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Chapter 6
1. To be deductible, meals and entertainment must be both an ordinary and necessary business expense and must be either
directly related to or associated with the active conduct of an activity for which the taxpayer has a business purpose.
a. True
b. False
ANSWER: True
2. The Big Easy Company leases a luxury box and purchases 20 tickets to the New Orleans Saints home games. The entire
amount is deductible as an entertainment expense as long as all the requirements are met.
a. True
b. False
ANSWER: False
3. A taxpayer may use either the actual cost method or the standard mileage rate for deducting auto expenses.
a. True
b. False
ANSWER: True
4. The actual cost method is a more-flexible way to compute the auto expense deduction and often results in a larger tax
savings.
a. True
b. False
ANSWER: True
5. To be away overnight requires the taxpayer to be away from their tax home for more than 24 hours.
a. True
b. False
ANSWER: False
6. A taxpayer can deduct multiple gifts to a single customer as long as the total value of all gifts to that customer does not
exceed $25.
a. True
b. False
ANSWER: True
7. To be deductible, employee compensation must be for services actually performed by the employee and the amount
must be reasonable.
a. True
b. False
ANSWER: True
8. Business and nonbusiness bad debts are both deductible as a short-term capital loss.
a. True
b. False
ANSWER: False
9. Discovery, Inc., a cash-basis consulting firm, can deduct a twelve-month insurance premium in the year the premium is
paid even though the policy remains in effect into the following year.
Copyright Cengage Learning. Powered by Cognero. Page 1
Chapter 6
a. True
b. False
ANSWER: True
10. Legal expenses are generally deductible if they have a business purpose; they are generally not deductible if they
originate from a personal transaction.
a. True
b. False
ANSWER: True
11. If an employer reimbursement plan is an accountable plan, for an expense that is fully reimbursed the employee does
not have to report either the expense or the reimbursement .
a. True
b. False
ANSWER: True
12. 50% of the self-employment tax is deductible as a miscellaneous itemized deduction from adjusted gross income.
a. True
b. False
ANSWER: False
13. In 2016, a husband and wife who are less than 50 and qualify may contribute $12,000 to two separate IRA accounts as
long as their total income exceeds $12,000. The total amount contributed to each account cannot exceed $6,000.
a. True
b. False
ANSWER: False
14. Danielle graduated from State University in 2015. She paid $2,100 of interest during 2016 on her qualified educational
loan. The full amount is deductible.
a. True
b. False
ANSWER: True
15. For moving expenses to be deductible the distance test must be met, which requires that the commuting distance from
the old residence to the new job must be 50 miles further than the commuting distance was to the old job.
a. True
b. False
ANSWER: True
16. Donald had a party to publicize the opening of his new accounting office. He invited community and business leaders
to his office where food and beverage of $4,000 was served along with $1,000 of entertainment. How much of the total
cost can Donald deduct?
a. $- 0 -
b. $2,500
c. $3,000
d. $4,500
e. $5,000
Chapter 6
ANSWER: b
17. Larry is a self-employed insurance salesperson. He decides to take his best customer to a Pacers basketball game.
Larry is able to buy two floor seat tickets for $500 each. The face amount of the tickets is $200 each. How much of the
total cost can Larry deduct?
a. $- 0 -
b. $ 200
c. $ 400
d. $ 500
e. $1,000
ANSWER: b
18. The Wondercress Advertising agency rents a skybox at the Metrodome where the Minnesota Vikings plays its home
games. The cost of the skybox for the season is $60,000 and includes ten tickets to each game. The team plays 8 games a
year at the arena. The most expensive non-luxury box seat is $125. After acquiring a new advertising client, the president
of the agency invites 9 business associates to watch a game in the company skybox. Food and drinks cost $900. What
amount can Wondercress deduct as meal and entertainment expense?
a. $- 0 -
b. $1,075
c. $2,100
d. $2,150
e. $4,200
ANSWER: b
19. The Crown Howe Accounting firm rents a skybox at Lucas Oil Field where the Indianapolis Colts play their home
games. The cost of the skybox for the season is $80,000 and includes 8 tickets to each game. The team plays 10 games a
year at the arena. The most expensive non-luxury box seat is $200. After acquiring a new accounting client, the Managing
partner invites 5 business associates to watch a game in the firm skybox. Food and drinks cost $800. What amount can
Crown Howe deduct as meal and entertainment expense?
a. $1,000
b. $1,200
c. $2,000
d. $2,400
e. $4,400
ANSWER: b
20. After negotiating a new supply contract with Jim, Beth takes him to dinner at the Magnolia Cafe. The dinner costs
$94. The amount includes tip ($15) and sales tax ($5). Cab fare to and from the restaurant is $20. How much can Beth
deduct for the evening's expenditures?
a. $ 47
b. $ 52
c. $ 67
d. $ 94
e. $114
ANSWER: c
21. Olga is a technical sales consultant for Interactive Systems Corporation (ISC) based in San Diego. While on business
Chapter 6
in Boise, she entertains several clients at a cost of $600. When she returns to San Diego, Olga gives ISC receipts and other
information to account for the entertainment expense. ISC reimburses Olga $600. How much can Olga and ISC deduct?
Olga ISC
a. $- 0 - $- 0 -
b. $- 0 - $300
c. $- 0 - $600
d. $300 $- 0 -
e. $600 $300
ANSWER: b
22. Sandra, who owns a small accounting firm, pays $1,500 to the local country club for food and entertainment for her
annual employee Christmas party. How much of the $1,500 in meals and entertainment cost can Sandra deduct?
a. $- 0 -
b. $500
c. $750
d. $1,000
e. $1,500
ANSWER: e
23. Rodrigo works as a salesperson for a auto parts manufacturer. His job requires that he spend most of his time outside
the office calling on customers. In addition, to supplement his income he works 1 night a week and on weekends as a
waiter at an exclusive seafood restaurant in the city. During the year, he keeps the following record of his travel:
Miles
Home to office 850
Office to home 425
Office to restaurant 300
Restaurant to home 1,200
Home to restaurant 725
Office to customers to office 7,100
Customers to restaurant 400
Total miles 11,000
If he uses the standard mileage rate, what amount can she deduct as a business automobile expense?
a. $3,621
b. $3,774
c. $3,941
d. $4,212
e. $6,105
ANSWER: d
24. Donna is an audit supervisor with the IRS and on January 4, 2016 she uses her car in the following manner.
Personal residence to her office at the IRS. 8 miles
IRS office to X Corp to supervise new audit activities. 10 miles
X Corp to Y Corp to supervise ongoing audit activities 6 miles
From Y Corp. to personal residence 7 miles
What amount of Donna's mileage for this day is qualified business mileage?
a. 10 miles.
Chapter 6
b. 16 miles.
c. 17 miles.
d. 23 miles.
e. 31 miles.
ANSWER: b
25. Walker, an employee of Lakeview Corporation, drives his automobile 18,000 business miles during 2016. He pays
tolls of $145 while traveling on business. What amount can Walker deduct as unreimbursed transportation expenses
before considering any limitations on itemized deductions?
a. $9,720 for AGI.
b. $9,865 for AGI.
c. $9,720 from AGI.
d. $9,865 from AGI.
ANSWER: d
26. Penny owns her own business and drives her car 12,000 miles a year for business and 3,000 miles a year for
commuting and personal use. She wants to claim the largest tax deduction possible for business use of her car. Her total
expenses related to her auto for 2016 are as follows:
Gas, oil, and maintenance $4,050
Insurance 720
Interest on car loan 500
Depreciation 2,960
License 80
Parking fees and tolls (100% business) 130
Penny's total deduction for business use of the auto in 2016 is:
a. $6,378
b. $6,778
c. $6,850
d. $6,610
e. $7,310
ANSWER: d
27. Mercedes is an employee of MWH company and drives her car 12,000 miles a year for business and 3,000 miles a
year for commuting and personal use. She is not reimbursed by her employer. She wants to claim the largest tax deduction
possible for business use of her car, before any limitations on itemized deductions. Her total auto expenses for 2016 are as
follows:
Gas, oil, and maintenance $4,600
Insurance 720
Depreciation 2,960
License 80
Parking fees and tolls (100% business) 130
Mercedes's total 2016 deduction for automobile use is:
a. $6,420
b. $6,818
c. $6,790
d. $7,030
Chapter 6
e. $7,250
ANSWER: b
28. Alfred uses his personal automobile in his business of selling party supplies to local businesses. He bought a new car
in 2016 and drove it a total of 20,000 miles of which 2,000 miles were for commuting and other personal uses. Actual gas,
oil, repairs, licensing, insurance, and depreciation totaled $11,000 for 2016. Actual parking expenses for business were
$200. What is the maximum amount Alfred can deduct for 2016?
a. $9,750
b. $10,100
c. $10,170
d. $10,550
e. $11,200
ANSWER: b
29. Lester uses his personal automobile in his business of selling insurances. He bought a new car in 2016 and drove it a
total of 30,000 miles of which 3,000 miles were for commuting and other personal uses. Actual gas, oil, repairs, licensing,
insurance, and depreciation totaled $16.500 for 2016. Actual parking expenses for business were $200. What is the
maximum amount Lester can deduct for 2016?
a. $13,050
b. $13,970
c. $14,780
d. $15,050
e. $15,725
ANSWER: d
30. During 2016, Marsha, an employee of G&H CPA firm, drove her car 24,000 miles. The detail of the mileage is as
follows:
Personal Use 3,000 miles
Transportation between home and office 3,000 miles
Transportation to and from clients' offices 18,000 miles
Marsha's 2016 records show that her car expenses totaled $14,320. The details of the expenses are as follows:
Gas, oil, and repairs 9,260
Insurance and licensing 1,500
Depreciation 2,960
Tolls and parking at clients’ offices 200
What is the amount of her deduction for her use of the car?
a. $9,000
b. $9,920
c. $10,490
d. $10,640
e. $10,790
ANSWER: c
31. In 2016, Eileen, a self-employed nurse, drives her car 20,000 miles, of which 12,000 miles pertain to business.
Expenses concerning the car include the following:
Chapter 6
Gas and oil $5,720
Auto license tag 90
Insurance 900
Repairs 700
Tires 400
Parking during business use 300
Tolls during business use 150
Depreciation 2,960
Assuming Eileen purchases the car in 2016 and she wants to use the most advantageous method to determine her 2016
deduction for automobile expense, what amount can Eileen deduct as auto expenses?
a. $5,964
b. $6,780
c. $6,930
d. $7,350
e. $11,220
ANSWER: c
32. Which of the following business expenses is/are subject to a 50% deduction limit for 2016?
I. Meals while traveling
II. Lodging while traveling
a. Only statement I is correct.

b. Only statement II is correct.
c. Both statements are correct.
d. Neither statement is correct.
ANSWER: a
33. Which of the following business expenses is/are subject to a 50% deduction limit for 2016?
I. Gifts
II. Incidental expenses while traveling

ANSWER: d
34. Arlene, a criminal defense attorney inherits $500,000 from her grandmother. Unsure of how to invest the money,
Arlene attends a three-day investment seminar in New York. Arlene attends all the sessions and receives a certificate for
successfully completing the seminar. Her expenses to attend the seminar are as follows:
Airfare $450
Hotel daily rate 110
Meals @ $40 per day 40
Incidentals @ $15 per day 15
Entertainment 140
What amount may she deduct as travel expenses for the seminar?
a. $- 0 -
b. $780

Chapter 6
c. $825
d. $885
e. $955
ANSWER: a
35. Julie travels to Mobile to meet with a client. While in Mobile, she spends 4 days meeting with the client and one-day
sightseeing. Her husband Harry goes with her and spends all 5 days sightseeing and playing golf. The cost of the trip is as
follows:
Airfare $540 for each person.
Lodging at hotel $150/day (Single Occupancy Rate = $125).
Meals $75/day for each person.
Incidental expenses $20/day for Julie. $15/day for Harry.
If Julie is self-employed, what is the amount of the deduction she may claim for the trip?
a. $730
b. $1,270
c. $1,370
d. $1,420
e. $1,520
ANSWER: b
36. Carlotta pays $190 to fly from Santa Fe to Denver. She spends three days finalizing a contract with the management of
El Rancho Restaurant for the delivery of green chili in the upcoming year. Because she finalized the contract, Carlotta
spends two-days attending the National Western Stock Show. Hotel costs are $108 per night and meals are $22 per day.
How much can Carlotta deduct as business expenses from her trip?
a. $190
b. $514
c. $547
d. $580
e. $763
ANSWER: c
37. Jason travels to Miami to meet with a client. While in Miami, he spends 2 days meeting with his client and 3 days
sightseeing. Mary, his wife, goes with him and spends all 5 days sightseeing and shopping. The cost of the trip is as
follows:
Airfare $540 for each person.
Lodging at hotel $150 per day (same rate for single and double rooms).
Meals $75 per day for each person.
Incidental expenses $20 per day for Jason. Mary kept no records.
If Jason is self-employed, what is the amount of the deduction he may claim for the trip?
a. $- 0 -
b. $415
c. $490
d. $955
e. $1,765
ANSWER: b

Chapter 6
38. Ernest went to Boston to negotiate several new contracts with clients. His airfare was $400 and he spent $150 per day
on lodging, $40 per day on meals, and a total of $60 on cab fare.
I. If Ernest spends 2 days on business and 3 days on personal activities, he can deduct $160 of
his airfare.
II. If Ernest spends 3 days on business and 2 days on personal activities, he can deduct $120 of
the meal costs.

