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Concepts in Federal Taxation 2015 22nd Edition Murphy Test Bank 1
Concepts in Federal Taxation 2015 22nd Edition Murphy Test Bank 1
To be deductible, meals and entertainment must be both an ordinary and necessary business expense and must be either
directly related to or associated with the active conduct of an activity for which the taxpayer has a business purpose.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: CIFT.MUHI.14.1 - 1
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
2. The Big Easy Company leases a luxury box and purchases 20 tickets to the New Orleans Saints home games. The
entire amount is deductible as an entertainment expense as long as all the requirements are met.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.1 - 1
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
3. A taxpayer may use either the actual cost method or the standard mileage rate for deducting auto expenses.
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a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: CIFT.MUHI.14.2 - 2
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
4. The actual cost method is a more-flexible way to compute the auto expense deduction and often results in a larger
tax savings.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: CIFT.MUHI.14.2 - 2
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
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5. To be away overnight requires the taxpayer to be away from their tax home for more than 24 hours.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.3 - 3
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
6. A taxpayer can deduct multiple gifts to a single customer as long as the total value of all gifts to that customer does
not exceed $25.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: CIFT.MUHI.14.4 - 4
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
7. To be deductible, employee compensation must be for services actually performed by the employee and the amount
must be reasonable.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.4 - 4
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
8. Business and nonbusiness bad debts are both deductible as a short-term capital loss.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.5 - 5
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
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9. Discovery, Inc., a cash-basis consulting firm, can deduct a twelve-month insurance premium in the year the
premium is paid even though the policy remains in effect into the following year.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.6 - 6
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
10. Legal expenses are generally deductible if they have a business purpose; they are generally not deductible if they
originate from a personal transaction.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.6 - 6
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
11. If an employer reimbursement plan is an accountable plan, for an expense that is fully reimbursed the employee
does not have to report either the expense or the reimbursement .
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.7 - 7
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
12. 50% of the self-employment tax is deductible as a miscellaneous itemized deduction from adjusted gross income.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.8 - 8
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
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13. In 2014, a husband and wife who are less than 50 and qualify may contribute $12,000 to two separate IRA
accounts as long as their total income exceeds $12,000. The total amount contributed to each account cannot
exceed $6,000.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.9 - 9
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
14. Danielle graduated from State University in 2013. She paid $2,100 of interest during 2014 on her qualified
educational loan. The full amount is deductible.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: CIFT.MUHI.14.11 - 11
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
15. For moving expenses to be deductible the distance test must be met, which requires that the commuting distance
from the old residence to the new job must be 50 miles further than the commuting distance was to the old job.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Medium
LEARNING OBJECTIVES: CIFT.MUHI.14.11 - 11
NATIONAL STANDARDS: United States - AACSB Analytic
United States - AICPA Measurement
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