Accounting for Taxation Study Guide Questions
Course Introduction
Accounting for Taxation explores the principles, regulations, and practices involved in accounting for various types of taxes applicable to individuals and businesses. The course covers key topics including income tax, value-added tax, deferred tax, and tax planning strategies. Students will learn to prepare tax-related financial statements, understand the impact of tax policies on business decisions, and apply relevant accounting standards such as IFRS and GAAP to taxation issues. Emphasis is placed on compliance, ethical considerations, and current legal frameworks to enable students to navigate the complexities of tax accounting in a real-world context.
Recommended Textbook
Pearsons Federal Taxation 2017 Corporations Partnerships Estates and Trusts 30th Edition Thomas
Available Study Resources on Quizplus
16 Chapters
1725 Verified Questions
1725 Flashcards
Source URL: https://quizplus.com/study-set/3382
2
Chapter 1: Tax Research
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/67128
Sample Questions
Q1) Internet versions of topical tax services include
A)Code and Regulations.
B)Revenue rulings,letter rulings,and revenue procedures.
C)Court cases involving tax issues.
D)All of the above.
Answer: D
Q2) When Congress passes a statute with language such as,"The Secretary shall prescribe such regulations as he may deem necessary," the regulations ultimately issued for that statute are
A)congressional regulations.
B)statutory regulations.
C)interpretative regulations.
D)legislative regulations.
Answer: D
Q3) The primary citation for a federal circuit court of appeals case would be
A)40 AFTR 2d 78-1234.
B)44 F.Supp.403.
C)3 F.3d 134.
D)79-2 USTC & 9693.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Corporate Formations and Capital Structure
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/67120
Sample Questions
Q1) Beth transfers an asset having an FMV of $200,000 and an adjusted basis of $150,000 to ABC Corporation in a Sec.351 transaction.Beth receives in exchange ABC common stock having an FMV of $175,000 and Zeus Corporation common stock (a capital asset)having an FMV of $25,000 and a basis of $10,000 to ABC Corporation.ABC Corporation must recognize A)no gain.
B)a $15,000 capital gain.
C)a $25,000 capital gain.
D)a $50,000 capital gain.
Answer: B
Q2) Anton,Bettina,and Caleb form Cage Corporation.Each contributes appreciated property worth $10,000 for one-third of the Cage stock.Before the exchange,Anton arranges to sell his stock to Darma as soon as he receives it.Does Sec.351 apply?
Answer: No,this prearranged plan means Anton,Bettina,and Caleb do not have control immediately after the exchange,so Sec.351 does not apply.
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Corporate Income Tax
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/67119
Sample Questions
Q1) Paul,who owns all the stock in Rodgers Corporation,purchases a truck from the corporation in January.The truck cost $11,000 and has an adjusted basis of $9,000.Paul pays Rodgers the truck's $7,000 FMV.Paul sells the truck later in the tax year to an unrelated party for $12,000.What is the amount and character of the income that Paul will report on this year's tax return?
Answer: The corporation could not recognize the $2,000 ($11,000 - $9,000)realized loss on the sale of the truck since Paul and the corporation are related parties (Sec.267(a)(1)).Paul would recognize a gain of only $3,000 [($12,000 - $7,000)- $2,000 disallowed loss] on his subsequent sale.
Q2) Identify which of the following statements is true.
A)Personal service corporations may be subject to the passive activity limitations.
B)All C corporations may be subject to the passive activity limitations.
C)Personal service corporations may use passive losses and credits to offset net active income but not portfolio income.
D)Both A and B are true.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Corporate Nonliquidating Distributions
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/67118
Sample Questions
Q1) John owns 70% of the May Corporation stock and 60% of the June Corporation stock.John sells one-half of his interest in May Corporation to June Corporation for $45,000.The E&P accounts of May and June are $25,000 and $35,000,respectively.The result would be that
A)John has sold his stock and reports a capital gain or loss.
B)John has sold his stock and reports a capital gain but no loss.
C)the transaction is treated as a contribution to May's capital and a redemption of June stock.