ANSWER: d
39. Caroline is a doctor in Little Rock. She travels to Atlanta to attend a two-day seminar for health professionals about
investing in real estate. Transportation expenses are $400, the hotel cost $104/day, and meals cost $50/day. How much
can Caroline deduct for travel to the seminar?
a. $- 0 -
b. $258
c. $308
d. $658
e. $708
ANSWER: a
40. Carter is a podiatrist in Minneapolis. He travels to Milwaukee to attend a two-day seminar for health professionals
about investing in commodities. Transportation expenses are $140, the hotel cost $125/day, and meals cost $60/day. How
much can Carter deduct for travel to the seminar?
a. $- 0 -
b. $140
c. $390
d. $450
e. $510
ANSWER: a
41. Francine operates an advertising agency. To show her appreciation to her 10 best customers, she sends a box of fancy
chocolate, costing $75 a box, to each of them. How much of the cost of the chocolates can Francine deduct as a business
gift?
a. $- 0 -
b. $125
c. $250
d. $375
e. $750
ANSWER: c
42. Kadian purchases a block of 10 tickets to next Saturday's basketball game. The tickets cost $45 each. He keeps two
tickets for himself and gives the remaining tickets to his business customers. Each customer receives two tickets, and
Kadian told all of them he would see them Saturday night. How much can Kadian deduct?
a. $- 0 -

Chapter 6
b. $180
c. $200
d. $360
e. $450
ANSWER: c
43. Which of the following information is not required for substantiation of business entertainment expenditures?
a. Time and place of event.
b. Specific business purpose of the event.
c. Receipt to provide evidence of amount of expenditure.
d. Identity of, and business relationship to, those persons attending the event.
e. All of the above information is required to substantiate business entertainment.
ANSWER: e
44. Entertainment, auto, travel, and gift expenses are subject to strict documentation requirements. Taxpayers are required
to keep records that show
I. The business purpose of the event.
II. The time and place of the event.

ANSWER: c
45. George is a full-time student at Indiana State University majoring in accounting. He works 12 to 20 hours per week at
a local CPA firm inputting data for spreadsheets to prepare monthly financial statements for the firm's clients. George's
tuition, fees, books, and supplies related to his education are $3,000 for the current year.
I. The educational costs are deductible from AGI because they prepare him for a new trade or
business.
II. The education costs are deductible because it is part of a program that will qualify George
to become a CPA.

ANSWER: d
46. Safina, a single taxpayer with adjusted gross income of $100,000, works as an engineer for the Wabash Corporation.
The corporation reimburses all its employees 80% of tuition, fees and books for courses taken at the local university.
Safina incurs $8,000 of expenses and can deduct the remaining 20% of the education expense
I. Only if the course improves her skills as an engineer.
II. Is not a deduction for adjusted gross income.

Chapter 6
ANSWER: c
47. Matthew, a single taxpayer with adjusted gross income of $90,000, works as a computer programmer for the Novak
Corporation. The corporation reimburses all its employees 50% of tuition, fees and books for courses taken at the local
university. Matthew incurs $6,000, is reimbursed $3,000, and can deduct the remaining $3,000 of the education expense
I As a deduction for adjusted gross income.
II. Only if the course is required by state law to continue in his current job.

ANSWER: d
48. Nora is the CEO of the publicly traded Micro Tech Corporation. The company paid her a salary of $1,030,000 and
made mortgage payments of $30,000 on her behalf. How much is deductible as compensation expense?
a. $- 0 -
b. $ 510,000
c. $1,000,000
d. $1,060,000
e. $1,030,000
ANSWER: c
49. Which of the following taxpayers can claim a business bad debt deduction for the current year?
I. Johnson is a dentist using the cash basis of accounting. He has accounts receivable from
patients totaling $7,800 that are more than 90 days past due.
II. George owns and operates a sporting goods store and uses the accrual method of
accounting. He has several customers who have owed him money for more than 10 months.

ANSWER: b
50. Which of the following taxpayers can claim a business bad debt deduction for the current year?
I. Sylvia lent her neighbor $4,000 to put a new roof on his home. Because they have been
friends for over 15 years, Sylvia trusted her neighbor to pay her back and didn't make him
sign a note with interest. The neighbor has left town and Sylvia will not get any of her
money back. Her loss is properly related to this year using the cash basis of accounting.
II. Saul is an attorney using the cash basis of accounting. One of his clients is short of money to
pay the utilities in the office building Saul rents from him. Saul advances the client $5,000.
Saul has just learned that the client has filed bankruptcy and that Saul will not be repaid for
any part of the loan.

Chapter 6
ANSWER: d
51. Peter, proprietor of Peter's Easy Loan Company, loaned Jessie $4,000 on December 1, 2014. The loan is to be repaid
on December 1, 2015, along with $600 interest. On July 10, 2015, Peter learns that Jessie has filed for personal
bankruptcy and that non-secured creditors will receive only $0.60 on the dollar. Peter actually receives nothing until
February 24, 2016. On that date, Peter receives a check for $1,000 from Jessie's bankruptcy proceedings in final
settlement of the loan. How should Peter account for the loan to Jessie?
a. $1,600 short-term capital loss in 2015; and $1,400 short-term capital loss in 2016.
b. $3,000 ordinary loss in 2015.
c. $2,400 ordinary loss in 2015.
d. $1,600 ordinary loss in 2015; and $1,400 ordinary loss in 2016.
e. $3,000 short-term capital loss in 2016.
ANSWER: d
52. Garcia is a self-employed chiropractor and a cash basis taxpayer. During the most recent tax year, he provides patient
services totaling $400,000. Of that total amount, he estimates $20,000 will never be collected. How much can Garcia
deduct as a bad debt expense in the current tax year?
a. $- 0 -
b. $6,000
c. $10,000
d. $14,000
e. $20,000
ANSWER: a
53. In July of this year, Sam performs financial consulting services for William. On August 1, Sam sends William a bill
for $1,200. As of September 30, Sam had not heard from William. After repeated efforts to collect the fee, Sam discovers
in November that William has left the state and cannot be found. If Sam is an accrual basis taxpayer, for the current year
he can deduct
a. $- 0 -
b. A $800 ordinary loss
c. A $1,200 ordinary loss
d. A $1,200 short-term capital loss
e. A $1,200 long-term capital loss
ANSWER: c
54. During 2015, Wendy, a biologist, made a bona fide $10,000 loan to her friend Ben when he was in a time of need. Ben
dies in 2016. Wendy has been informed by Ben's estate that creditors can expect to receive 40% of amounts owed to them.
No payments to creditors are made from Ben's estate in 2016. Wendy's maximum deduction in 2016 is
a. $- 0 -
b. $3,000
c. $4,000
d. $6,000
ANSWER: a
55. Which of the following best describes the tax treatment of losses from uncollectible business debts?
a. Such losses are not deductible.
Chapter 6
b. Such losses are limited to $3,000 per year.
c. Such losses are treated as short-term capital losses.
d. Such losses are deductible without limitation as an ordinary loss.
ANSWER: d
56. Byron loaned $5,000 to his friend Alan in 2011. They drew up a formal loan agreement that called for a reasonable
rate of interest. Alan used the loan proceeds to pay expenses during his last year in college. Byron was recently informed
that his friend Alan was struck by lightning and died. Byron will never be able to collect the proceeds of this loan because
Alan died with no assets. What tax benefit, if any, will Byron will be able to claim in 2016, the year that the loan became
worthless.
a. $5,000 tax credit.
b. $5,000 ordinary loss.
c. $5,000 short-term capital loss.
d. This is a personal non-deductible loss.
ANSWER: c
57. During 2015, Virginia, an architect, made a bona fide $7,500 loan to her friend Joe when he was in a time of need. Joe
died in 2016. Virginia has been informed by Joe's estate that he was insolvent. Virginia should record the nonpayment of
the loan as
a. An ordinary loss.
b. An itemized deduction.
c. A short-term capital loss.
d. A long-term capital loss.
e. Nothing. It cannot be deducted.
ANSWER: c
58. During 2015, Wan-Ying, a lawyer, made a bona fide $5,750 loan to her friend Bill when he was in a time of need. Bill
died in 2016. Wan-Ying has been informed by Bill's estate that he was insolvent. What is her deduction ton her 2016 tax
return (she has no other capital transactions)?
a. $- 0 -
b. $1,500
c. $3,000
d. $3,500
e. $5,750
ANSWER: c
59. Three years ago Edna loaned Carol $80,000 to help her get started in the TV repair business. Carol gave Edna a 5-
year, 9% note with semiannual repayment terms. Edna and Carol have been friends for over 35 years. Edna is a recently
retired college professor with a significant portfolio of investments. During the current year, Carol became ill and couldn't
continue operating the business. She has repaid $10,000 of the debt owed Edna. Because Carol has no remaining assets,
no additional payments will be made to any of her creditors. For the current year, Edna realizes a
a. $- 0 -
b. $70,000 ordinary loss
c. $70,000 long-term capital loss
d. $70,000 short-term capital loss
e. $80,000 ordinary loss
ANSWER: d
Chapter 6
60. Marsh Harbor Company manufactures fishing gear. Its taxable income in 2016 before the Qualifying Production
Activities Deduction (QPAD) is $4,000,000 and its qualified production activities income is $3,500,000. Its qualifying W-
2 wages paid are $300,000. How much may Marsh Harbour claim as its QPAD deduction in 2016?
a. $150,000
b. $175,000
c. $210,000
d. $300,000
e. $315,000
ANSWER: a
61. Milroy Company manufactures steering wheels. Its taxable income in 2016 before the Qualifying Production
Activities Deduction (QPAD) is $2,000,000 and its qualified production activities income is $2,500,000. Milroy’s
qualifying W-2 wages paid are $400,000. How much may Milroy take as it QPAD deduction in 2016?
a. $100,000
b. $180,000
c. $200,000
d. $225,000
e. $280,000
ANSWER: b
62. Which of the following is true regarding the Qualified Production Activities Deduction (QPAD)?
I. The QPAD deduction is limited to 9% of the lessor of taxable income before the QPAD
deduction or qualified production activities income
II. The QPAD deduction cannot exceed 50% of W-2 wages allocated to QPAD activities.

ANSWER: c
63. Raisor Corporation pays an annual premium of $12,000 on the whole life insurance policy on the life of Wilson, the
founder and CEO of the corporation. The corporation is the beneficiary of the multi-million dollar policy.
I. The corporation can deduct the premiums.
II. If Wilson dies, the corporation will receive the policy proceeds tax-free.
III. If Wilson's wife is the beneficiary instead of the corporation, the amount of the premiums
paid is a tax-free fringe benefit for Wilson.
IV. If Wilson's wife is the beneficiary instead of the corporation, the corporation can deduct the
amount of premiums paid as compensation.
a. Statements I, II, and III are correct.

b. Statements I and II are correct.
c. Only statement II is correct.
d. Statements II and IV are correct.
e. Statements I, II, and IV are correct.
ANSWER: d

Chapter 6
64. During the current year, Hope Corporation paid a $3,250 premium for a life insurance policy on the life of the chief
executive officer, Joel. Determine the deductibility of the $3,250.
I. Hope could deduct the premium as compensation if Joel's daughter is the stated beneficiary
of the policy.
II. The premium is not deductible if Hope Corporation is the beneficiary.

ANSWER: c
65. Which of the following taxes paid by the Sill Engineering Company can be deducted during 2016?
I. Federal taxes withheld from employees.
II. Sill Engineering's share of employee's Social Security taxes.

ANSWER: b
66. Which of the following taxes paid by the Fowlers Company can be deducted during 2016?
I. State sales tax on utilities.
II. Federal income tax paid in 2016 when filing Fowlers' 2015 corporate tax return.

ANSWER: a
67. Which of the following taxes paid by Woodhaven Inc. can be deducted during 2016?
I. Special real estate tax assessment for upgrading the sewer.
State income taxes paid in 2016 when filing Woodhaven's 2015 corporate return tax
II.
return.

ANSWER: b
68. Which of the following taxes paid by Trevor Products, Inc. can be deducted during 2016?
I. Real estate taxes.
II. Sales tax on purchase of new equipment.

Chapter 6
ANSWER: a
69. Drew incurs the following expenses in his grocery store business. Drew can deduct the following as business expenses
in the current year
I. $3,750 for advertising on the web.
II. $2,000 of interest expense related to the purchase of a new delivery truck.

ANSWER: c
70. Winslow owns a residential rental property with an adjusted basis of $200,000 at the beginning of the current year.
The county treasurer sends Winslow a tax bill payable by December 31. The bill is for real estate property taxes of $1,200
for the current calendar year and for a $6,000 special assessment for a new sewer line. On November 1, Winslow sells the
property to Edwin for $225,000. As part of the sale contract, Winslow will pay the special assessment at closing and
Edwin agrees to pay the realty taxes on the due date. What is Winslow's gain on the sale?
a. $19,000
b. $20,000
c. $21,000
d. $25,000
e. $26,000
ANSWER: b
71. Sidney owns a residential rental property with an adjusted basis of $200,000 at the beginning of the current year. The
county treasurer sends Sidney a tax bill payable by December 31. The bill is for real estate property taxes of $1,200 for
the current calendar year and for a $6,000 special assessment for a new sewer line. On November 1, Sidney sells the
property to Donald for $225,000. As part of the sale contract, Sidney will pay the real estate taxes of $1,200 at closing and
Donald agrees to pay the special assessment of $6,000 on the due date. What is Sidney's gain on the sale?
a. $19,800
b. $20,000
c. $21,000
d. $24,800
e. $29,800
ANSWER: e
72. On May 1, 2016, Linda sells her rental property for $125,000. Her basis in the property at the beginning of the year is
$75,000. As part of the sales contract, the buyer agrees to pay the real property taxes of $1,500 for the current year when
they come due on December 31, 2016.
I. Linda has a gain on the sale of the rental property of $50,000.
II. Linda can deduct $500 in real estate taxes.

