25 May Question 1. Deductions are allowed unless a specific provision in the tax law provides otherwise.
Question
1. Deductions are allowed unless a specific provision in the tax law provides otherwise.
a. True
b. False
2. Mitch is in the 28% tax bracket. He may receive a different tax benefit for a $2,000 expenditure that is classified as a deduction fromAGI than he will receive for a $1,000 expenditure that is classified as a deduction forAGI.
a. True
b. False
.
3. Depending on the nature of the expenditure, expenses incurred in a trade or business may be deductible foror from AGI.
a. True
b. False
4. Only some employment related expenses are classified as deductions forAGI.
a. True
b. False
5. Section 212 expenses that are related to rent and royalty income are deductions forAGI.
a. True
b. False
6. Alice incurs qualified moving expenses of $12,000. If she is reimbursed by her employer, the deduction is classified as a deduction for AGI. If not reimbursed, the deduction is classified as an itemized deduction.
a. True
b. False
7. Expenses incurred for the production or collection of income generally are deductions fromadjusted gross income.
a. True
b. False
8. The Code does not specifically define what constitutes a trade or business.
a. True
b. False
9. An expense need notbe recurring in order to be “ordinary.”
a. True
b. False
10.Aaron, a shareholder-employee of Pigeon, Inc., receives a $300,000 salary. The IRS classifies $100,000 of this amount as unreasonable compensation. The effect of this reclassification is to decrease Aaron’s gross income by $100,000 and increase Pigeon’s gross income by $100,000.
a. True
b. False
.
11.The portion of a shareholderemployee’s salary that is classified as unreasonable has no effect on the amount of a shareholderemployee’s gross income, but results in an increase in the taxable income of the corporation.
a. True
b. False
12.Generally, a closely-held family corporation is notpermitted to take a deduction for a sala
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