Multiple Choice Questions
1. Section 179 expense is available for all of the following business assets except
a. Office building.
b. Office furniture.
c. Computer.
d. Delivery truck.

2. Jordan has two jobs. She works as a night auditor at the Moonlight Motel. When her shift at the motel is over, she works as a short-order cook at the Greasy Spoon Restaurant. On a typical day, she drives the following number of miles:
Home to Moonlight Motel ………………………………. 4
Moonlight Motel to Greasy Spoon Restaurant …………. 7
Greasy Spoon Restaurant to home ………………………12
How many miles would qualify as transportation expenses for tax purposes?
a. 4.
b. 7.
c.11.
d.12.
3. Which of the following is false with respect to the standard mileage rate?
a. It can be used if the taxpayer owns the vehicle and uses the standard mileage rate for the first year it was placed in service.
b. It includes parking fees, tolls, and property taxes on the vehicle.
c. It encompasses depreciation or lease payments, maintenance and repairs, gasoline, oil, insurance, and vehicle registration fees.
d. It does not include interest expense on acquisition of the automobile.
4. Frank purchased a vehicle for business and personal use. In 2014, he used the vehicle 70% for business (11,000 business miles incurred equally throughout the year) and calculated his vehicle expenses using the standard mileage rate. Frank also paid $1,800 in interest and $480 in county property tax on the car. What is the total business deduction related to business use of the car?
a. $5,610.
b. $6,215.
c. $7,756.
d. $8,495.
5. Jimmy took a business trip from Dallas to Brazil. He was there for a total of seven days, of which two were weekend. Over the weekend, he spent his time sightseeing and relaxing. His expenses were as follows:
Airfare…………..………….………….………….…… $1,400
Lodging (7 days x $300) ….………….………….…… 2,100
Meals (7 days x $85) ….………….………….……….. 595
Taxi fares ($600 to and from business meetings) ……. 800
How much is Jimmy allowed to deduct?
a. $ 3,404.
b. $ 3,496.
c. $ 4,598.
d. $ 4,895.
6. Jake runs a business out of his home. He uses 600 square feet of his home exclusively for the business. His home is 2,400 square feet in total. Jake had $27,000 of business revenue and $22,000 of business expenses from his home-based business. The following expenses relate to his home:
Mortgage interest ….………….………….………………$ 10,800
Real estate taxes ….………….………….………………. 1,600
Utilities ….………….………….………………………… 2,400
Insurance ………….………….………………………….. 600
Repairs ………….………….…………………………….. 2,400
Depreciation (on business use portion of home) ………… 1,200
What is Jake’s net income from his business? What amount of expenses is carried over to the following year, if any?
a. ($14,000) and $0 carryover.
b. ($650) and $0 carryover.
c. $0 and $650 carryover.
d. $550 and $0 carryover.
7. Which of the following is not a relevant factor to be considered in deciding whether an activity is profit seeking or a hobby?
a. Manner in which the taxpayer carries on the activity.
b. Expertise of the taxpayer or his or her advisers.
c. Time and effort expended by the taxpayer in carrying on the activity.
d. All of the above are relevant factors.
8. Which of the following individuals can deduct education expenses?
a. A real estate broker who attends college to get an accounting degree.
b. A CPA who attends a review course to obtain his building contractor’s license.
c. A corporate executive attending an executive MBA program.
d. An accounting bookkeeper taking a CPA review course to pass the CPA exam and become a CPA
9. Annie is self-employed and has $58,000 in income from her business. She also has investments that generated dividends of $3,000 and interest of $2,500. What is Annie’s self-employment tax for the year?
a. $ 8,195..
b. $ 8,619..
c. $ 8,874.
d. $ 8,972.
10. The maximum tax bases and percentages for 2014for the two portions of the self-employment tax are which of the following?
Social SecurityMedicare
a. $117,000; 12.4%Unlimited; 2.9%.
b. $117,000; 12.4%Unlimited; 15.3%.
c.$113,700; 12.4%Unlimited; 2.9%.
d.$113,700; 15.3%Unlimited; 15.3%.