Chapter 6
ANSWER: b
73. Which of the following legal expenses paid by the Kerr Corporation can be deducted in the current year?
I. Legal fees to resolve a tax dispute with the Internal Revenue Service.
II. Legal fees to purchase land that will be used to expand its warehouse.

ANSWER: a
74. Which of the following legal expenses paid by the Sutton Corporation can be deducted in the current year?
I. Legal fees to initiate a lawsuit against a competitor who is using its patent.
II. Legal fees to settle a lawsuit filed by a delivery person who slipped on the ice delivering a
package to Sutton's office.

ANSWER: c
75. Gary, a sole proprietor, incurs the following expenses in his record store business. Gary can deduct the following as
business expenses in the current year
I. $3,000 in legal fees to acquire a competing record store.
II. $500 to the local police chief to not write parking tickets to his customers whose time ran-
out on parking meters in front of his store.

ANSWER: d
76. Walter recently received a notice of an income tax deficiency of $21,000 from the IRS. He hires an attorney to handle
his IRS problems. Walter's legal expenses are $4,000. Can Walter deduct the legal expenses?
I. He can deduct the full amount if the tax deficiency relates to his business.
He can deduct the full amount if the tax deficiency relates to income other than business
II.
income.
III. He can deduct the legal fees if the income tax deficiency is personal in nature.

c. Only statement III is correct.
d. Statements I and II are correct.
e. Statements I and III are correct.
ANSWER: d
Chapter 6
77. Which of the following expenses is not deductible for AGI?

a. Alimony paid.
b. Contributions to an IRA.
c. Moving expenses.
d. Interest on qualified student loans.
e. Interest expense related to an investment.
ANSWER: e
78. Deductions for adjusted gross income include

I. Contribution to a Roth IRA.
II. Contribution to conventional IRA

ANSWER: b
79. Deductions for adjusted gross income include

I. Transportation of household goods for a qualified move.
II. Unreimbursed employee business expenses for a nonaccountable plan.

ANSWER: a
80. Melissa is a corporate sales representative for Computer City. Melissa receives a monthly travel allowance from
Computer City to cover her travel costs (transportation, food, lodging, entertainment, etc.). If Melissa is required to
account to Computer City for the use of the travel advance and to return any excess travel advance
I. Melissa will not have to show any aspect of the travel reimbursement or expenses incurred
if she spends all of the reimbursement on valid travel expenses.
II. Melissa will have gross income to the extent her travel allowance used for travel expenses
reimbursed.

ANSWER: a
81. Sally is a corporate sales representative for Computer City. Sally receives a monthly travel allowance from Computer
City to cover her travel costs (transportation, food, lodging, entertainment, etc.). If Sally is not required to account to
Computer City for the use of the travel advance
I. Sally will not have to show any aspect of the travel reimbursement or expenses incurred if
she spends all of the reimbursement on valid travel expenses.
II. Sally will only have gross income to the extent her travel allowance exceeds her actual
Chapter 6
costs.

ANSWER: d
82. Victor is a sales representative for Valley Winery. Victor receives a monthly travel allowance from Valley to cover his
travel costs (transportation, food, lodging, entertainment, etc.). If Victor is required to account to Valley for the use of the
travel advance and to return any excess travel advance
I. To the extent Victor is reimbursed for less than his costs, part of his expenses are deducted
for AGI and part are deducted from AGI.
II. Victor must include the travel allowance in his gross income. His actual costs are
deductible from AGI, subject to all applicable limits on such deductions.

ANSWER: a
83. Richard is a sales person for Publix Company. Every month Richard fills out an expense account report, documenting
all his expenses and submits it for reimbursement. During the current year, Richard submitted documentation and receives
$12,500 of reimbursements. All his claims are reimbursed. How will these expenses and reimbursements affect Richard's
income tax calculation?
I. Expense amounts are deductible from AGI.
II. Reimbursed amounts are excluded from gross income.

ANSWER: b
84. Lynn is a sales representative for Textbook Publishing Company. He receives a monthly travel allowance from
Textbook to cover his travel costs (transportation, food, lodging, entertainment, etc.). If Lynn is not required to account to
Textbook for the use of the travel advance
I. Lynn will not have to show any aspect of the travel reimbursement or expenses incurred if
he spends all of the reimbursement on valid travel expenses.
II. To the extent Lynn is reimbursed for his costs he will get a deduction for AGI.

ANSWER: d
85. Ester is a sales representative for a pharmaceutical company. She receives a monthly travel allowance from the
Chapter 6
company to cover her travel costs (transportation, food, lodging, entertainment, etc.). If Ester is not required to account to
the company for the use of the travel advance
I. Ester will only have gross income to the extent her travel allowance exceeds her actual
costs.
II. Ester must include the travel allowance in her gross income. Her actual costs are deductible
from AGI, subject to all applicable limits on such deductions.

ANSWER: b
86. Natasha is an employee of The Johnson Company. She incurs a total of $7,500 in business expenses as follows:
Lodging $2,500
Transportation (no commuting) 3,500
Dues and subscriptions 1,500
Natasha receives reimbursement of $5,600 after an adequate accounting to her employer. Natasha's itemized deductions
before any limitations would be:
a. $- 0 -
b. $1,500
c. $1,900
d. $5,600
e. $7,500
ANSWER: c
87. Eloise is a sales representative for a video production company. While at an exposition, she incurs $2,000 in
entertainment expenses and $1,200 for meals. The expenses occur while she is discussing business and Eloise makes an
adequate accounting to her employer and is reimbursed $1,200. How much may Eloise deduct if her AGI is $40,000?
a. $- 0 -
b. $1,200 for AGI and $200 from AGI.
c. $1,200 for AGI and $2,000 from AGI.
d. $- 0 - for AGI and $200 from AGI.
e. $- 0 - for AGI and $1,000 from AGI.
ANSWER: b
88. Brees Co. requires its employees to adequately account for all reimbursed business expenses. Tracy, an employee of
Brees Co. has AGI of $50,000 and submitted for reimbursement the following valid business expenses:
Transportation costs $1,000
Meals 700
Entertainment costs 500
Hotel costs 800
What are the tax consequences if Brees reimburses Tracy $2,400?
I. Tracy must report $2,400 of income.
II. Tracy can deduct $2,400 of the expenses for AGI and $-0- as miscellaneous itemized
deductions, after limitations.

Chapter 6
ANSWER: c
89. Joline works as a sales manager for the Washington Manufacturing Company. Although the company has an
accountable reimbursement plan, as a cost containment measure the company will only reimburse its sales personnel for
80% of their business expenses. During the year, Joline incurred the following business expenses:
Airfare $3,000
Hotels 3,700
Meals 1,200
Entertainment 1,000
If Joline's adjusted gross income is $62,000, what amount can Joline deduct as a miscellaneous itemized deduction?
a. $320
b. $540
c. $890
d. $1,560
e. $1,780
ANSWER: a
90. Mathew works for Levitz Mortgage Company. The company has an accountable reimbursement plan. During the year
Levitz reimburses Mathew $5,400 for his business expenses. Mathew's adjusted gross income for the year is $45,000. His
business expenses are as follows:
Airfare $2,900
Hotel 1,900
Meals 1,400
Entertainment 1,000
What amount will Mathew be able to deduct as a miscellaneous itemized deduction?
a. $- 0 -
b. $600
c. $1,200
d. $1,500
e. $1,800
ANSWER: b
91. Brenda travels to Cleveland on business for her employer. She spends 4 days in meetings with a client. Brenda's plane
fare for the trip is $400. Meals cost $40 per day. Hotel and incidental costs amount to $150 per day. Brenda receives no
reimbursement for any expenses. Brenda's adjusted gross income for the year is $40,000. What is Brenda's deduction for
the trip?
a. $- 0 -
b. $280
c. $1,080
d. $1,160
e. $2,320
ANSWER: b

Chapter 6
92. Charlie is single and operates his barber shop as a sole proprietorship. During the current year, Charlie paid $2,200 for
his personal health insurance plan and $4,000 for health insurance for his employees. How much of these premiums can
be deducted for Charlie’s adjusted gross income?
a. $- 0 -
b. $2.200
c. $4,000
d. $5,100
e. $6,200
ANSWER: e
93. Margaret is single and is a self-employed proprietor of a convenience store near the mall. During the current year,
Margaret paid $4,000 for health insurance coverage for herself. She paid another $500 for coverage for her unrelated
employee, Corky. How should Margaret deduct the health insurance cost?
I. Margaret takes $500 as a business expense.
II. Margaret takes the $4,000 as a deduction for AGI.

ANSWER: c
94. Kyle is married and a self-employed landscaper. During the current year, Kyle pays $3,000 for health insurance
coverage for himself. He pays another $400 for coverage for his employee, Tabatha. How should Kyle deduct the health
insurance cost?
I. Kyle deducts a total of $3,400 for AGI.
II. Kyle cannot deduct any portion of his premium of $3,000 for AGI if his spouse is covered
by a health plan through her employer.

ANSWER: c
95. Oliver owns Wifit, an unincorporated sports store. In 2016 Wifit earned $100,000, before Oliver drew out a salary of
$60,000. What is Oliver’s 2016 deduction for self-employment taxes?
a. $2,826
b. $7,065
c. $7,650
d. $14,130
e. $15,300
ANSWER: b
96. Concerning individual retirement accounts (IRAs),

I. A single taxpayer that is not an active participant in a qualified plan may deduct up to
$6,000 of the annual contribution.
II. A taxpayer that is not working outside of the home may not deduct any amount if their
Chapter 6
spouse is an active participant in a qualified plan, unless their AGI is below $61,000.

ANSWER: d
97. Rhonda and Ralph are married. Rhonda earns $81,000 annually, and Ralph earns $6,000 annually working part-time.
Their AGI is $108,000. Rhonda participates in an employer-sponsored retirement plan. Ralph's company does not have a
pension plan. Rhonda and Ralph contribute the maximum amount allowable annually to their IRAs. What is their
allowable deduction for this year's contributions?
a. $0 -
b. $2,200
c. $5,500
d. $8,000
e. $11,000
ANSWER: c
98. Chi is single and an employee of Federal Company. Chi's adjusted gross income for the current year is $63,000. Chi
would like to make the maximum contribution to his individual retirement account this year. Which of the following
statements about Chi's contribution and deduction amounts is (are) true?
I. He is not allowed to make an IRA contribution because his adjusted gross income is greater
than $61,000.
II. If Federal Company does not have a qualified pension plan; Chi can contribute and deduct
a maximum of $5,500 to his IRA account.

ANSWER: b
99. Chelsea is an employee of Avondale Company. Chelsea's adjusted gross income for the current year is $65,000.
Chelsea would like to make the maximum contribution to her individual retirement account this year. Which of the
following statements about Chelsea's contribution and deduction amounts is (are) true?
I. If Chelsea is single and is covered by a qualified pension plan, she is allowed to contribute
$5,500 to her IRA account, but she is allowed a deduction for only $3,300 of the
contribution because her adjusted gross income is greater than $61,000.
II. If Chelsea is married and covered by a qualified pension plan and her husband does not
work, they can contribute and deduct $5,500 to two separate IRA accounts (one for herself
and one for her husband).

ANSWER: c

Chapter 6
100. Darlene and Devin are married. Darlene earns $48,000 and Devin earns $41,000. Their adjusted gross income is
$97,000. Darlene's employer provides her with a qualified pension plan, Devin's does not. What are Darlene and Devin's
maximum combined IRA contribution and deduction amounts?
Contribution Deduction
a. $11,000 $5,000
b. $11,000 $6,000
c. $11,000 $8,000
d. $11,000 $10,725
e. $11,000 $11,000
ANSWER: e
101. Aaron is a 34-year-old head of household and a self-employed taxpayer. He contributed the maximum amount to his
IRA account during the current year, and his net earnings from his business totaled $29,000. How much can Aaron deduct
for AGI this year?
a. $- 0 -
b. $3,200
c. $3,800
d. $5,000
e. $5,500
ANSWER: e
102. Hector is a 54-year-old head of household and a self-employed taxpayer. He contributed the maximum amount to his
IRA account during the current year, and his net earnings from his business totaled $36,000. How much can Hector
deduct for AGI this year?
a. $- 0 -
b. $3,200
c. $5,500
d. $6,000
e. $6,500
ANSWER: e
103. Arturo and Josephina are married with salaries of $47,000 and $48,000, respectively. Their combined AGI is
$101,000. Josephina is an active participant in her company's qualified pension plan while Arturo is not. Determine
Arturo and Josephina’s combined IRA contribution and deduction amounts?
Maximum Maximum
a. $5,500 $2,750
b. $11,000 $2,750
c. $11,000 $5,500
d. $11,000 $10,175
e. $11,000 $11,000
ANSWER: d
104. Fred and Irma are married with salaries of $49,000 and $44,000, respectively. Their combined AGI is $108,000.
Both are active participant in their companies’ qualified pension plans. Determine their maximum combined IRA
contribution and deduction amounts?
Chapter 6
Maximum Maximum
a. $5,500 $ 2,750
b. $11,000 $2,750
c. $11,000 $5,500
d. $11,000 $7,500
e. $11,000 $11,000
ANSWER: c
105. Marshall and Michelle are married with salaries of $80,000 and $64,000, respectively. Their combined AGI is
$184,000. Michelle is an active participant in her company's qualified pension plan while Marshall is not. Determine the
maximum combined IRA contribution and deduction amounts?
Maximum Maximum
a. $5,500 $2,750
b. $11,000 $5,500
c. $5,500 $5,500
d. $11,000 $7,500
e. $ 11,000 $ 11,000
ANSWER: b
106. Mark and Cindy are married with salaries of $45,000 and $42,000, respectively. Adjusted gross income on their
jointly filed tax return is $98,000. Both individuals are active participants in employer provided qualified pension plans.
What is the maximum amount each person may deduct for AGI with regard to IRA contributions?
Mark Cindy
a. $1,000 $1,000
b. $5,225 $5,225
c. $3,200 $3,200
d. $- 0 - $-0-
e. $ 5,500 $5,500
ANSWER: e
107. Dan and Dawn are married and file a joint return. During the current year, Dan had a salary of $30,000 and Dawn
had a salary of $36,000. Both Dan and Dawn are covered by an employer-sponsored pension plan. Their adjusted gross
income for the year is $95,000. Determine the maximum IRA contribution and deduction amounts.
Maximum Maximum
a. $11,000 $11,000
b. $11,000 $- 0 -
c. $11,000 $5,500
d. $5,500 $-0-
e. $8,000 $8,000
ANSWER: a

