Aaron Has a Successful Business with $50,000 of Income in 2016

question 52

Multiple Choice

Aaron has a successful business with $50,000 of income in 2016. He purchased a new 7-year MACRS property with a cost of $7,000. For tax purposes, what is the largest write-off Aaron can obtain in 2016 for the new asset?

• A)$500
• B)$1,000
• C)$3,500
• D)$7,000

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Definitions:

Financial Ratios

Quantitative measures derived from financial statement analysis to evaluate the financial health of a company.

Underlying Conditions

Fundamental or root circumstances or factors that directly impact outcomes, often requiring analysis to fully understand their effects.

Financial Statement

Reports that provide an overview of a company's financial condition, performance, and cash flow, including the balance sheet, income statement, and cash flow statement.

Statement of Financial Position

A financial statement that displays the assets, liabilities, and equity of a company at a specific point in time, also known as the balance sheet.