Illegal Bribes and Kickbacks Are Not Deductible as Business Expenses

question 128

True/False

Illegal bribes and kickbacks are not deductible as business expenses but fines imposed by a governmental unit are deductible as long as the fines are incurred in the ordinary course of business.

---

Definitions:

Calculated Selling Price

The calculated selling price is the price at which a product must be sold to cover its costs and achieve a desired profit margin.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated in advance based on estimated costs and activity levels.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products based on a pre-established criterion, such as labor hours or machine hours.