Reference no: EM131130270

1. Matt operates a sole proprietorship and files his return on a calendar year basis. He took out a fire insurance policy for his business effective July 1, year 1, and paid a premium of 3,600 for 4 years. Matt reports his income and expenses on a cash basis. What is Matt's deductible insurance expense for Year 1?

2. Which of the following items generally cannot be deducted or amortized over its useful life or over a statuatory period?

a. commission to stockbrocker for issueing and selling initial stock offering

b. business start up costs

c. goodwill acquired as a part of a bulk purchase

d. attorney's fees paid in perfecting a patent application

3. Bill Thomas a sole proprietor incurred the following business expenses during the year. All are deductible except:

a. Interest paid on an individual's tax deficiency when the deficiency was related to income from a business

b. kickbacks, a violation of state law that is not generally inforced

c. postage and freight expenses

d. interest and taxes paid on vacant land held for invesment

4. Start up expenditures of a business may be amortized over a period of not less than:

a. 12 months

b. 24 months

c. 60 months

d. 180 months