Question Number One

Twenty true$-$false statements appear below. You must answer all of them. For each statement, insert $"$T$"$ or $"$F$"$ in the appropriate space provided on the separate answer sheet.

Answer all questions assuming that the relevant tax year is $2023$ unless a problem states otherwise.

Question Number One

Twenty true$-$false statements appear below. You must answer all of them. For each statement,

insert $"$T$"$ or $"$F$"$ in the appropriate space provided on the separate answer sheet.

A taxpayer who acquires and places in service tangible personal property may elect under

MACRS to depreciate the property using a half year convention.

The portion of the total cost of a business meal that is lavish or extravagant is $100\%$ non$-$

deductible.

A section $179$ election is not available when a taxpayer acquires and places in service an

automobile classified by the IRS as a luxury vehicle.

IRC $162$ requires an expenditure to be either ordinary or necessary in order to be deductible.

The taxpayer must carry the burden of proof in a criminal tax matter.

Current income tax law continues to allow a deduction for IRC $212$ expenditures associated

with rent or royalty income, but only as deductions from adjusted gross income.

An employee who incurs and pays an unreimbursed qualifying employee business expense

amount may deduct $50\%$ of the amount as a miscellaneous itemized deduction.

Trade or business interest expense is allowable as a deduction for AGI.

For an item of listed property, if the original business use of the asset exceeded $50\%$ but

falls below $50\%$ in a subsequent year, the taxpayer must recompute depreciation expense

for all prior years using the straight$-$line method and file an amended income tax return

for any prior year in which accelerated depreciation amount was claimed.

An IRC $179$ election is not available for an asset placed in service if the asset was purchased

from a related person.

For the cost of a business meal to be deductible under the directly related to the active

conduct of a trade or business test, an expectation of a business benefit and goodwill

must be present.

The special luxury automobile limits do not apply if the asset in question has a weight in

excess of $5,000$ pounds.

An expense is "necessary" if it is appropriate, helpful, or capable of making a contribution to

the taxpayer's profit seeking activity.

If a taxpayer disposes of an asset being depreciated under the mid$-$quarter convention, the

depreciation amount for the year of disposition will be one half of whatever the depreciation

amount would have been for the year if no disposition had taken place.

Ordinary and necessary expenditures incurred and paid in an activity deemed to be a

hobby are deductible as an itemized deduction, but only in an amount up to the amount of

gross income earned in the activity.

An otherwise qualifying expense incurred and paid by an individual engaging in an illegal

gambling operation cannot be deducted on Form $1040.$

A self$-$employed individual may deduct qualifying travel expenses incurred in hi$($s$)/($h$)$er

trade or business activity as a deduction "for adjusted gross income."

Taxpayers filing a joint Form $1040$ may not claim a deduction for student loan interest expense.

To be "ordinary" under IRC $162,$ an expense should be must be habitual or recurring.

Under IRC $162,$ the "all events test" is satisfied as soon as all events establishing the

existence of a liability have occurred.