A Corporation Is Allowed to Deduct All of Its Ordinary

question 72

Multiple Choice

A corporation is allowed to deduct all of its ordinary and necessary business expenses. Which of the following Concepts is least helpful in determining this treatment?

• A)All-inclusive Income Concept.
• B)Entity Concept.
• C)Capital Recovery Concept.
• D)Legislative Grace Concept.
• E)Business Purpose Concept.

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Definitions:

Unsystematic Risk

The risk associated with a specific company or industry, which can be reduced through diversification, unlike systematic risk which affects the entire market.

Portfolio Diversification

A strategy for managing risk that involves diversifying a portfolio with a broad range of investments to reduce the effect of the performance of any individual asset.

Security

A financial instrument that represents ownership (stocks), a creditor relationship (bonds), or rights to ownership (options) that can be bought and sold.

Expected Return

The weighted average of the probable returns of an investment, considering all possible outcomes and their likelihoods.