Answered: What are Lou’s allowable current-year…

Business

Accounting

What are Lou’s allowable current-year deductions?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 2DQ

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Question

Lou incurred the following business expenses during the year:

Penalty for breach of business contract $3,200

State sales tax penalty for late remittance $2,500

Rent expense $6,000

Office supplies $450

Early withdrawal penalty on investment account at a savings and loan $185

What are Lou’s allowable current-year deductions?

A. $6,635

B. $9,835

C. $12,150

D. $12,335

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