Question

TRUE OR FALSE QUESTIONS

1. The ordinary, necessary, and reasonable expenses of a cocaine dealer are deductible. TRUE OR FALSE

2.A taxpayer wins the third place prize of $20 in a raffle. The income is excluded from gross income since it is less than $25. TRUE OR FALSE

4. The percentage depletion deduction is allowed even though the entire cost of the asset has been recovered (i.e., the basis of the asset is zero). TRUE OR FALSE

9.The percentage depletion deduction is allowed even though the entire cost of the asset has been recovered (i.e., the basis of the asset is zero). TRUE OR FALSE

10. In computing depreciation using MACRS, a taxpayer who elects to expense all or a portion of an asset must also reduce the basis of the asset by the same amount. TRUE OR FALSE

12. A taxpayer who leases an automobile for business purposes will be allowed to deduct the lease payments, but may have to include an imputed amount in income. TRUE OR FALSE

Answer 1

1 . False

Reason :

Cocaine is ILLEGAL PRODUCT .. All these were contraband articles were seized and proceedings under the Narcotic Drugs and Psychotropic Substances Act, 1985 were initiated against the assessee.

2 .True

Reason :

The IRS will let your business deduct only $25 or less for business gifts you give to any one person during your tax year.

4 . False

Reason :

Percentage depletion functions as a percent of gross revenue regardless of the unit production from a piece of property during that year. In every case, depletion can't reduce the property's basis to less than zero.

9 .False

Reason :

Percentage depletion functions as a percent of gross revenue regardless of the unit production from a piece of property during that year. In every case, depletion can't reduce the property's basis to less than zero.

10 . True

Reason :

MACRS serves as the most suitable depreciation method for tax purposes. ... The MACRS depreciation method allows greater accelerated depreciation over the life of the asset. This means that the business can take larger tax deductions in the initial years and deduct less in later years of the asset's life.

12 . True

Reason :

Monthly lease payments are tax-deductible as a business expense.. Sometimes we include it..