Indicate the amount (if any) that Josh can deduct as ordinary and necessary business deductions in each of the following situations.(Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
a.
Josh borrowed $87,000 from the First State Bank using his business assets as collateral. He used the money to buy City of Blanksville bonds. Over the course of a year, Josh paid interest of $13,300 on the borrowed funds, but he received $12,000 of interest on the bonds.
Deductible amount
$
b.
Josh purchased a piece of land for $50,000 in order to get a location to expand his business. He also paid $5,400 to construct a new driveway for access to the property.
Deductible amount
$
c.
This year Josh paid $23,400 to employ the mayor’s son in the business. Josh would typically pay an employee with these responsibilities about $19,200 but the mayor assured Josh that after his son was hired, some city business would be coming his way.
Deductible amount
$
d.
Josh paid his brother, a mechanic, $5,550 to install a robotic machine for Josh’s business. The amount he paid to his brother is comparable to what he would have paid to an unrelated party to do the same work. Once the installation was completed by his brother, Josh began calibrating the machine for operation. However, by the end of the year, he had not started using the machine in his business.
Melissa recently paid $640 for round-trip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses:
$590 fee to register for the conference,
$255 per night for three night’s lodging,
$170 for meals, and
$605 for cab fare.
(Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
a.
What amount of the travel costs can Melissa deduct as business expenses?(Round your answer to the nearest dollar amount.)
Deductible amount
$
b.
Suppose that while Melissa was on the coast, she also spent two days sightseeing the national parks in the area. To do the sightseeing, she paid $1,990 for transportation, $940 for lodging, and $295 for meals during this part of her trip, which she considers personal in nature. What amount of the travel costs can Melissa deduct as business expenses?(Round your answer to the nearest dollar amount.)
Deductible amount
$
c.
Suppose that Melissa made the trip to San Francisco primarily to visit the national parks and only attended the business conference as an incidental benefit of being present on the coast at that time. What amount of the airfare can Melissa deduct as a business expense?
Deductible amount
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