Chapter 4 - Self-Employment, Farming and Adjustments Flashcards Preview

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Flashcards in Chapter 4 - Self-Employment, Farming and Adjustments Deck (15):
1

A sole proprietor generally reports all self-employment income and expense on what schedule?

Schedule C

2

Gross income includes what?

All income from a trade or business

3

A deduction from gross income is allowed for all _____ and _______ expenses paid or incurred during a tax year in carrying on a trade or business.

Ordinary and Necessary expenses

4

An activity that is not engaged in for a profit is _____?

A hobby

5

______ means the taxpayer devotes a substantial amount of business time to the activity.

Regular

6

Implies that the expense normally occurs or is likely to occur in connection with businesses similar to the one operated by the taxpayer claiming the deduction.

Ordinary

The expenditures to not need to occur frequently

7

Implies that an expenditure must be appropriate and helpful in developing or maintaining the trade or business

Necessary

8

Up to _____ of the cost of employee achievement awards is deductible by an employee for all non-qualified plan awards.

$400

9

Taxpayers can deduct up to ______ of start-up costs and _____ of organizational costs in the taxable year in which the business begins.

$5000
$5000

10

The cost of intangibles must generally be?

Capitalized

11

________ is allowed is allowed if the intangible has a determinable useful life.

Amortization

12

Replacing machinery is generally a?

Capital expenditure

13

______ _______ are made in acquiring or improving property that will have a useful life of longer than 1 year.

Capital expenditures

14

If the property is a depreciable asset, the cost is recovered through ________.

depreciation

15

If the property is not a depreciable asset, the amount of capital expenditure might be recovered when?

At the time of disposal