Question

10.   Tom Smith entertains one of his clients and pays the following expenses: Cab fare 22...

10.   Tom Smith entertains one of his clients and pays the following expenses:

Cab fare

22

Cover charge

10

Meal

110

Tip to food server

20


Assuming the necessary documentation exists, how much may Tom deduct?

a. $92

b. $107

c. $162

d. $81

e. the amount is $_______.

11. The maximum business expense deduction for gifts to customers and clients is:

a. $4.

b. $10.

c. $75.

d. $25.

e. No maximum amount exists.

12. A self-employed taxpayer buys a new business automobile during the year. What method is permitted in computing car and truck expenses on Schedule C?

a. The actual expense method

b. The standard mileage method

c. Either the actual expense or the standard mileage method

d. The actual mileage method

e. None of the above

13. Which of the following income items is treated as earnings from self-employment?

a. Compensation received by a registered nurse who is hired by a patient to provide private nursing services

b. Dividends

c. Capital gain from the sale of an investment

d. Compensation received by a babysitter who provides child care in the parent's home

e. All of the above are earnings from self-employment

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Homework Answers

Answer #1
ans 10
Cab fare 22
Cover charge 10
Meal 110
Tip to food server 20
Amt of deduction 162
Option C $162
ans 11
d) $25
IRS allows maximum $25 deduction for business gift.
Per recepient maximum is $25
Ans 12
c. Either the actual expense or the standard mileage method
Taxpayer can use any of the two method depending upon
under which method he gets maximum deduction.
Ans 13
a. Compensation received by a registered nurse who is hired by a patient to provide private nursing services
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