Three Requirements Must Be Met in Order to Deduct a Trade

question 15

Multiple Choice

Three requirements must be met in order to deduct a trade or business expense. Also, deductible trade or business expenses may not be which of the following:
I.a capital expenditure.
II.reasonable in amount.
III.a payment that frustrates public policy.
IV.an expense related to tax-exempt income.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Statements III and IV are correct.
• D)Statements I, II, and III are correct.
• E)Statements I, III, and IV are correct.

---

Definitions:

Payment Date

The specific date on which a dividend payment is made to shareholders or a date on which any financial obligation must be settled.

Basic Earnings

The income earned by a company divided by the total number of shares outstanding; a measure of the company's profitability.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is globally accepted for financial reporting.

Noncash Consideration

Payment made in a form other than cash, such as property, goods, or services, during transactions.