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.
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• 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.

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Definitions:

Delegations

The act of authorizing another person or entity to act on one's behalf in certain matters or decision-making processes.

English Parliament

The supreme legislative body in the United Kingdom, made up of the House of Commons, the House of Lords, and the Sovereign.

Act for the Prevention of Frauds and Perjuries

Historical legislation which aimed at reducing fraud and perjury in legal agreements, emphasizing the importance of written contracts.

Promissory Estoppel

The legal enforcement of an otherwise unenforceable contract due to a party’s detrimental reliance on the contract.