Which of the Following Is Likely to Be a Fully

question 59

Multiple Choice

Which of the following is likely to be a fully deductible business expense?

• A) Salaries in excess of the industry average paid to attract talented employees.
• B) The cost of employee uniforms that can be adapted to ordinary personal wear.
• C) A speeding fine paid by a trucker who was delivering a rush order.
• D) The cost of a three-year subscription to a business publication.
• E) None of these is likely to be deductible.

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Definitions:

Material

The substance or substances of which any physical object is composed or can be made, including metals, woods, plastics, and textiles.

Location

A specific place or position, often used in various contexts to define where something is situated or found.

Moral Hazard

A situation in which one party is more willing to take risks because the costs that may result will not be borne by them.

Adverse Selection

A situation in which asymmetric information leads to the market being dominated by inferior products or by participants who are at a disadvantage.