D)the sale is recast as a dividend paid to John,first by June and then by May.
Q2) Maple Corporation distributes land to a noncorporate shareholder.Explain how the following items are computed:
a)The amount of the distribution.
b)The amount of the dividend.
c)The basis of the land to the shareholder.
d)The start of the holding period for the land.
How would your answers change if the distribution was made to a corporate shareholder?
Q3) What is a constructive dividend? Under what circumstances are constructive dividends most likely to arise?
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Other Corporate Tax Levies
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/67117
Sample Questions
Q1) Church Corporation is a closely held C corporation.All of the stock is owned by Charles and Chanda Church.The corporation,in its second month of operation in its initial tax year,anticipates earning $150,000 of gross income in the current year.Gross income is expected to be approximately 40% dividends,30% corporate bond interest,and 30% net real estate rentals (after interest,property taxes,and depreciation).Administrative expenses are expected to be $20,000.What special problems does the large amount of passive income that Church Corporation expects to earn present to you as their CPA?
Q2) What is a personal holding company?
Q3) ASC 740 requires that
A)the AMT is not considered as federal income tax expense.
B)companies must establish a valuation allowance for the minimum tax credit.
C)the minimum tax credit creates a deferred tax asset.
D)the minimum tax credit increases federal income tax expense.
Q4) The general business credit can be used to offset the alternative minimum tax.
A)True
B)False
Q5) The ACE adjustment always increases alternative minimum taxable income (AMTI). A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Corporate Liquidating Distributions
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/67116
Sample Questions
Q1) A liquidation must be reported to the Internal Revenue Service on Form 966
A)within 60 days of the adoption of a plan of liquidation.
B)that is filed with the national IRS office.
C)whether the shareholders' realized gain is recognized or not.
D)by the shareholders.
Q2) Identify which of the following statements is true.
A)In general,a noncorporate shareholder that receives a distribution in complete liquidation of the liquidating corporation recognizes his or her entire realized gain as a capital gain.
B)The basis for nonmoney property received by a noncorporate shareholder as part of a liquidating distribution is the same as its basis on the books of the liquidating corporation.
C)The liquidating corporation does not recognize gains and losses when making a distribution of nonmoney property.
D)All of the above are false.
Q3) A subsidiary must recognize depreciation recapture income when the subsidiary is liquidated into the parent.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Corporate Acquisitions and Reorganizations
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/67115
Sample Questions
Q1) Taxable acquisition transactions can either be a purchase of assets or a purchase of stock.
A)True
B)False
Q2) As part of a plan of corporate reorganization,Sally exchanged 1,000 shares of Tone Corporation common stock that she had purchased for $85,000,for 3,000 shares of Fade Corporation voting common stock having an $87,000 FMV.What is the amount and character of Sally's recognized gain and her basis in the Tone stock as a result of the exchange?
Q3) Why would an acquiring corporation want an acquisition to be tax-free if it gets only a substituted basis rather than a step-up basis for the acquired assets?
Q4) Define the seven classes of assets used in allocating basis when using the residual method.
Q5) Gulf Corporation wants to acquire all of Beamer Corporation's assets and liabilities in a Type C reorganization.The FMV of Beamer's assets is $500,000.Beamer's liabilities are $70,000.How much cash can Gulf Corporation use to pay for Beamer's assets without violating the Type C reorganization requirements?
Q6) What are the two steps of a Sec.338 deemed liquidation election?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Consolidated Tax Returns
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/67114
Sample Questions
Q1) Cardinal and Bluebird Corporations both use a calendar year as their tax year.At the close of business on June 30,Cardinal Corporation buys all of Bluebird Corporation's stock.If the two corporations file a consolidated return and both corporations earn their income evenly throughout the year,what portion of Bluebird's income will be included in the consolidated return? (Assume all months have 30 days. )
A)100%
B)50%
C)0%
D)none of the above
Q2) A consolidated return's tax liability is owed by
A)all group members in equal portions.
B)the group member responsible for that portion of the tax liability.
C)all group members who are severely liable.
D)the parent corporation.
