Which of the Following Expenditures Is Most Likely to Be

question 88

Multiple Choice

Which of the following expenditures is most likely to be deductible for a construction business?

• A) A fine for a zoning violation.
• B) A tax underpayment penalty.
• C) An "under the table" payment to a government representative to obtain a better price for raw materials.
• D) A payment to a foreign official to expedite an application for a business permit.
• E) An arm's length payment to a related party for emergency repairs of a sewage line.

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Definitions:

Normal Spoilage

The expected amount of loss or waste of materials during the manufacturing process that is considered to be an acceptable cost of production.

LIFO Inventory

An inventory valuation method standing for Last-In, First-Out, where the last items added to inventory are the first to be sold.