Chapter 6
108. Carl, age 59, and Cindy, age 49, are married and file a joint return. During the current year, Carl had a salary of
$41,000 and Cindy had a salary of $35,000. Both Carl and Cindy are covered by an employer-sponsored pension plan.
Their adjusted gross income for the year is $94,000. Determine the maximum IRA contribution and deduction amounts.
Maximum Maximum
a. $12,000 $12,000
b. $11,000 $11,000
c. $12,000 $11,000
d. $11,000 $9,000
e. $13,000 $13,000
ANSWER: a
109. Kevin, single, is an employee of the Colonial Company and is an active participant in its pension plan. Kevin's
adjusted gross income for the current year is $59,000. Kevin contributes $1,000 to his conventional individual retirement
account. Which of the following statements about Kevin contributions and deduction amounts is (are) true?
I. He is allowed to deduct his $1,000 contribution to his conventional IRA.
II. Kevin can also contribute but not deduct $4,500 to his Roth IRA.

ANSWER: c
110. Mollie is single and is an employee of the Royal Corporation. She is an active participant in the company's pension
plan. Mollie's adjusted gross income is $116,000 and she has never established an IRA account. How much can Mollie
contribute to a Roth IRA?
a. $- 0 -
b. $1,000
c. $2,750
d. $4,400
e. $5,500
ANSWER: e
111. Margie is single and is an employee of the Stitch Corporation. She is an active participant in the company's pension
plan. Margie's adjusted gross income is $65,000 and she contributes the maximum amount allowable as a deduction to her
IRA account during the current year. How much can Margie contribute to her Roth IRA?
a. $- 0 -
b. $1,000
c. $2,200
d. $4,000
e. $5,500
ANSWER: c
112. Fred and Flossie are married and their adjusted gross income is $194,000. Both Fred and Flossie are active
participants in their company's qualified pension plan and have never established an Individual Retirement Account. What
is the maximum combined amount they can contribute to Roth IRAs?
Chapter 6
a. $- 0 -
b. $2,000
c. $5,500
d. $8,000
e. $11,000
ANSWER: a
113. Homer and Marge are married and have an adjusted gross income of $183,000. Currently, neither is covered by an
employer sponsored pension plan. They have never established an Individual Retirement Account until this year, when
they opened a Roth IRA. What is the maximum amount they can each contribute to Roth IRAs?
a. $1,000
b. $2,000
c. $2,750
d. $4,950
e. $5,500
ANSWER: e
114. Alex and Alicia are married and have two children ages 5 and 9. Their adjusted gross income for the year is $86,000.
During the year they establish a Coverdell Education Savings Account (CESA) for each child.
I. They can contribute $2,000 to each child's CESA.
II. They can deduct the CESA contributions for their adjusted gross income.

ANSWER: a
115. Laura and Jason are married and have 3 children ages 2, 6, and 8. Their adjusted gross income for the year is
$95,000. The maximum they can contribute to their children's Coverdell Education Savings Accounts is
a. $- 0 -
b. $667
c. $1,500
d. $2,000
e. $6,000
ANSWER: e
116. James has three nieces, ages 11, 16, and 19 and is single. His adjusted gross income for the year is $100,000. The
maximum he can contribute to their Coverdell Education Savings Accounts is
Each Account Total Contribution
a. $1,333 $2,667
b. $1,333 $4,000
c. $2,000 $4,000
d. $2,000 $6,000
e. $6,000 $6,000
ANSWER: b
Chapter 6
117. Phil and Faye are married and have 3 children ages 11, 14, and 17. Phil and Faye’s adjusted gross income for the
year is $200,000. The maximum they can contribute to their children's Coverdell Education Savings accounts is
Each Account Total Contribution
a. $- 0 - $-0-
b. $1,333 $4,000
c. $2,000 $4,000
d. $2,000 $6,000
e. $6,000 $6,000
ANSWER: b
118. Carlos is single and has a 7 year-old child. Carlos' adjusted gross income for the year is $101,000. The maximum
amount he can contribute to his child's Coverdell Education Savings Account is
a. $- 0 -
b. $800
c. $1,200
d. $2,000
e. $4,000
ANSWER: c
119. Karen is single and graduated from Marring University in May of 2015. In January of 2016, she begins repaying her
student loans and in 2016 pays $2,800 of interest on the loans. Her adjusted gross income is $51,000.
I. Karen can deduct $2,500 of interest as a deduction for adjusted gross income.
II. Karen can deduct $2,800 of interest as a deduction from adjusted gross income.

ANSWER: a
120. Victor is single and graduated from Wabash College in May of 2015. In January of 2016, he begins to repay his
student loans. During the year he pays $1,500 of interest on the loans. His adjusted gross income for the year is $65,000.
Victor can deduct student loan interest of
a. $- 0 -
b. $800
c. $1,000
d. $1,200
e. $1,500
ANSWER: e
121. Martha is single and graduated from Ivy Tech in May of 2015. In January of 2016, she begins repaying her student
loans and pays interest on the loans of $2,600 in 2016 and $1,200 in 2017. Her adjusted gross income in 2016 is $63,000
and is $80,000 in 2017. Martha can deduct student loan interest of
2016 2017
a. $- 0 - $-0-
b. $2,000 $1,200
Chapter 6
c. $2,500 $1,200
d. $2,000 $-0-
e. $2,500 $-0-
ANSWER: e
122. Which of the following is (are) correct concerning the time test for deducting moving expenses?
Self-employed individuals must work in the new location for 39 weeks during a 2-year
I.
period.
II. A transfer of the employee by the employer waives the time requirement.

ANSWER: b
123. Thomas changes jobs during the year and moves from Philadelphia to El Paso. Which of the following expenses
relating to the move can Thomas deduct?
I. Prior to the move, Thomas flies to El Paso to find an apartment.
II. The cost of meals while driving his household goods to El Paso.

ANSWER: d
124. Carla changes jobs during the year and moves from Oklahoma City to Orlando. Which of the following expenses
relating to the move can Carla deduct?
Upon arriving in Orlando, her apartment is not ready so she spends 2 nights in a local
I.
hotel.
II. Gas and tolls during the move to Orlando.

ANSWER: b
125. Jay obtains a new job in Boston and moves from Reno during the current year. He incurs the following moving
expenses:
Transportation of household goods $5,700
House-hunting trips to Boston 600
Cost of transporting Jay's family 2,300
Meals incurred while moving the family 200
Temporary living expenses while waiting for the new residence to be ready 1,000
What is Jay's moving expense deduction?
a. $- 0 -
Chapter 6
b. $5,700
c. $8,000
d. $9,700
e. $9,800
ANSWER: c
126. Julian and Deloris move during the current year from their home in Houston to Santa Fe. Julian was a rocket scientist
with NASA in Houston and has accepted a new job with the Los Alamos research lab near Santa Fe. Moving expenses
and reimbursement information are presented below.
Direct costs of moving themselves, furnishings and other personal belongings to Santa Fe total
•
$8,000.
• A house-hunting trip before their move to Santa Fe resulted in the total costs of $2,500.
Julian and Deloris incurred commissions and legal costs in the amount of $12,000 in
•
conjunction with the sale of their Houston residence.
Los Alamos research laboratories reimbursed Julian and Deloris for $5,000 of their moving
•
costs.
What is their Moving Expense deduction?
a. $17,500 deduction from AGI.
b. $8,000 deduction for AGI.
c. $10,500 deduction from AGI.
d. $3,000 deduction for AGI.
e. $22,500 decution from AGI.
ANSWER: d
127. For each of the following situations, determine whether the item is deductible, how it would be deducted on the
taxpayer's return (if there are alternatives possible, discuss the conditions which would determine the treatment) and any
limitations that might be placed on the deduction.
a. Monica took a client out to dinner to discuss the tax aspects of the client's proposed
acquisition of a rival company. After dinner, Monica took the client to see a play.
1. Assume Monica is self-employed

2. Assume Monica is an employee of GHQ Corporation. GHQ does not reimburse its
employees for entertaining clients.
b. Sergio owes Edward $5,000. During the current year, Sergio files for bankruptcy.
Sergio's attorney indicates that due to Sergio's poor financial condition his creditors will
be lucky to get $.80 on the dollar for their debts.
1. Assume Sergio is a customer of Edward's (an accrual basis taxpayer) and the $5,000
debt is from an account receivable related to Edward's business.
2. Assume Sergio is a business associate of Edward's. Edward loans Sergio the $5,000 to
pay off some gambling debts. Edward owns a meat packing plant.
ANSWER: a.
1. The cost of the dinner is a directly related meal because Monica and the client actually
discussed business. The cost of the play is an associated with entertainment expense
because it directly followed a bona-fide business discussion. Monica can deduct 50% of
the cost of the meal and the play as a deduction for adjusted gross income because it is a
trade or business expense.
2. As in (1), the meal and the play are deductible business expenses and 50% of the cost is

