Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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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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Chapter 3 Solutions
Income Tax Fundamentals 2020
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