A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test. To choose: The option that is not a test for deductibility of a business expense.

Question

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Answer 1

Question

Chapter 3, Problem 1MCQ

To determine

Concept Introduction:

A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test.

To choose: The option that is not a test for deductibility of a business expense.

Expert Solution & Answer

Answer to Problem 1MCQ

b.

Explanation of Solution

Explanation for Correct answer:

The expectation of profit test is not one of the tests for the deductibility of a business expense. Hence, option b is correct.

Explanations for incorrect answers:

a. The ordinary and necessary test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

c. The reasonableness test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

d. The business purpose test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

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Answer 2

Question

Chapter 3, Problem 1MCQ

To determine

Concept Introduction:

A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test.

To choose: The option that is not a test for deductibility of a business expense.

Expert Solution & Answer

Answer to Problem 1MCQ

b.

Explanation of Solution

Explanation for Correct answer:

The expectation of profit test is not one of the tests for the deductibility of a business expense. Hence, option b is correct.

Explanations for incorrect answers:

a. The ordinary and necessary test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

c. The reasonableness test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

d. The business purpose test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

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Answer 3

Question

Chapter 3, Problem 1MCQ

To determine

Concept Introduction:

A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test.

To choose: The option that is not a test for deductibility of a business expense.

Expert Solution & Answer

Answer to Problem 1MCQ

b.

Explanation of Solution

Explanation for Correct answer:

The expectation of profit test is not one of the tests for the deductibility of a business expense. Hence, option b is correct.

Explanations for incorrect answers:

a. The ordinary and necessary test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

c. The reasonableness test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

d. The business purpose test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

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Answer 4

Question

Chapter 3, Problem 1MCQ

To determine

Concept Introduction:

A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test.

To choose: The option that is not a test for deductibility of a business expense.

Expert Solution & Answer

Answer to Problem 1MCQ

b.

Explanation of Solution

Explanation for Correct answer:

The expectation of profit test is not one of the tests for the deductibility of a business expense. Hence, option b is correct.

Explanations for incorrect answers:

a. The ordinary and necessary test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

c. The reasonableness test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

d. The business purpose test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

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Answer 5

Chapter 3, Problem 1MCQ

To determine

Concept Introduction:

A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test.

To choose: The option that is not a test for deductibility of a business expense.

Expert Solution & Answer

Answer to Problem 1MCQ

b.

Explanation of Solution

Explanation for Correct answer:

The expectation of profit test is not one of the tests for the deductibility of a business expense. Hence, option b is correct.

Explanations for incorrect answers:

a. The ordinary and necessary test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

c. The reasonableness test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

d. The business purpose test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

Answer 6

Chapter 3, Problem 1MCQ

To determine

Concept Introduction:

A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test.

To choose: The option that is not a test for deductibility of a business expense.

Expert Solution & Answer

Answer to Problem 1MCQ

b.

Explanation of Solution

Explanation for Correct answer:

The expectation of profit test is not one of the tests for the deductibility of a business expense. Hence, option b is correct.

Explanations for incorrect answers:

a. The ordinary and necessary test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

c. The reasonableness test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

d. The business purpose test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

Answer 7

Chapter 3, Problem 1MCQ

To determine

Concept Introduction:

A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test.

To choose: The option that is not a test for deductibility of a business expense.

Answer 8

Expert Solution & Answer

Answer to Problem 1MCQ

b.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Explanation for Correct answer:

The expectation of profit test is not one of the tests for the deductibility of a business expense. Hence, option b is correct.

Explanations for incorrect answers:

a. The ordinary and necessary test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

c. The reasonableness test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

d. The business purpose test is one of the three tests for the determination of the deductibility of a business expense. Hence this option is incorrect.

Answer 12

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A business expense has to go through several tests to get eligible for deduction from business income for tax purposes. These tests are an ordinary and necessary test, business purpose test, and reasonableness test. To choose: The option that is not a test for deductibility of a business expense.

Concept explainers

Answer to Problem 1MCQ

Explanation of Solution

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Chapter 3 Solutions