Chapter 6
allowed as an employee business expense. However, employee business expenses are
deductible as miscellaneous itemized deductions that are subject to a 2% of adjusted
gross income limitation. Therefore, to receive a deduction for the cost, Monica must
itemize her deductions and Monica's total allowable miscellaneous itemized deductions
must exceed 2% of adjusted gross income.
b.
1. The debt is related to Edward's trade or business. Business bad debts are deductible in the
year of partial worthlessness as an ordinary business expense. Edward can deduct $1,000
[$5,000 × (1 - .80)] as an estimate of the ultimate bad debt expense.
2. The debt is not related to Edward's trade or business. Nonbusiness bad debts are deducted
as short-term capital losses in year of actual worthlessness. Therefore, Edward cannot
deduct any of the bad debts until the actual amount of worthlessness is known.
128. Phong is a life insurance salesman for Swan Insurance and spends 4 days a month in the office. His office is 12 miles
from home. He also has a part-time job as a salesman in a clothing store. Typically, he works 2 nights during the week
and 1 day on the weekend. The clothing store where he works is 6 miles from his office and 7 miles from his home. What
portion(s) of Phong's travel is (are) considered business?
ANSWER: Phong can deduct the cost of traveling from home to his business clients and back. He also can deduct the cost
of traveling from his office to his clients and back to his office. The cost of traveling to his office and then
home, as he does 4 days a month, is considered commuting and is nondeductible. However, the cost of
traveling from either his office or clients to his second job is deductible. The cost of traveling home from his
part-time job and to-and-from the job on the weekend is not deductible because the travel is considered
commuting. Finally, any out-of-town traveling Phong incurs is fully deductible.
129. Jerry recently graduates with an MBA degree from a leading university and will be going to work as an employee of
a major stock brokerage firm. Jerry is unsure of the circumstances under which he can legitimately deduct the costs of
entertaining and dining with clients and prospective clients. Jerry will spend approximately $5,000 a year on such
activities for which he will not be reimbursed. It is important that he be able to derive tax benefit for these costs. Advise
Jerry of the general rules in this area of the tax law. Include a brief discussion of substantiation requirements for such
business expenses.
ANSWER: To be deductible, meal and entertainment expenses must be either directly related to or associated with the
active conduct of an activity for which the taxpayer has a business purpose. The directly related test requires
that the entertainment expense meet four tests, one of which is that a bonafide business activity takes place
during the entertainment. For the entertainment to qualify under the associated with test, two requirements
must be met. First, there must exist a clear business purpose, other than goodwill, for the entertainment. The
second test requires that the entertainment occur either preceding or following a substantial business
discussion. For substantiation, the tax law requires the taxpayer to keep records that will show the amount of
the expense; the time and place of travel or entertainment, or date and description of a gift; the business
purpose of the travel, entertainment or gift; and the business relationship to the person entertained or receiving
the gift. Finally, Jerry needs to know that he can only deduct 50% of these expenses.
taxpayer's return (if there are alternatives possible, discuss the conditions which would determine the treatment) and any
limitations which might be placed on the deduction.
a. Cassie sells insurance and other financial products for Bison Assurance Company. During the
current year, she gives each client who has been with her for three years 2 tickets to a Willie
Nelson concert. The tickets have a face value of $75 each, but Cassie has to pay $100 per ticket
to obtain a block of 100 tickets. Cassie was out of town and did not attend the concert.
b. Randolph was the CEO and chairman of the board of directors of Vison Inc., until his
retirement 5 years ago. Although he still owns 5% of Vison's stock, he has no other active
Chapter 6
involvement in the company. While playing golf one day he learns that 4 of the company's
biggest customers are coming to town to close a big deal. Randolph had been responsible for
bringing 3 of the customers to the business 30 years earlier when he started working for the
company. Because he has developed a solid business relationship with them through the years
and to help the company out, he holds a reception for the 4 customers and top executives of the
company at his country club. The cost of the reception is $2,000. Randolph did not ask for, nor
did Vison offer, a reimbursement for the reception.
c. Ai-leng is an engineer employed by Boiler Corporation. While having lunch with one of
Boiler's clients, she learns of a new relaxation technique that the client felt had greatly reduced
his job-related stress. Ai-leng enrolls in a night course at the local community college to learn
the new relaxation technique. The cost of the course is $200.
ANSWER: a. The tickets do not meet the criteria for deductibility as an entertainment expense. However,
you are allowed to deduct business gifts up to a maximum of $25 per donee. Deductions for
tickets are limited to the face value of the ticket. Therefore, Cassie can deduct $25 per client.
Her total deduction is $2,500 ($25 × 100 clients). Because she is an employee, she must take
the deduction as a miscellaneous itemized deduction, which is subject to a 2% of adjusted gross
income limitation.
b. No deduction is allowed. Deductions are allowed for meals and entertainment costs that are
related to a trade or business. Since the company no longer employs Randolph, he is not in a
trade or business and cannot deduct any of the $2,000. In addition, the expenditure is not
ordinary (investors normally do not entertain clients of the company they own), or necessary (a
prudent businessman would not make such an expenditure).
c. The cost of the course is not deductible. To deduct education expenses, the course must either
maintain or improve job skills or be required by law or by her employer. The course in
relaxation techniques does not relate to Ai-Leng's job as an engineer and was not required by
her employer or by law.
131. For each of the following situations explain why the expenditure is or is not deductible and any limitations that may
be placed on the amount of the deduction.
a. Akira is self-employed as a personal financial planner. He went out-of-town for two days
to visit three of his best clients and incurs the following expenses:
Airfare $350
Rental car 160
Lodging 240
Incidentals 90
Meals 220
Entertainment 130
b. Woodrow is President and CEO of ISPEP, a closely held corporation with assets of
$20,000,000. Woodrow, who owns 60% of the company, decides to hire his twin daughters
who have just completed their freshman year at Aztec State to work in the promotions
department of the company. His daughters will be paid $5,000 each for the summer. Other
college students who are hired for the summer to perform similar tasks will be paid $4,000.
c. Felix is a Realtor. To show his appreciation, he gives each client who buys a home from
him a $75 wall clock. During the year Felix gives 64 clocks to his clients.
d. Sandy sues Harrison for divorce. Originally, Sandy asks for one-half of all their assets,
including 50% of Harrison's car dealership. Harrison's lawyer has worked out a
Chapter 6
compromise with Sandy and her attorney that allows Harrison to retain 100% ownership of
the dealership. Harrison pays his lawyer $10,000 in legal fees.
ANSWER: a. Akira can deduct the full cost of the airfare ($350), rental car ($160), lodging ($240), and
incidentals ($90). The meals and entertainment expenses must be reduced by 50%. The
deduction for the meals and entertainment is $175 [$220 + $130) × 50%]. Akira can deduct
for adjusted gross income $1,015 ($350 + $160 + $240 + $90 + $175) for his trip.
b. Because his daughters are related parties, the compensation paid by Woodrow to them is
subject to scrutiny. The normal compensation for the work his daughters will perform is
$4,000. Therefore, the additional compensation of $1,000 ($5,000 - $4,000) paid to each
daughter is not deductible because it lacks a business purpose. Under the substance over
form doctrine, the $2,000 ($1,000 × 2) is treated as a dividend to Woodrow and a $2,000
gift ($1,000 each) from Woodrow to his daughters. The gift to his daughters is excluded
from income and is not deductible by Woodrow.
c. Felix can deduct up to $25 per year for each clock he has given to a client. For the year, he
can deduct $1,600 ($25 × 64) as business gifts.
d. Harrison may not deduct any portion of the legal fees because the legal dispute originates
from a personal matter. The fact that his wife sues for 50% control of his car dealership,
which is a business asset, does not affect the tax treatment.
132. For each of the following situations explain why the expenditure is or is not deductible and any limitations that may
be placed on the amount of the deduction.
a. Ellis is a part-time bookkeeper for Gilmore Company. The owner of Gilmore told Ellis that
if he earns an accounting degree and passes the CPA exam, he would hire him as Gilmore’s
accountant. Ellis spends $5,600 taking classes towards an accounting degree at City
College.
b. Harry owns Circus City Condiments, a wholesaler of circus food. In 2011 he loaned his
friend Joanna $8,000 at 6% annual interest with the balance due in 5 years. Joanna used the
loan to open a beauty salon. In December 2016, Joanna tells Harry that she has filed for
bankruptcy and that he will be lucky to get $2,000 of his money back. The bankruptcy
proceedings had not been completed at the end of 2016.
c. Audrey is a self-employed computer consultant. Harvey calls Audrey and asks her for
information on installing a new Lan-based workstation system in his business. Audrey
meets Harvey at Franco's Chop House. They have dinner while Audrey explains how such a
system will work and what it will cost. Audrey pays for the dinner, which costs $100.
Harvey calls Audrey the next day and tells her that he has decided that the system costs too
much and that he will not need her services.
ANSWER: a. To be deductible, education expenses must be either required by law (employer) or maintain
or improve the job skills of the taxpayer. Education expenses that meet the minimum job
requirements or which qualify the taxpayer for a new trade or business are not deductible.
Because he is not currently an auditor with Gilmore Company, Ellis's education expenses
are to meet the minimum educational requirements of the job (and qualify him for a new
trade or business) and are not deductible.
b. The loan is not related to Harry's trade or business and must be accounted for as a non-
business bad debt. Non-business bad debts are deductible as short-term capital losses in the
year in which the actual amount of worthlessness is determined. Because the actual amount
of the bad debt has not been determined as of the end of 2016, Harry is not entitled to any
deduction related to the loan in 2016.
Chapter 6
c. The meal is a directly related business expense. The meal had a clear business purpose and
there was a reasonable expectation of Audrey obtaining Harvey's business as a result of their
discussion. The fact that she does not ultimately receive Harvey's business is not relevant.
She can deduct $50 ($100 × 50%) of the meal cost as a trade or business expense.
133. Roscoe is a religion professor. During the summer, he spends 3 months in Israel touring historical landmarks. The
cost of the summer trip includes $1,300 for airfare, $2,750 for lodging, $1,175 for meals, and $850 for incidental
expenses. The following semester he incorporates many of the items he collected and the knowledge he gained from his
experiences into his lectures. How much of the travel costs can Roscoe deduct? Explain.
ANSWER: None of the costs that Roscoe incurred are deductible travel expenses. Travel, as a form of education, is
specifically not deductible. The expenses are personal.
134. For each of the following situations, determine whether the expenses are deductible as an education expense.
Explain.
a. Marvin owns a real estate development firm and his adjusted gross income is $60,000. He
enrolls as a part-time student at Northern College. His primary motivation for taking the
classes is to obtain a greater understanding of the accounting issues associated with his real
estate development business. He also believes that he can save 25% of the amount he pays in
accounting expenses. The cost of the 2 courses he enrolls in is $900.
b. Nancy is employed as a computer manager for a data processing company and her adjusted
gross income is $90,000. She enrolls in a night course ($225) at the local college. The course
is not required by her employer, but does improve her job skills.
c. Janine is a recent graduate of Western University and has been hired by a local accounting
firm. The firm expects Janine to pass the CPA exam on her initial attempt. To help her
prepare for the CPA exam, she takes the Booker CPA Review Course that costs $1,500.
d. Cam runs a licensed day-care center. To maintain his license he is required to attend a
minimum of 30 hours a year of continuing education. During the year, Cam attends 40 hours
of continuing education seminars at a cost of $1,500.
ANSWER: a. The education expenses will help Marvin in his business by improving his job skills. Therefore,
the $1,400 expense is deductible as a trade or business expense.
b. Although her employer does not require the course, the cost of the night course is deductible
because it improves her job skills. Nancy can deduct the $225 as an unreimbursed employee
business expense. It is deducted as a miscellaneous itemized deduction from AGI.
c. Even though Janine is an accounting graduate and is working in a local CPA law firm, she is
not a CPA. The course she takes to pass the CPA exam is not deductible because the CPA
review course is an education expense that will help her qualify for a new trade or business.
Being a CPA is considered a separate trade or business from being an accountant. The expense
is personal.
d. Cam can deduct the $1,500 cost of the seminars. The fact that Cam attended more than the
required number of continuing education hours does not limit the amount he can deduct. The
first 30 hours of continuing education are deductible because state law requires them. The
remaining 10 hours are deductible because the courses maintain or improve the skills required
in his trade or business.
135. Sally and Kelly are both enrolled in a graduate accounting course at Deacon University. Discuss how it is possible
Chapter 6
that Sally can deduct the cost of her tuition as an education expense while Kelly's tuition is not deductible.
ANSWER: An education expense is deductible when the expense is either required by the taxpayer's employer (or by law)
to maintain the job or maintains or improves the taxpayer's skills. That same education expense incurred by
another taxpayer could be considered an expense, which qualifies the taxpayer for a new trade or business, or
is needed to meet the minimum educational requirements required for the taxpayer's job.
Therefore, if Sally already has a degree in accounting or is working in the field of accounting, the cost of her
tuition is deductible because the course would improve or maintain her accounting skills. On the other hand, if
Kelly is not working in the field of accounting, or has never worked in accounting but is just continuing her
accounting education, the expense is not deductible because the education will qualify her for a new trade or
business or help her meet the minimum educational requirements of being an accountant.
136. Amanda is the president and 60% owner of ANR, a closely held corporation. During the year, she is paid a salary of
$650,000. Her salary is 40% higher than that for executives of comparably sized companies in the industry. ANR has
experienced 4 straight years of increased sales growth, at 3% per year, while other companies in the industry have
experienced decreasing or level sales. Discuss what factors are used to determine whether Amanda's salary represents
reasonable compensation.
ANSWER: In determining whether Amanda's salary is reasonable, the IRS will focus on several factors including the
following:
• Her duties, responsibilities, and pay history.
• Her ability and accomplishments.
The relationship of her compensation to the gross and net income of the business and dividends
•
paid to the shareholders.
The amount of her salary related to other executives at similarly situated companies in the
•
industry.
• The salary policy of the company over the past several years.
• The size of the company and the economic environment.
For her salary to be considered reasonable, the amount paid to her should be based on the number of hours she
works, and her responsibilities and duties. In addition, Amanda's salary history should also be consistent with
her accomplishments as president of the corporation. That is, her salary should be reflective of the financial
performance and growth of the corporation.
A factor in Amanda's favor is that she has guided her company to four straight years of increased growth while
other companies in the industry have experienced decreasing or level sales. Amanda's position will be further
strengthened if other key financial variables (e.g., gross margin percentage, net income as a percentage of
sales, return on assets) are significantly better than similar company's in the industry.
Because Amanda's salary is significantly greater than other presidents in the industry, the IRS might challenge
whether Amanda's performance justifies a 40% differential. In challenging Amanda's salary, the IRS will
assert that the corporation is attempting to disguise a dividend payment to Amanda in the form of excessive
salary.
137. Sita loans her next-door neighbor, Ivan, $800 to pay his rent and cover his utilities for last month. Ivan promises Sita
he will repay her at the end of next month when he receives his next payroll check. Two weeks after loaning Ivan the
money, Sita discovers Ivan had left town. No one knows his whereabouts. Sita is told that Ivan also hasn't paid his rent or
utility bills. Discuss whether Sita can deduct the $800. Completely explain your reasoning.
ANSWER: To receive a nonbusiness bad debt deduction, Sita will have to prove that her intent was not to make an $800
gift to Ivan. To have a nonbusiness bad debt, a bonafide loan must have existed. That is, a note to show
evidence of the debt, a provision for interest on the loan, possible collateral for the loan, a payment due date,
and collection efforts by Sita need to be present in all or part. If evidence could be found to show this situation
is a bonafide loan, a nonbusiness bad debt deduction would be reported as a short-term capital loss.

