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1- The fair market value of property or services received inbartering must be included in gross income.

2- Mr. Barley an accountant, accepted a painting for his officefrom his client in lieu of payment of his customary fee of $400 forpreparation of a tax return. He must include the $400 income.

3- An ordinary expenditure is one which is commonly incurred byother businesses.

4- Rent and royalty expenses are deductible from adjusted grossincome.

5- Federal income taxes paid by a taxpayer in connection withher business are not deductible in computing the business federaltaxable income.

6- A necessary expense is one that is appropriate to helpful tothe continuation of the taxpayer' business; ordinary refers to anexpense that is customary and acceptable in the taxpayer's type ofbusiness.

7- If debt becomes worthless, the amount allowed as baddeduction is the adjusted basis of the debt.

8- Independent contractor is self-employed individuals whoperform services for another individual or business entity and areconsidered employees of the persons or business that hire them.

9- The portion of an employee's salary deemed ''unreasonable''may be considered a dividend distribution to an employee that isalso a shareholder of the corporation.

10- taxpayers cannot deduct the costs of tickets to anyentertainment actively or facility whether or not the taxpayer'sattendance at the activity is related to business.