Using the Tests for Deductibility Discussed in Chapter 5, Explain

question 19

Essay

Using the tests for deductibility discussed in Chapter 5, explain why the following expenses are not deductible.
a.Mel is a sprint car racer. He does repair and maintenance on his cars in the garage at his home. After repairing the cars, he tests them on city streets. He received 15 citations (totaling $2,900) for speeding, running stop signs, and reckless driving.
b.Albert, a carpenter, pays his 10-year-old son $150 a week to empty waste cans in his work shop. Albert's son works each evening and two hours on Saturday morning.
c.Sharon contributes $25 to a local organization that is campaigning against a foreign trade bill. The legislation would damage Sharon's business.
d.Marline borrows $5,000 and pays $500 in interest. The loan is used to purchase bonds issued by the City of Lafayette School District.
e.Christine is the wife of a physician, and she is an experienced horseman. She has raised horses for ten years and occasionally shows them for prize money. She enjoys her horse activity but has never made a profit in any year. Her horses are appraised at $200,000.

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Definitions:

Hardy Personality

A personality trait characterized by resilience and the ability to cope effectively with stress.

Qualities

Characteristics or attributes that can be used to describe or evaluate something or someone.

Social Readjustment Rating Scale

A scale that measures the stressfulness of life events to predict the impact of stress on health.

Major Life Changes

Significant events or transitions in an individual's life that can have profound psychological and emotional impact, such as marriage, divorce, or loss of a loved one.