Chapter 6
138. Walter is a cash basis taxpayer with a drapery cleaning business. In the current year he determines he will never
receive payment from Davis for cleaning services provided to Davis. Can Walter record a deduction for the bad debt?
Explain.
ANSWER: Allowing a bad debt deduction for a cash basis taxpayer would amount to a double deduction. The expenses of
the services rendered are deducted when payments are made to vendors. Also, no income is recorded at the
time services are performed. Income is recorded when payments are received. In the present case, no income
has been recorded. Therefore, Walter does not have a basis in the bad debts and no expense can be recorded to
offset the income.
taxpayer's return (if there are alternatives possible, discuss the conditions that would determine the treatment) and any
limitations, which might be placed on the deduction.
Allison is self-employed. She pays the following
a.
taxes during the current year:
State income tax $1,200

Federal income tax 4,000
Self-employment tax 3,200
Property tax on residence 700
Tax on business equipment 200
b. A customer who owed Leon $5,000 declared

bankruptcy last year. At that time, the customer's
accountant estimated that only 40% of the
customer's debts would be paid. In the current year,
Leon receives $1,000 from the bankruptcy court as
final payment on the $5,000 debt.
ANSWER: a. Allison can deduct the state income tax and the property tax on her residence as an itemized
deduction. One-half of the self-employment tax, $1,600, is deductible for adjusted gross
income. The tax on business equipment is capitalized as part of the cost of the equipment.
Federal income taxes are not deductible.
b. If Leon is a cash basis taxpayer, no deduction is allowed. He will include the $1,000 he
receives in the current year in his gross income. If Leon is an accrual basis taxpayer, he
would deduct $3,000 ($5,000 × 60%) last year as a bad debt expense. In the current year, he
can deduct an additional $1,000 ($2,000 expected payment - $1,000 actual payment) as a bad
debt expense.
140. For each of the following IRA situations, determine the amount the taxpayer can deduct. Discuss any limitations,
which might be placed, on the deduction.
a. Marissa is single and is an active participant in a qualified employee pension plan. Determine
the maximum Roth IRA contribution that she can make if her adjusted gross income for the
year is $73,000.
b. David and Donna are married and file a joint return. Each is covered by an employee-
sponsored pension plan, and their adjusted gross income is $103,000. Determine their
maximum IRA contribution and deduction for the current year.
c. Pedro and Roxanne are married and have two children, ages 8 and 4. Their adjusted gross
income for the year is $196,000. What is maximum amount they can contribute to each child's
Coverdell Education Savings Account (CESA) for the year?
ANSWER: a. Assuming Marissa did not make any contributions to other IRA accounts during the year, she is
Chapter 6
allowed to make a $5,500 contribution to a Roth IRA. Marissa does not receive a deduction for
the contribution. If Marissa's adjusted gross income exceeds $117,000, the amount that can she
can contribute to a Roth IRA is phased out ratably until no contribution is allowed when her
adjusted gross income equals $132,000.
b. They both can contribute $5,500 to IRA accounts because both are covered by an employer-
sponsored pension plans, the amount of the IRA deduction is reduced when their adjusted gross
income reaches $98,000. The deduction is fully phased out when adjusted gross income
exceeds $118,000. The maximum contribution amount is not affected by this limitation, only
the deductible amount of the contribution. The $10,000 deduction must be reduced by 35%
[($103,000 - $98,000) ÷ $20,000]. This leaves an allowable deduction for adjusted gross
income of $8,250 [$11,000 - ($11,000 × 25%)].
c. All taxpayers can make a nondeductible contribution of up to $2,000 to CESA for the benefit
of an individual who is not 18 years of age. However, the total amount contributed to an
individual's CESA is limited to $2,000. For married taxpayers, this amount is phased out
ratably when their adjusted gross income exceeds $190,000 and is fully phased-out when
adjusted gross income exceeds $220,000. Because their adjusted gross income exceeds
$190,000, the amount that they can contribute to each CESA is phased out ratably until no
contribution is allowed when adjusted gross income equals $220,000. Therefore, they must
reduce the total amount they contribute to each CESA by 20% [($196,000 - $190,000) ÷
$30,000] and they can contribute $1,600 [$2,000 - ($2,000 × 20%)] to each CESA.
taxpayer's return (if there are alternatives possible, discuss the conditions that would determine the treatment) and any
limitations, which might be placed on the deduction.
a. Tony and Rika are married and file a joint return. Only Tony is covered by an employee-
sponsored pension plan and their adjusted gross income is $184,000. Determine their
maximum IRA contribution and deduction for the current year.
b. Elise graduated from Southern University in May of 2015 and immediately started working as
a financial analyst for Simone Financial Group. To finance her college education, she borrowed
$30,000 from a local bank. In January of 2016, she begins paying back her student loans and
pays $2,400 of interest expense during the year. Her adjusted gross income for the year is
$63,000.
c. During the current year, Rowland accepts a job as a computer programmer with Davenport
Industries. He incurs the following expenses in moving from East Brunswick, New Jersey to
Durham, North Carolina. Davenport Industries reimburses him $4,000 for his move.
Transportation
of household $2,800
goods
Airfare 340
Temporary
living:
Lodging 430
Meals 120
House-
hunting trip:
Transportation 330
Lodging 280
Meals 110
Chapter 6
ANSWER: a. Both Tony and Rika are allowed to contribute $5,500 to their IRA accounts. Because Tony is
covered by an employer-sponsored pension plan and their adjusted gross income exceeds
$118,000, he is not eligible to deduct his contribution. However, because Rika is not covered
by an employer-sponsored pension plan, her contribution is fully deductible if their adjusted
gross income is less than or equal to $184,000. Since their adjusted gross income equals
$184,000, the amount that she can deduct must be reduced by 0% [($184,000 - $184,000) ÷
$10,000]. This leaves her with an allowable deduction for adjusted gross income of $5,500
[$5,500 - ($5,500 × 0%)].
b. The maximum amount of student loan interest that can be deducted is phased-out ratably
over a $15,000 range when adjusted gross income exceeds $65,000. Since her adjusted gross
income is less than $65,000 the amount that she can deduct is $2,400.
c. Rowland must include the $4,000 in gross income and he can deduct $3,140 of moving
expenses for adjusted gross income. He can only deduct his direct moving expenses. Direct
moving expenses include the cost of moving household goods ($2,700) and personal effects
to the new residence, and airfare to his new residence ($340). The housing hunting expenses
and temporary living expenses are considered personal in nature and are not deductible.
Match each statement with the correct term below.

a. Not deductible.
b. Short-term capital loss.
c. Limited to $25 per person.
d. Deductible as an ordinary loss
e. Only 50% of the cost is deductible.
f. Must be away from tax home overnight to be deductible.
g. General area where a taxpayer conducts principal activity.
h. If the "directly-related" test fails; this test may allow the deduction.
142. Associated with

