Which of the Following Business Expense Deductions Is Most Likely

question 24

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 entertaining a former client when there is no possibility of any future benefits from a relation with that client.
• D) All of these are likely to be unreasonable in amount.
• E) None of these is likely to be unreasonable in amount.

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Definitions:

Four-Firm Concentration Ratio

A measure that indicates the total market share controlled by the four largest firms in an industry, used to assess the degree of market concentration.

Indeterminate

A situation in which a clear outcome or result cannot be ascertained due to a lack of definitive information or multiple influencing factors.

Industry Table

A consolidated representation of essential data for various industries, typically including information on performance, growth, and trends.

Included

Being part of or encompassed within something else.