Various Criteria Will Disqualify the Deduction of a Business or Investment

question 99

Multiple Choice

Various criteria will disqualify the deduction of a business or investment related expenditure. Which of the following criteria will not disqualify a business or investment expenditure?

• A) capital expenditure
• B) expenses related to tax-exempt income
• C)expenses are not incurred annually
• D)expenses are illegal or in violation of public policy

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Definitions:

Bad Debt

Money owed to a company that is unlikely to be paid by the debtor, often leading to the creditor writing it off as a loss.

Percentage of Sales

A method used to forecast financial figures, such as net income or expenses, based on a percentage of the sales volume.

Dishonored

Refers to a check or promissory note that has been refused by the bank on which it was drawn because of insufficient funds or other reasons.

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.