Question

Which of the following expenses are deductible on Schedule C as business expenses?

1) Beauty parlor salaries
2) Depreciation and real estate taxes for the apartment building
3) Interest income
4) Alimony expense

Answer 1

The Correct option is 1 &2). Salaries for employees at a beauty parlor are typically deductible business expenses on Schedule C, while depreciation and taxes for a rental property should be reported on Schedule E, interest income is not a deductible expense, and alimony is not deductible on Schedule C.

Step-by-step explanation:

The question asks which expenses are deductible on Schedule C as business expenses. Specifically, for expenses to be deductible on Schedule C, they must be ordinary and necessary for conducting business. Here's how the listed expenses align with Schedule C tax deductions:

• Beauty parlor salaries - If the beauty parlor is your business, then the salaries you pay to your employees are indeed a deductible business expense.
• Depreciation and real estate taxes for the apartment building - This would typically be deductible if the apartment building is used in your trade or business. However, if it's a rental property, these expenses should instead be reported on Schedule E.
• Interest income - Interest income is not a deductible expense. It is usually reported as income on your tax return.
• Alimony expense - Alimony is not a business expense and is not deductible on Schedule C.

In summary, beauty parlor salaries may be deducted if they are an ordinary and necessary expense for conducting the business.