Question 1: (Please explain your answer) (Please note all questions are for USA Federal Income Taxation)

A nonbusiness bad debt deduction can be taken in the year the debt becomes totally worthless.

True or False

Question 2: (Please explain your answer) (Please note all questions are for USA Federal Income Taxation)

Nicole operates a pizzeria. In 2021, she had the following expenses:

Parking ticket of $150 for one of her delivery bikes that was illegally parked.

Parking ticket of $100 when she parked illegally while visiting a bar in Queens, NY.

DUI ticket of $600 while returning from the bar.

The Attorney's fee of $1000 is associated with the DUI ticket.

What amount can Nicole deduct for these expenses?

Question 3: (Please explain your answer) (Please note all questions are for USA Federal Income Taxation)

On December 13, 2021, Daniel incurred a regular monthly business expense and his credit card was charged. He paid the credit card statement that included the charge on January 2, 2022. Which of the following is correct?

A.

If Daniel is a cash method taxpayer, he cannot deduct the expense until 2022.

B.

If Daniel uses the accrual method, he can choose to deduct the expense in either 2021 or 2022.

C.

If Daniel is an accrual method taxpayer, he can deduct the expense in 2021.

D.

None of these.

E.

"If Daniel is a cash method taxpayer, he cannot deduct the expense until 2022" and "If Daniel uses the accrual method, he can choose to deduct the expense in either 2021 or 2022" are correct.

Question 4: (Please explain your answer) (Please note all questions are for USA Federal Income Taxation)

The debtor's use of borrowed funds is important when determining whether a debt is a business or nonbusiness bad debt.

True or False