ANSWER: h
143. Business meals

ANSWER: e
144. Business gift

ANSWER: c
145. Business bad debt expense

ANSWER: d
146. Child support

ANSWER: a
147. Nonbusiness bad debt

ANSWER: b
148. Tax home

ANSWER: g

Chapter 6
149. Travel expenses
ANSWER: f

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from any sudden swell of the sea, such as might be apprehended
during spring-tides; and each boat being manned by a party of
seamen well skilled in the management of such craft, the fabric was
justly regarded as abundantly secure. To complete its construction,
however, gave employment to the artificers of the army during two
whole days, though they contrived to render it passable for infantry in
less than half that space of time.
Meanwhile, neither the right nor the centre of the Allied army was
inactive. The operations of the 23d—of which I have already said as
much, and perhaps more than one who professes not to speak from
personal observation is entitled to say—having been concluded,
Soult, alarmed at the determined advance of his enemies, and
confounded by the celerity of their movements, retired, in the night of
24th, from Sauveterre across the Gave du Pau, and, destroying all
the bridges in his flight, assembled the strength of his army, on the
morning of the 25th, near the village of Orthes. Thither Lord
Wellington immediately followed. Pushing forward a numerous body
of Spaniards, so as to cut off all communication between the French
Marshal and Bayonne, he manœuvred with the third, fourth, fifth,
sixth, and seventh British divisions during that and the succeeding
days; and finally, on the 27th, fought the glorious battle of Orthes, of
which, as I had no share in it, I shall attempt no description. The
result of it, as everybody knows, was the hasty and disastrous
retreat of Marshal Soult upon Toulouse, the capture of Bourdeaux,
and the first public declaration which had yet been made, by any part
of the French nation, of the renewal of their allegiance to the house
of Bourbon.
Whilst these great events were in progress elsewhere, a corps,
consisting of the first and fifth British divisions, of two or three
brigades of Portuguese, and a crowd of Spaniards, proceeded,
under the command of Sir John Hope, to invest the town and citadel
of Bayonne. As the rest of my journal will consist entirely of such
occurrences as befell during the progress of the siege, it may not be
amiss if I endeavour to convey to the mind of my reader something
like a correct idea of the important city against which our efforts were
turned, and of the general face of the country immediately around it.
The city of Bayonne stands upon a sandy plain—the citadel upon a
rock or hill which closely overhangs it. Between them runs the river
Adour with a sluggish current, resembling, in the darkness of its
water and the sliminess of its banks, the Thames near Gravesend or
Blackwall, but considerably narrower and more shallow. Both town
and fortress are regularly and strongly fortified; and on the present
occasion a vast number of field-works, of open batteries, fleches,
and redoubts, were added to the more permanent masonry which
formed the ramparts. Nor was the erection of these the only method
adopted by the enemy to give unusual strength to this most
important place. Various sluices were cut from the river, by means of
which, especially in our immediate front, the whole face of the
country could be inundated at pleasure to the extent of several miles;
whilst ditches, deep and wide, were here and there dug, with the
view of retarding the advance of troops, and keeping them exposed
to a heavy fire from the walls, as often as the occurrence of each
might cause a temporary check. The outer defences began in all
directions, at the distance of a full mile from the glacis. The roads
were everywhere broken up and covered with abattis and other
encumbrances. Nothing, in short, was neglected which promised in
any degree to contribute to the strength of a place which is justly
regarded as the key of the southern frontier of France.
Such was the condition of the works about Bayonne. With respect to
the country commanded by them, it varied considerably, both in its
nature and general appearance, the soil being in some directions
tolerably fruitful, in others little better than sand. It was, however,
universally flat, and very slightly wooded or broken to the distance of
three or four miles in every direction from the ditch. A few hamlets
were, indeed, scattered here and there (and wherever there is a
French hamlet a certain quantity of foliage will be found), the largest
of which was Anglete, where we had spent the night of the 23d, and
through which runs the great road to Bourdeaux and Paris; but in
general the desolate aspect of things seemed to indicate that the
labours of the builder and planter were prohibited, lest a village or a
grove might shelter an enemy, or furnish a point for the
establishment of a hostile post within cannon-shot of the walls. In the
direction of the sea, and parallel with the left bank of the river, deep
sands prevailed. These were, for large patches, totally bare of
verdure; but thick woods of dark short pine more frequently
overspread them, which, rising and falling, as the sands had broken
up into little eminences and valleys, gave a very striking and
romantic appearance to that side of the panorama. As I afterwards
learned, the Landes—those vast forests which stretch all the way to
Bourdeaux, and which, according to the tradition of the natives, were
originally planted to render firm what had previously been a huge
moving quicksand—begin here.
My description of Bayonne, and the scenery near it, applies thus far
only to the city, and to the tract of country situated on the southern or
Spanish side of the Adour. The citadel, being built upon a hill, or
rather upon the crest of a range of heights which rise gradually from
the sea, and extend upwards in a sort of inclined plane for about
eight miles, differs entirely from the preceding sketch, both in its style
of fortification and in the nature of the view which it presents to the
gaze of a traveller. Like all hill-forts, its works are constructed rather
as the natural inequalities of the ground permit than after any
scientific plan or model. One of its fronts—that which faces the
village of St Esprit and the mouth of the river—presents, indeed, the
regular octangular appearance; but in other directions the abrupt and
uneven course of the rock has compelled the engineer to draw his
wall around without any respect to form or figure. Yet it is a place of
prodigious strength—the more assailable of its faces being that on
which the shape of the ground has permitted the engineer to bestow
the largest share of his attention.
The view from the ramparts of the citadel is extremely pleasing. Vast
woods of pine are seen in the distance; whilst nearer, the face of the
country is beautifully diversified by the intermingling of corn-fields,
meadows, groves of magnificent cork-trees, vineyards, cottages, and
several chateaux. Close beneath the walls, moreover, lies the
romantic village of St Esprit, with its neat church and churchyard,
sloping along the side of a ravine, and having all its cottages
surrounded by pretty gardens, well stocked with fruit-trees and
shrubs. This village was commanded, not only by the guns from the
citadel, but by a redoubt which General Thouvenot, the French
governor, had caused to be erected on a sort of table-land near it,
and which, though no addition to the beauty of the landscape, added
greatly to the general strength of the castle by occupying the only
level spot across which the besiegers might hope to push a sap with
any success or facility.
Though Bayonne was already, to all intents and purposes, invested
—that is to say, though the garrison and inhabitants were fairly cut
off from holding open intercourse with other parts of the country—
nothing of the restraint of a siege, in the proper acceptation of the
term, had as yet been imposed on either class. The besiegers had,
indeed, drawn an extended line around the works; but the French
pickets were still posted at the distance of three, four, and some of
them five miles from the glacis; whilst their patrols continually broke
the chain of connection, and made excursions as far as the camp of
Marshal Soult at Orthes. This was the case at least up to the evening
of the 24th. There being no direct or safe communication between
the two banks of the Adour below the town, Sir John Hope could not
venture to tighten the cord, or to convert the investment into a strict
blockade. For as yet all reinforcements to the little corps which,
under the command of General Stopford, had passed on the 23d,
were floated across by means of rafts—the men sitting with their
guns upon the beams of wood, and leading the horses, which swam
after them. Yet, even in this rude way, so large a force contrived to
establish itself among the sand-hills by the evening of the 24th, that
all apprehension of a renewed attack from the enemy was laid aside.
Nevertheless the artificers were anxiously pressed to render the
bridge trustworthy with as little delay as possible; and they
strenuously exerted themselves to meet the wishes of the general.
Meanwhile, about fourteen or twenty thousand men of the Spanish
army took post along those faces of the town and citadel which
looked towards Helletre and the Joyeuse. The left of this semicircular
line, resting upon the heights where, during the late affair, I stood in
safety to watch the progress of the skirmishers on both sides of me,
swept round, through the abandoned intrenchments, to the brink of
the river. Here, the stream being narrow, a pontoon-bridge was
formed, and the line recommencing on the opposite bank, wound on
till it touched a corps of Portuguese at the back of the citadel. But as
yet the chain was continued from that point only by occasional
patrolling parties; and through this opening the enemy daily sent out
his foragers and brought in supplies. Such a state of things could not
be permitted long to last. It was essential to the prosecution of Lord
Wellington's future operations that the gap should be filled up
previous to the renewal of hostilities between his army and that of
Soult; nor was much time wasted in making preparations for driving
the garrison within the walls. Working parties laboured hard, not only
during the day, but during the whole night of the 24th; and at dawn
on the 25th it was reported that infantry might cross the floating
bridge with safety. This was the signal for action; and hence the 25th
proved to be, at least to part of the army, a day of hostile
employment.
CHAPTER XXII.
A direct communication between the opposite banks of the river
being thus established, the remaining battalions of the Guards, the
chief part of the King's German Legion, together with a proportionate
force of cavalry and artillery, marched at daybreak on the 25th to join
their comrades among the sand-hills. The whole of the besieging
army being at the same time put in motion, the gap which prior to
this date had existed in the line of investment was filled up. Little or
no fighting took place on that occasion. The enemy, perceiving our
design, offered no serious resistance, but evacuating the village of
Boucaut, after having exchanged a few shots with our skirmishers,
established their pickets about half a mile in its rear. As yet,
therefore, a good deal more of open space was granted to them than
they could long hope to enjoy; but all opportunity of corresponding
with Marshal Soult, as well as of adding to the stock of grain and
provisions already in their magazines, was cut off.
The running and irregular fire which had been maintained throughout
the morning gradually died away, and ceased altogether about noon.
From that hour till after nightfall everything continued quiet. A
feverish excitement, necessarily consequent even upon a trifling
skirmish, prevailed indeed amongst us; nor did we venture to take off
our accoutrements, or return to our usual employments, during the
remainder of the day. But we might have done so, had we felt
disposed, with perfect safety; because the enemy were too well
satisfied with being permitted to retain what they still held of territory
beyond the glacis to endanger its loss by a useless attempt to regain
what had been wrested from them. Still we were anxious; and the
anxiety which pervaded us all the day ceased not to operate at night.
The garrison of Bayonne, we were well aware, was at once
numerically powerful and composed of the best troops in the French
army. From all that we could learn, Soult had by no means
calculated upon the plan of operations adopted by Lord Wellington.
Concluding that the Marquess would halt after the passage of the
Adour, and invest that important place with the whole of his forces,
he had thrown into it fifteen thousand picked men, assigning the
command to General Thouvenot—an officer who, by his successful
defence of Burgos on a former occasion, appeared worthy of so
delicate a trust on the present. Lord Wellington, however, knew too
well how much depended in war on celerity of movement to waste
his time under the walls of Bayonne. He therefore left Sir John Hope
to mask the place with two British divisions, and taking the remainder
with himself, hung upon the rear of the retreating enemy. These two
divisions, which composed his left wing, were indeed supported by a
considerable force of Spaniards. But not even now could much
reliance be placed on Spanish troops; though it is just to add, that
they were much upon the alert at the outposts, and patient under
privations and hardships. The task assigned to Sir John Hope was
not therefore an easy one. With some thirty thousand men of all
arms, of whom only one-half might be fully trusted, he drew his lines
of circumvallation round a well-fortified town, the enceinte of which
could not measure less than four English miles, and towards which
he did not as yet venture to push his pickets nearer than one mile, or
perhaps more, from the glacis.
It was felt by him, and indeed by all, that vigilance could not under
the circumstances be too keen or too constant. The besieged,
moving upon an interior line, had it in his power to throw at any
moment a superior force upon the besiegers; hence, especially for
the first few days and nights, officers and men alike kept themselves,
so to speak, constantly on the stretch of expectation. On the 25th, for
example, as all seemed to be quiet in front, we lay down at the usual
hour and slept. Our camp was pitched under the lee of a sand-hill;
and just over its brow, and at the base beyond, our pickets were
posted. It was still early, an hour or two from midnight, when a
musket-shot in the direction of the pickets roused us. There was no
time to consider, because the enemy, if a sortie was intended, would
be upon us in a moment; so we sprang from our pallets, and each
dressing hastily, and seizing his weapons, we ran to the place of
muster. And now another and another shot broke the stillness of the
night. The bugles began to sound, the baggage was hastily packed,
the horses were saddled, and all the bustle and hurry attendant upon
the preparations for battle took place. For myself, having seen that
my men were in their ranks, I ran to the top of the hill, whence I saw
the flashes of several muskets half-way between our sentinels and
those of the enemy; but no sound of advancing columns met my ear,
neither was the fire returned by our own soldiers. The perplexity
occasioned by this state of affairs was not, however, of long
continuance. The officer in command of the outposts sent in a
messenger to say that no symptom of an attack was discernible, but
that several deserters had come into his lines, at whom the French
sentries were firing. This account was confirmed soon afterwards by
the arrival of the deserters in the camp; and the troops accordingly
laid aside their weapons and returned to their tents.
The alarm in that direction had hardly subsided, when another and
not less serious one arose in a different quarter. A sentry who was
posted by the bank of the river reported to his officer when visiting
him that boats were moving and oars splashing in the water.
Apprehensions were immediately excited for the safety of the bridge,
against which we naturally concluded that some attempt was about
to be made. To oppose it as far as possible, of whatever nature it
might be, three field-pieces which were attached to our brigade
limbered up, and galloped to the water's edge. These I
accompanied; and certainly the splash of oars was very audible,
though the darkness would not permit us to distinguish whence the
sound proceeded. A few shots were, however, fired in the direction
of the sound, just by way of hinting to the enemy that we were
awake; and whether it was that the hint was not lost upon them, or
that they never seriously entertained the idea of assailing the bridge,
an immediate cessation of rowing was the consequence. Having
watched, therefore, for half an hour, and neither hearing nor seeing
anything indicative of danger, I left the gunners to themselves, and
returning to my cloak and blanket, wrapt myself closely up, and slept
soundly and securely till the morning.
The whole of the 26th passed over without the occurrence of any
event worthy of mention. By myself it was spent, not very profitably,
in sauntering about among the pine-woods, where little or no game
was to be found. For the troops in general, as well within as without
the walls of the beleaguered city, it might be accounted a sort of
armed truce. Hardly a cannon-shot was fired, from sunrise till sunset,
on either side; but matters were drawing to a crisis. Stores and
ammunition were conveyed day and night across the river in large
quantities; and it was manifest that even the few miles of open
country which the garrison still held would before long be taken away
from them. It was therefore no unexpected communication which
reached me on the morning of the 27th, that the corps was to stand
to its arms forthwith, and that the enemy were to be driven in all
directions within their works.
Having in a former chapter described the nature of the ground in our
immediate front, the reader will understand why no serious advance
on our part was intended. We were already within range of the guns
on the ramparts, and between the ramparts and the camp no broken
ground nor village, nor any other species of cover, existed. We could
not therefore hope to establish ourselves had we been pushed on;
whereas the French general, by opening the sluices from the river,
might at any moment lay the whole level under water. On the
opposite side of the Adour the case was different. There the most
forward British pickets were very little in advance of the village of
Boucaut; and the village of Boucaut is full four miles from the citadel.
The face of the country also between the two points being rugged
and broken, numerous positions could be taken up by the besiegers,
in which, whilst they were themselves secure from the fire of the
place, they could easily prevent the garrison from venturing beyond
the ditch. Moreover, the relative situations of the town and fortress
rendered the former secure against active annoyance till after the
latter should have fallen into our hands. Though, therefore, it was
understood that the whole of our line was to be drawn somewhat
more tightly round the city, we were all aware that the trenches
would be opened, and breaching batteries thrown up against the
citadel alone.
The men being accoutred and the baggage packed, we stood quietly
in our ranks behind the sand-hill, till a gun from the opposite side of
the stream sounded the signal of attack. Upon this we extended our
files so as to give to a single weak battalion the appearance of an
entire brigade, and, ascending the heights, we stopped short where
the tops of our bayonets and caps just showed themselves over the
ridge. Similar demonstrations were likewise made by the corps which
filled Anglete and crowned the rise in connection with it; whilst
occasionally a shout was raised, as if at length the order of attack
had been given, and we were preparing to rush on. All this was done
for the purpose of drawing the attention of the enemy to many
different points at the same time, and thus hindering them from
opposing with the entire strength of the garrison the forward
movements of those who were appointed to invest the castle.
Whilst we and the divisions near us were thus amusing ourselves
and the enemy with the pomp and circumstance, rather than with the
reality, of war, the Guards and light Germans, with a corps of
Portuguese infantry, were very differently occupied on the other bank
of the river. As our situation was a commanding one, it enabled us to
obtain a tolerably distinct view of their proceedings. We saw one
column of British troops form on the sands beside Boucaut. In front
of it was a body of German riflemen, who pressed leisurely forward
in skirmishing order till they reached a picket of the French troops. Of
the enemy, on the other hand, a heavy column showed itself upon
the high ground, where it halted, and continued to send out
numerous parties to support the outposts, between whom and the
Germans a hot skirmish began. But it could not be said that any
decided advantage was gained by either party during several hours.
The column which we descried upon the sands beside Boucaut was
not of great strength; indeed the numbers of our own people
discernible by us were very inconsiderable. The fact, as I afterwards
learned, was, that the side of the hill visible to us was by far the most
rugged and least assailable of any; consequently the main attack
was to be made in another direction, the attack in this waiting till the
other should have in part succeeded. Hence the trifling progress
made by our skirmishers, who seemed to be kept back rather than
animated forward by their officers; and hence the apparently
obstinate resistance of the French pickets. But it was, nevertheless,
an exceedingly interesting spectacle, to the beauty of which the
uneven and picturesque scenery around added not a little.
I wish I could convey to the mind of the reader some notion of the
scene as it then appeared, and is still remembered by myself. Let
him imagine himself, then, lying with me upon the brow of a sand-hill,
