Personal expenses are deductible to the extent that our tax laws provide that such expenses are deductible.. True or false
To be deductible for tax purposes, trade or business expenses must be:
A) Ordinary and necessary
B) In general, reasonable in amount
C) Related to an activity which is deemed to be a trade or business
D) All of the above
An ordinary expenditure is one which is commonly incurred by other businesses. True or false
Susanne Watson is an employee and sole-shareholder of Klaxon. Klaxon is a calendar-year company which uses the accrual method of accounting. On December 30, 2019, Klaxon announced that it would award Susanne a bonus of $30,000 based on the company's 2018 year-end profit. The bonus was reasonable, ordinary and necessary. It was paid on February 11, 2020. In what year can Klaxon deduct the bonus it paid to Susanne? Susanne is a calendar-year, cash method taxpayer.
A) 2020 B) 2018 C) 2019 D) The bonus cannot be deducted by Klaxon, Inc.
Last year, a corporation purchased an office building for $220,000, of which $30,000 was allocated to the land on which the building was located. The building's salvage value was estimated to be $50,000. The corporation's current year depreciation deduction for the building is:
A) $3,590 B) $4,872 C) $5,641 D) $6,909