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____ 4. S is a cash basis, calendar year taxpayer. She operates Cloth R Us. All the store's profits come from the sale of fabric. Sales are $3 million. During the year, she paid the following expenses:

1. $5,000 premium for liability insurance covering her business. The coverage runs from December 1, 2019 through November 30, 2022.

2. $15,000 for cloth, all of which is still on hand at the end of the taxable year.

3. $2,000 for "points" related to obtaining a loan for the purchase of her principal residence.

4. $1,200 for "points" related to obtaining a loan on rental property.

S may deduct all the expense paid in 2019 for which item(s)?

a. 1

b. 1 and 2

c. 1, 2, and 3

d. 1, 3, and 4

e. 3 and 4

f. 3

____ 5. Which of the following statements is true concerning deductions "for" and "from" adjusted gross income (A.G.I.)?

a. Corporations, like individuals, must classify their deductions as deductions for and from A.G.I.

b. Misclassification of a deduction for A.G.I. has no effect on the taxpayer's tax liability, assuming the taxpayer itemizes her or his deductions.

c. A deduction from A.G.I. has no effect on the taxpayer's self-employment tax liability.

d. Misclassification of a deduction for A.G.I. never has an effect on the taxpayer's medical expense deduction.

____ 6. Which of the following is not a deduction for A.G.I.?

a. Property taxes for a rental property actively managed by the taxpayer.

b. Deductible expenses related to a self-employed CPA's home office.

c. Employee transportation expense reimbursed by the employer and included in employee's income.

d. Employee travel expense not reimbursed by the employer.

NO MORE INFO IS NEEDED. THERE IS 3 QUESTIONS.

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