The arm's length transaction test would most likely not apply to which of the following? Multiple Choice O Whether a specific activity is profit motivated O Whether an expenditure should be deducted in a later period O Whether expenditure is related to a personal activity O Whether an expenditure is reasonable in amount O All of the choices are correct.2 Which of the following is a true statement? Multiple Choice O The cost of business entertainment is not deductible An employer can only deduct half of any meals provided to employees Meals are not deductible as a business expense A taxpayer can only deduct the full cost of a meal for a client if business is discussed after the meal None of the choices are true. 0000 Which of the following is a true statement? Multiple Choice O The cost of transportation is never deductible for business travel if the taxpayer enjoys the travel Employees can deduct the cost of meals when they must work during the lunch hour Half of the costs of travel are deductible for employees who travel on business The cost of lodging is deductible if the taxpayer is away from home overnight on business None of the choices are true. 0000 Drake operates a trucking business, and one of his trucks was damaged in a trafc accident. The truck was purchased for $52,000 and the adjusted basis was $22,000 at the time of the accident. The truck was repaired at a cost of $5,000 and insurance reimbursed Drake $2,000 of this cost. What is the amount of Drake's casualty loss deduction? Multiple Choice 0 $22,000 $5,000 $3,000 $2,000 0000 Drake is not eligible for a casualty loss deduction. Which of the following cannot be selected as a valid tax year end? 5 Multiple Choice O December 15th O January 31st O The last Friday of the last week of June O December 31st O A taxpayer can select any of these days as a year end.Charley Inc is a large corporation that reported revenue of $80 million and income of $620,000 this year. Included in the calculation of income was $10,000 of interest income, depreciation deductions of $170,000, and interest expense deductions of $420,000. What is the maximum amount of interest expense deduction this year? Multiple Choice 0 $1,200,000 $370,000 $10,000 $366,000 0000 $360,000 Steven operates a landscaping service on the accrual method. In September of this year, Steven received a payment of $18,000 for 24 months of landscape services ($750 per month commencing on November 15" of this year). When must Steven recognize the income if his accounting methods are selected to minimize income recognition? Multiple Choice 0 $1,500 is recognized in this year, $16,500 next year. $1,500 is recognized this year, $9,000 next year, and $7,500 in the last year of the contract. $18,000 is recognized this year. $9,000 is recognized this year and $9,000 next year. 0000 $18,000 is recognized in the last year of the contract. Which of the following is not a payment liability? 8 Multiple Choice O Tort claims O Accrued compensation O Insurance premiums O Real estate taxes O All of the choices are correct.Which of the following is a true statement? Multiple Choice 0 The cost of meals is fully deductible as long as the meal is unrelated to entertainment. An employer can deduct the full cost of meals provided to employees as compensation. The cost of business meals is extravagant if incurred away from home. A taxpayer can only deduct the full cost of a meal for a prospective client. All of these statements are false. @000 Blue Corporation began business on April 1 of last year and reported gross receipts of $18 million. Which of the following is true statement about the gross receipts test as applied to Blue? 10 Multiple Choice 0 Blue cannot qualify because they do not have gross receipts for the entire prior three-year period Blue will qualify because their average gross receipts is only $24 million Blue will qualify because their average gross receipts is only $18 million Blue cannot qualify until the rm reports gross receipts for an entire year None of the choices are true. 0000