and looking down first upon the broad and deep waters of the Adour,
and over them upon a sandy bank, which speedily ends, and is
succeeded by a green hill, having on its side—the side upon which
we are gazing—frequent cuts or gullies, or glens, some of them
bare, others wooded, with here and there a white cottage showing
itself from among the trees. Let him imagine that he sees on the
summit of the heights, and immediately in a line with himself, a
portion of an armed mass, with a single field-piece pointed towards
the river's mouth. About a mile to the rearward let him figure to
himself a green field, more level than any other part of the hillside—a
sort of table-land, as it were, having a hedge along that face of it
which is turned towards Boucaut, and a precipitous red bank under
the hedge. In this field he will observe about three hundred infantry
soldiers dressed in grey greatcoats and broad caps or shakos, who
carry hairy knapsacks on their backs, and are armed with long clear
muskets, which have bayonets screwed to their muzzles. These are
Frenchmen. Under the red bank let him farther suppose that there is
a picturesque valley stocked with tall and shadowy cork-trees, about
the middle of which is a neat mansion something larger than a
farmhouse, yet hardly deserving the name of a chateau. That house
is full of light Germans; and almost every tree about it affords cover
to a rifleman, who fires as a good aim is presented to him at the
persons behind the hedge. From the windows of the house, likewise,
many shots are from time to time discharged; and the sudden flash
and uprising of smoke from various parts of the hedge show that the
French tirailleurs are not less active than their assailants, or
disposed to receive their salute without returning it. In this skirmish
little change of ground takes place. Occasionally, indeed, a single
rifleman will steal on, running from tree to tree, till he has reached a
convenient spot; whilst a Frenchman will as often rise, and having
watched him through a brake or over a bush, will fire whenever he
exposes himself to observation. But no grand rush is made on either
side, nor is any decided loss sustained either of ground or in men.
All this while the exertions of our people were, as far as might be,
aided by a well-served cannonade from the three pieces of artillery
which had kept their station near the bank of the river since the
evening of the 25th. The fire of these guns was directed chiefly
against a large house—apparently some public work or manufactory
—which stood by the brink of the water, and was filled with French
troops. Neither were the enemy's batteries opposite to us idle.
Having wasted about twenty or thirty round-shot without effect, they
brought a couple of mortars, with a howitzer or two, to bear upon us,
from which they threw shell after shell among our ranks. But from the
effects of the cannonade the nature of the soil secured us, the shells
either burying themselves in the sand to the extinction of the fuze, or
exploding when we were all snugly laid flat, and therefore safe from
their fragments.
Matters had continued thus for an hour or two, and we were
beginning to fear that some part of our General's plan might have
gone wrong, or that the enemy were in too great force to be driven in
by the divisions opposed to them, when a sudden stir in the French
column which had hitherto stood quietly upon the heights attracted
our attention. The field-piece was all at once wheeled round, and
turned in the direction of the opposite country; the infantry collected
into compact order, and were gradually hidden from us by the brow
of the hill. By-and-by a few musket-shots were fired; then about a
dozen more; then came the report of one, two, or three field-pieces;
and, lastly, a roar of cannon and small-arms. This was kept up, hot
and rapid, for half an hour. Every moment the sound came nearer
and nearer. Now the smoke, which had at first followed each report
after the interval of a few seconds, rose at the same instant with the
noise; then the glancing of arms over the high ground was
distinguishable; next came the French troops, some retiring slowly,
and firing as they fell back—others fleeing in extreme confusion.
Mounted officers were galloping over the ridge, and apparently
exerting themselves to restore order; but all would not do. The
enemy were in full flight. Down they rushed towards the river, and
away along the sands in the direction of the citadel, whilst our three
guns poured in round-shot among them, some of which we could
distinctly perceive take effect. And now the green field on which my
reader and I have so long looked was abandoned. The tirailleurs fled
—the riflemen pursued—the little column in scarlet pushed on in
good order and with a quick pace—and on the brow of the height
above a British ensign was held up as a signal for our battery to
cease firing. The signal was obeyed, and we had nothing farther to
do during the remainder of the day than to watch, which we eagerly
did, the progress of our victorious comrades.
The enemy having fled as far as the manufactory, were there joined
by reinforcements from the garrison. Here, then, the battle was
renewed with great obstinacy; but stern as was the resistance
offered, it became every hour less and less effectual. At length the
building took fire; it was abandoned, and its defenders fled; after
which the entire scene of action was hidden from us, and we were
enabled to guess at the state of affairs only by the sound of firing
and the direction which it took. That inclined every moment more and
more towards the ramparts. But it continued without intermission till
darkness had set in, when both parties were compelled to desist
because they could not distinguish friends from foes.
In this affair the loss on both sides was considerable; but we were
completely successful. The enemy were driven within their works,
and our advanced-posts were established in the village of St Esprit,
about half-pistol-shot from the nearest redoubt. In other directions
little change of ground occurred. Some Spanish divisions took up a
position, I believe, somewhat less distant than formerly from the
walls of Bayonne; but neither we nor the divisions in communication
with us were in any degree affected by it. We returned, on the
contrary, to our tents, having lost by the cannonade only one man
killed and three wounded.
I stated in another part of my narrative that, except on one occasion,
I could not tax my memory with any symptom of violent or permanent
grief on the part of a soldier's wife at the death of her husband. The
case to which I then alluded occurred to-day. A fine young Irishman,
the pay-sergeant of my own company, had brought his wife with him
to the seat of war. He married her, it appeared, against the wish of
her relatives, they considering themselves in a walk of life superior to
his. To what class of society they belonged I cannot tell; but she, I
know, was a lady's-maid to some person of rank, when the
handsome face and manly form of M'Dermot stole her heart away.
They had been married about a year and a half, during the whole of
which time she had borne the most unblemished character, and they
were accounted the happiest couple in the regiment. Poor things!
they were this day separated for ever.
M'Dermot was as brave and good a soldier as any in the army; he
was at times even foolhardy. Having observed a recruit or two cower
down in no very dignified manner as a cannon-ball passed over
them, M'Dermot, by way of teaching them to despise danger, threw
himself at his ease on the summit of the sand-hill, with his head
towards the enemy's guns. He was in the act of laughing at these
lads, assuring them that "every bullet has its billet," when a round-
shot struck him on the crown of the head and smashed him to
atoms. I shall never forget the shriek that was raised. He was a
prodigious favourite with all ranks; and then all of us thought of his
poor young wife, so spotless, and so completely wrapped up in him.
"Oh, who will tell Nance of this?" said another non-commissioned
officer, his principal companion. "Poor Nance!" cried the soldiers,
one and all; so true is it that virtue is respected, and a virtuous
woman nowhere more beloved than among British soldiers. But
there was no hiding it from Nance. The news reached her, heaven
knows how, long before we returned to our tents, and she was in the
midst of us in a state which beggars all description in five minutes
after the event took place.
I cannot so much as attempt to delineate the scene that followed.
The poor creature was evidently deranged, for she would not believe
that the mangled carcass before her was her husband; and she
never shed a tear. "That! oh, that is not he!" cried she; "that
M'Dermot!—my own handsome, beautiful M'Dermot! Oh no, no—
take it away, or take me away, and bring me to him!" She was
removed with gentle violence to the camp, and the body was buried,
a young fir-tree being planted over it.
Several days passed before Mrs M'Dermot was sufficiently calm to
look her situation in the face. But at last the feeling of utter
desolation came over her; and instead of listening, as women in her
position generally do, to the proposals of some new suitor, all her
wishes pointed homewards. To her home she was accordingly sent.
We raised for her a handsome subscription, every officer and man
contributing something; and I have reason to believe that she is now
respectably settled in Cork, though still a widow.
CHAPTER XXIII.
From the date of the occurrences just described—namely the 27th
of February—the siege of Bayonne may be said to have fairly
commenced. To follow in regular detail the events of each day as it
proceeded would not, I am sure, greatly interest my readers; and to
lay such detail before them would be to myself an occupation little
less irksome than it sometimes was to kill the tedious hours of a ten
weeks' blockade. I may be permitted, therefore, to state generally,
and in few words, that the strictest investment was continued all the
while, and that an extremely harassing kind of duty was imposed
upon us till the siege and the war were brought to an end together by
the hoisting of the white flag on the 28th of the following April.
Premising this, I shall merely take the liberty of narrating, without
regard to dates or natural order, such incidents and adventures as
appeared to myself best deserving of record at the time.
In the first place, then, it may be observed that, while on our side of
the river no other works were erected than such as appeared
indispensable for strengthening our own position, and rendering the
bridge and the highroad, and the stores brought up by them, secure,
the Guards and Germans on the other side were busily employed in
digging trenches, and pushing forward active operations against the
citadel. These, as may be imagined, they were not permitted to carry
on without being annoyed in every practicable manner by the
besieged. A continual, or rather a dropping and irregular fire of
cannon, was kept up upon their parties from the ramparts, to which
even the darkness of the night brought no cessation; for blue-lights
were thrown out wherever the people were at work, the flame of
which guided the artillerymen in taking aim. Nor were we wholly
exempt from that species of entertainment. On the contrary, as the
erection of a three-gun battery on the top of our hill was deemed
necessary, we worked at it by turns till it was completed; and, as a
matter of course, we worked under the fire of all the cannon and
mortars which could be brought to bear upon us. These working
parties are by far the most unpleasant of all the employments to
which a soldier is liable. There is in them nothing of excitement, with
a great deal of danger; and danger, where there is no excitement, no
man would voluntarily choose to incur for its own sake. Let me
describe one of these mornings' amusements.
It fell to my lot frequently to superintend the people when at work.
The spot on which we laboured was high, and therefore completely
exposed to the view of the enemy. It was the top of the hill opposite
to them. Immediately on our arrival, a four-gun battery, with one
howitzer and two nine-inch mortars, began to play upon us. They
were well served, for the balls hit apparently in every quarter except
the particular spots on which each of us stood. On such occasions, if
there be no very pressing demand for the completion of the work,
you generally station one of your party to watch. As soon as he
perceives a flash he calls out—"Shot," or "Shell," as the case may
be. If it be simply a cannon-shot, you either toil on without heeding it,
or having covered yourself as well as you can till the ball strike, you
start up again and seize your tools. If it be a shell, you lie quite still till
it burst. The unmilitary reader may perhaps question whether it be
possible to tell the nature of the missile which is coming against you,
when as yet it has barely escaped from the muzzle of the gun, and is
still a mile or more distant; but he who has been in the habit of
attending to these matters will entertain no such doubt. Not to
mention the fact that an experienced eye can trace, by means of the
burning fuze, the whole journey of a shell through the air, from its
expulsion till its fall, the more perpendicular flight of the smoke may
of itself inform him who takes the trouble to observe when it issues
from a mortar; and there is a sharpness in the report of a gun which
will effectually distinguish the one from the other, even if the sense of
sight should fail. I have heard men assert that they can trace, not
only a shell, but a cannon-ball through the air. This may be possible;
but if it be, it is possible only to those whose sense of sight is far
more acute than mine.
Though abundantly annoying, the cannonade of which I am speaking
proved but little destructive of human life. I do not believe, though
continued for several weeks, it cost us five men. Neither was an
attempt which the enemy by-and-by made to shell us out of our
position more successful. Hidden from their view by the sand-hills,
we lay exposed only to such aim as a calculation of distances might
enable their gunners to take; and this, besides that it was not always
very accurate, had, in the nature of the soil on which our tents stood,
much to defeat it. Shells falling among loose sand bury themselves
so far into the ground as to take away a good deal from the force of
their destructiveness. Probably the French artillerists guessed, from
the perfect indifference with which we treated them, that they were
wasting their ammunition. At all events, they slackened their fire by
degrees, and by-and-by restrained it altogether.
Unless my memory greatly deceive me, the chief subject of
complaint amongst us at this time was that we were fettered to one
spot, and that there was not in our situation peril or excitement
enough to hinder us from feeling the confinement as a grievous
restraint. Though tolerably secure, from the nature of the ground, our
post was one of vast importance—that is to say, had the enemy
succeeded in forcing it, they might have easily made their way to the
bridge ere any fresh troops could be brought to oppose them. Under
these circumstances, it was considered imprudent to wander far or
frequently from the tents; and hence even the resource of fishing and
shooting was in a great measure taken away from us. My friend and
I did indeed occasionally venture into the woods; but these
excursions were too rare to be very profitable, and our limits too
confined to furnish an abundance of game.
The reader is not, however, to suppose that all our days and night
partook of the same tame character. Independently of the usual
round of outpost duty (a duty which, to me at least, was never
irksome, because it always served to keep my interest awake), a
deserter would, from time to time, come over, and bring with him
rumours of sorties intended. One of these brought with it a more than
ordinary degree of excitement. We were sitting one Sunday evening,
Grey and myself, in the upper loft of an old mill, where, by way of an
indulgence, we had established ourselves. The commanding officer
had read prayers to the battalion about half an hour previously, and
the parade had just been dismissed, when a sergeant clambered up
the ladder to inform us that the servants and batmen were
commanded to sleep accoutred, that the horses were to be saddled,
and the baggage in readiness to move at a moment's notice. On
inquiring into the cause of this order, we learned that a French officer
had arrived in camp, that he had brought with him intelligence that a
sortie would take place a little before midnight, and that the garrison
were already making preparations for the attack. As may be
supposed, we put everything in proper trim forthwith; and having
seen that our men lay down, with knapsacks buckled up, and
pouches and bayonets slung on, we too threw ourselves on the floor
in our clothes.
It might be about eleven o'clock when we were startled from our
repose by the firing of cannon. The sound was, however, distant: it
evidently came from the opposite side of the river, and it was
followed by no musketry. We watched it, therefore, for a while,
anxiously enough, and sat up prepared to issue forth as soon as our
presence might be required. But no bugle sounded, nor was any
other summons given; so we lay down again, and the night passed
by in peace. I have reason to believe, however, that the French
officer had not deceived us. An attack upon our position had been
seriously intended, and the plan was abandoned only because this
officer being missed, it was conjectured that we should be fully
prepared to repel it.
Another little affair took place soon afterwards. Whether our posts on
the left of Anglete had been of late pushed somewhat more in
advance than formerly I cannot tell; but the enemy sent a message
one morning by a flag of truce to the officer in command, desiring
that he would fall back, otherwise they would compel him. The
demand was of course met by a peremptory refusal, and they,
having allowed him an hour to change his mind, proceeded to carry
their threat into execution. A considerable body of light troops
attacked the post, and a sharp skirmish ensued. The sound of firing
soon drew assistance to our picket; and the result was, that the
French once more retired within their works, leaving us in
possession of the disputed ground. This event, with many others
which I have not recorded, because they have in them even less of
interest, occurred during the remaining days of February and the
whole of March. On the 1st of April our position was changed, and
we took from that period a more active part in the conduct of the
siege.
The change of ground to which I now allude proved, at least for a
day or two, extremely agreeable to the corps in general. My friend
and myself had, indeed, as I have already stated, fixed our abode in
an old mill—close to the camp, yet sufficiently apart from it to be
freed from the bustle. It was a ruinous and dilapidated mansion, I
admit; our living and sleeping chamber consisting simply of one half
of a loft, and only of one half, because the flooring of the other half
had given way; to which we ascended by means of a ladder or trap-
stair, and from which we looked down upon our horses and mules
that occupied the basement story. But in that old mill, the tiling of
which was unsealed, and can hardly be said to have been proof
against the weather, I spent some weary and many more pleasant
evenings; for, ruinous as it was, it appeared comfortable to men who
repaired to it from the sandy ground on which they had previously
spent several days and nights under cover of the canvas. Though,
therefore, I cannot accuse myself of murmuring at the removal of the
camp, it is quite certain that I partook not in the general rejoicing
which the occurrence produced among my comrades; or that the
beauty of the spot to which my tent was transferred at all
compensated for the loss of a boarded floor and a detached
habitation.
It was, however, a delightful change to the majority. During the last
week or ten days the heat of the sun had become exceedingly
oppressive, beating, as it did, through the white canvas, and having
its rays reflected back on all hands from a grey sandy soil. Not a tree
grew near to shelter us; nor was there a blade of grass within sight
on which the weary eye could repose. On the 1st of April we retired
about a couple of miles into the heart of a pine-wood, and left the
sand-hill to be guarded by the pickets alone. Our tents were pitched
in a sweet little green vale, overshadowed with the dark foliage of the
fir-trees, and near the margin of a small lake or pond of clear water.

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a. Only statement I is correct.

a. Only statement I is correct.

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a. Only statement I is correct.

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a. Only statement I is correct.

a. Only statement I is correct.

a. Only statement I is correct.

a. Only statement I is correct.

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a. Only statement I is correct.

a. Only statement I is correct.

a. Statements I, II, and III are correct.

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a. Only statement I is correct.

a. Only statement I is correct.

a. Only statement I is correct.

a. Only statement I is correct.

a. Only statement I is correct.

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77. Which of the following expenses is not deductible for AGI?

78. Deductions for adjusted gross income include

a. Only statement I is correct.

79. Deductions for adjusted gross income include

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a. Only statement I is correct.

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a. Only statement I is correct.

a. Only statement I is correct.

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a. Only statement I is correct.

a. Only statement I is correct.

96. Concerning individual retirement accounts (IRAs),

a. Only statement I is correct.

a. Only statement I is correct.

a. Only statement I is correct.

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a. Only statement I is correct.