Q3) On January 1,Alpha Corporation purchases 100% of the stock of Omega Corporation for $2 million.During the year,Omega Corporation earns $350,000 of taxable income,$30,000 of tax-exempt income,and distributes $150,000 in dividends.Each company paid its own tax liability.Assume a 34% tax rate.What basis adjustment must Alpha Corporation make at year-end?
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Partnership Formation and Operation
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/67113
Sample Questions
Q1) Jason,a lawyer,provided legal services for the employees of the ABC Partnership during the first six months of the current year.In exchange,he received a 2% capital and profits interest in the partnership.The value of the interest is $5,000.What are the tax consequences to Jason,the ABC Partnership,and the employees of ABC?
Q2) Under what conditions will a special allocation of partnership depreciation be recognized? Assume the partnership has no nonrecourse liabilities.
Q3) Matt and Joel are equal partners in the MJ Partnership.For the current year ended December 31,the partnership has book income of $80,000,which includes the following deductions: (1)guaranteed payments (salaries)to partners: Matt,$35,000;and Joel,$25,000;and (2)charitable contributions,$6,000.The book income amount does not include any sales of capital assets or Sec.1231 assets or any tax-exempt income.Based on the above information,what amount should be reported as ordinary income on the partnership return?
A)$60,000
B)$80,000
C)$86,000
D)$140,000
Q4) What is included in partnership taxable income?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Special Partnership Issues
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/67127
Sample Questions
Q1) Can a partner recognize both a gain and a loss on the sale of a partnership interest? If so,under what conditions?
Q2) When Rachel's basis in her interest in the RST Partnership is $40,000,she receives a current distribution of office equipment.The equipment has an FMV of $60,000 and a basis of $50,000.Rachel will not use the office equipment in a business activity.What tax issues should Rachel consider with respect to the distribution?
Q3) Identify which of the following statements is true.
A)A liquidating distribution that terminates a partnership interest cannot include more than one distribution.
B)A partnership with a large amount of unrealized receivables and substantially appreciated inventory items liquidated and distributed all of its assets in kind to each partner in proportion to their partnership interests.Each partner will report ordinary income at the time these assets are received equal to their FMV.
C)The rule for recognizing gain on a liquidating distribution is the same rule that is used for a current distribution.
D)All of the above are false.
Q4) What are some advantages and disadvantages of making a Section 754 election?
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: US Corporations
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/67126
Sample Questions
Q1) Troy owns 50% of Dot.Com,an e-commerce company.His S corporation stock basis at the beginning of the year is $300,000.Dot.Com has not done well this year and will report an ordinary loss of $875,000.Troy's marginal tax rate for the current year is 35%.What tax issues should Troy consider with respect to the loss?
Q2) S shareholders are allocated shares of income,gain,loss,deduction,and credit based on their number of shares of stock and period of time for which the stock is held.
A)True B)False
Q3) An S corporation is not treated as a corporate taxpayer with respect to which one of the following fringe benefits?
A)stock options
B)qualified retirement plans
C)group term life insurance premiums
D)nonqualified deferred compensation
Q4) Corporations and partnerships can be S corporation shareholders.
A)True B)False
Q5) What is a permitted year?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: The Gift Tax
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/67125
Sample Questions
Q1) Calvin transfers land to a trust.His daughter Melissa will receive the income from the land for ten years.After ten years,the land is returned to Calvin.Calvin's interest is
A)a term certain.
B)a life estate.
C)a reversionary interest.
D)none of the above.
Q2) Tracy gave stock with an adjusted basis of $18,000 and an FMV of $15,000 to her nephew Phil.No gift tax was paid.Phil sold the stock for $16,000.The gain or loss Phil will recognize on the sale is
A)$1,000 gain.
B)$0.
C)$1,500 loss.
D)none of the above
Q3) Discuss the ways in which the estate and gift tax system is a unified system.
Q4) Describe the penalties for undervaluing gifts on a gift tax return.
Q5) What are the requirements for classifying a transaction as a transfer of a qualified terminable interest property (QTIP)?
