chap 4 quiz Flashcards
The following taxes are not deductible:
A. Donor’s tax
B. Estate tax
C. All are incorrect.
D. Income tax
E. Income tax paid abroad if claimed as tax credit
C. All are incorrect.
Properties not directly related to production can be depreciated using this method.
A. Cost-depletion method
B. Declining-balance method
C. Directly to expense
D. All are correct.
E. Straight line method
F. All are incorrect.
E. Straight line method
It is the excess of actual contributions over the normal cost.
A. Pension liability
B. Insurance
C. Past service cost
D. Tax
C. Past service cost
It means the excess of allowable deduction over gross income of the business in a taxable year.
A. Income tax
B. Net operating loss
C. Salaries
D. Donor’s tax
E. Interest
B. Net operating loss
Worthless securities can be deductible if:
A. The same is charged off after the taxable year
B. All are correct.
C. Securities are not ascertained to be worthless
D. All are incorrect.
E. It must be a capital asset
E. It must be a capital asset
The amount of any charitable contribution of property other than money shall be based on the ___________.
A. Acquisition cost
B. Market value
C. Any of the choices
D. None of the choices
A. Acquisition cost
The taxes paid or incurred within the taxable year in connection with the taxpayer’s profession, trade or business, shall not be allowed as deduction.
TRUE OR FALSE
FALSE
Requisites for deductibility in general includes:
A. Supported by sufficient evidence
B. All are correct.
C. Paid or incurred during the taxable year;
D. Connected with trade, business or practice of profession;
E. All are incorrect.
F. Not against the law, morals, public policy or public applicable.
G. Must be ordinary and necessary;
B. All are correct.
Requisites for interest does not include:
A. There must be an indebtedness
B. The indebtedness must be that of the taxpayer
C. There must not be legal liability to pay interest;
D. It must be paid or incurred during the taxable year.
C. There must not be legal liability to pay interest;
Non-deductible items include:
A. Personal, living or family expenses
B. Any amount paid out for new buildings or for permanent improvements, or betterments made to increase the value of any property or estate
C. Interest between family members
D. All are incorrect.
E. All are correct.
E. All are correct.
Capital invested in oil and gas wells or mines may be amortized using this method.
A. Straight line method
B. All are incorrect.
C. Declining-balance method
D. All are correct.
E. Directly to expense
F. Cost-depletion method
F. Cost-depletion method
Requisites for casualty losses does not include:
A. Actually sustained during the taxable year
B. Incurred in trade, profession or business
C. Claimed as deduction for estate tax purposes
D. Not compensated for by insurance or other forms of indemnity
C. Claimed as deduction for estate tax purposes
Ordinary and necessary trade, business or professional expenses excludes:
A. Salaries and wages paid to the employee
B. Travel expenses for business trips
C. Rentals for the house of the owner
D. Other necessary business expenses
C. Rentals for the house of the owner
Proprietary (private) educational institutions may capitalize and claim depreciation as deduction the cost incurred for the expansion of school facilities.
True OR False
TRUE
Pension liability is equivalent to Normal Cost.
True OR False
TRUE
