Which of the Following Business Expense Deductions Is Most Likely

question 9

Multiple Choice

Which of the following business expense deductions is most likely to be unreasonable in amount?

• A)Compensation paid to the taxpayer's spouse in excess of salary payments to other employees.
• B)Amounts paid to a subsidiary corporation for services where the amount is in excess of the cost of comparable services by competing corporations.
• C)Cost of a meal with a former client when there is no possibility of any future benefits from a relation with that client.
• D)All of the choices are likely to be unreasonable in amount.
• E)None of the choices are likely to be unreasonable in amount.

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Definitions:

Dissociative Amnesia Disorder

A mental health disorder characterized by an inability to recall important personal information, usually following a stressful or traumatic event, that cannot be explained by ordinary forgetfulness.

Obsessive-Compulsive Disorder

A mental health disorder characterized by repetitive, unwanted thoughts (obsessions) and irrational, excessive urges to do certain actions (compulsions).

Panic Disorder

A type of anxiety disorder characterized by sudden and repeated episodes of intense fear accompanied by physical symptoms such as chest pain, heart palpitations, or shortness of breath.

Representativeness Heuristic

A cognitive bias where people judge the probability of an event by how much it resembles a typical case.