Q6) Discuss the purpose of the gift tax annual exclusion.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: The Estate Tax
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/67124
Sample Questions
Q1) Identify which of the following statements is false.
A)The "blockage" regulations allow the IRS to prevent the estate's executor from electing the alternate valuation date.
B)If the alternate valuation date is elected,changes in value that occur solely because of a "mere lapse of time" usually are to be ignored.
C)The alternate valuation date can be elected for estate tax purposes only if the election decreases the value of the gross estate and estate tax liability (after reduction for credits).
D)If property is sold within 6 months of the date of death,the alternative valuation date is the date of sale.
Q2) When computing the federal estate tax liability in 2014,the maximum amount for a taxable estate (not tentative tax)that the unified credit for the current year will eliminate all of the tax is
A)$555,800.
B)$780,800.
C)$5,340,000.
D)$2,000,000.
Q3) Explain why living trusts are popular tax-planning vehicles.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Income Taxation of Trusts and Estates
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/67123
Sample Questions
Q1) Identify which of the following statements is true.
A)Tax-exempt income is allocated among beneficiaries in the proportion that total tax-exempt income bears to total distributable net income (DNI).
B)Both income required to be distributed currently and discretionary income distributions are included in tier-1 distributions.
C)Under the tier system,tier-2 beneficiaries are the first to absorb income.
D)All are false.
Q2) Briefly discuss the reasons for establishing a trust.
Q3) What is the basis of inherited IRD items to the beneficiary?
Q4) Revocable trusts means
A)the transferor may not demand the assets be returned.
B)income or estate tax savings for the grantor.
C)the assets in the trust avoid probate.
D)the grantor is always the beneficiary.
Q5) Briefly discuss some of the reasons for using a revocable trust.
Q6) Explain how to determine the deductible portion of trustee's fees.
Q7) This year,the Huang Trust received $20,000 of dividends and $30,000 of tax-free interest.It distributes all of its receipts to its beneficiary.How should the beneficiary treat the distribution?
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Administrative Procedures
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/67122
Sample Questions
Q1) For innocent spouse relief to apply,five conditions must be met.Explain them.
Q2) Terry files his return on March 31.The return shows taxes of $6,000,and Terry pays this entire amount when he files his return.By what time must he file a claim of refund?
A)the later of two years from the return filing or three years from the date the tax is paid
B)the later of three years from the return due date or two years from the date the tax is paid
C)two years from the payment of tax date,if the IRS mails a notice of deficiency in the third year following the due date of the return
D)four years from the payment of tax date,if the IRS mails a notice of deficiency
Q3) Tax return preparers can be penalized for the following activities except
A)failure to sign a return.
B)failure to give a copy of the return to the taxpayer.
C)failure to maintain IRS continuing education requirements.
D)failure to provide the preparer's identification number on the return.
Q4) Explain one of the two exceptions to imposing interest from the original due date of the tax return until the date the tax deficiency is paid.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Us Taxation of Foreign-Related Transactions
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/67121
Sample Questions
Q1) U.S.Corporation owns 45% of the stock of Foreign Corporation.Foreign Corporation is incorporated in Country T.In its first year of operations,Foreign Corporation earns 60,000 frugs of E&P,pays a 40,000- frug dividend,and pays 5,000 frugs in income taxes.The exchange rate between the dollar and the frug is: first year average,1 frug = $0.20;yearend,1 frug = $0.25;tax payment date,1 frug = $0.30;and dividend payment date,1 frug = $0.28.What is the translated dividend amount?
A)$5,400
B)$4,500
C)$5,040
D)$3,600
Q2) Darlene,a U.S.citizen,has foreign-earned income of $150,000 and employment-related expenses of $15,000.Darlene earns no other income.Darlene also has $12,000 of itemized deductions not directly related to the foreign-earned income.She can exclude $97,600 of foreign-earned income.Darlene incurs $33,750 of Country C income taxes on $150,000 of Country C taxable income.How much of Darlene's foreign income taxes are noncreditable?
Q3) Excess foreign tax credits can be carried back one year and forward five years.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 18