Which of the Following Payments Are Currently Deductible

question 158

Multiple Choice

Which of the following payments are currently deductible?
I.Steve is a self-employed attorney. He pays another attorney $14,000 to represent him in a lawsuit that alleged that he was liable in a personal auto accident.
II.Connie has an investment portfolio in excess of $600,000. She pays Chris $1,000 to do an analysis of her investments and make recommendations on restructuring the portfolio.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Journal Entry

A record in the books of accounts that represents each business transaction, detailing the accounts and amounts to be debited and credited.

Debit

An entry recorded on the left side of an accounting ledger that increases an asset or expense account, or decreases equity, liability, or revenue accounts.

Credit

An accounting entry that either increases a liability or equity account, or decreases an asset or expense account.

Internal Report

Documents generated within an organization for the purpose of informing internal stakeholders about business performance and operations.