Advanced Federal Taxation Test Bank
Course Introduction
Advanced Federal Taxation delves into complex issues of federal income taxation applicable to individuals, corporations, partnerships, and other business entities. The course explores intricate tax code provisions, regulatory interpretations, and strategies for compliance and tax planning. Topics include corporate acquisitions and reorganizations, partnership allocations, S corporations, estate and gift taxation, and the taxation of international transactions. Emphasis is placed on research, critical analysis, and application of tax law to real-world scenarios, preparing students for professional advisory roles and advanced certification.
Recommended Textbook
South Western Federal Taxation 2018 Comprehensive 41st Edition by William H. Hoffman
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4007 Verified Questions
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Page 2
Chapter 1: An Introduction to Taxation and Understanding
the Federal Tax Law
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Sample Questions
Q1) For the negligence penalty to apply,the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.
A)True
B)False
Answer: True
Q2) For individual taxpayers,the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).
A)True
B)False
Answer: True
Q3) Logan dies with an estate worth $20 million.Under his will,$10 million passes to his wife while $10 million goes to his church.What is Logan's Federal estate tax result?
Answer: None.After a marital deduction of $10 million and a charitable deduction of $10 million,Logan's taxable estate is $0.
Q4) A Federal deduction for state and local sales taxes paid.
Answer: c
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Chapter 2: Working With the Tax Law
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Sample Questions
Q1) A Revenue Ruling is a judicial source of Federal tax law.
A)True
B)False Answer: False
Q2) There are 11 geographic U.S.Circuit Court of Appeals.
A)True
B)False Answer: True
Q3) Which company does not publish citators for tax purposes?
A)John Wiley & Sons
B)Commerce Clearing House
C)Thomson Reuters, RIA
D)Westlaw
E)Shepard's
Answer: A
Q4) In a U.S.District Court,a jury can decide both questions of fact and questions of law.
A)True
B)False Answer: False
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Chapter 3: Computing the Tax
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Sample Questions
Q1) Territorial system of taxation
Answer: k
Q2) Contrast the tax consequences resulting from the following filing status situations:
a.Married filing jointly versus married filing separately.
b.Married filing separately versus single.
c.Married filing separately versus abandoned spouse status.
Answer:
11ea87ef_7658_b5f8_9939_3def42926132_TB4136_00
Q3) Basic standard deduction
Answer: a
Q4) The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.
A)True
B)False
Answer: False
Q5) A dependent cannot claim a personal exemption on his or her own return.
A)True
B)False
Answer: True
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Chapter 4: Gross Income: Concepts and Inclusions
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Sample Questions
Q1) Jay,a single taxpayer,retired from his job as a public school teacher in 2017.He is to receive a retirement annuity of $1,200 each month and his life expectancy is 180 months.He contributed $36,000 to the pension plan during his 35-year career; so his adjusted basis is $36,000.Jay collected 192 payments before he died.What is the correct method for reporting the pension income?
A)Since Jay is no longer working, none of the pension payments must be included in his gross income.
B)The first $36,000 received is a nontaxable recovery of capital, and all subsequent annuity payments are taxable.
C)The first $180,000 he receives is taxable and the last $36,000 is a nontaxable recovery of capital.
D)All of the last 12 payments he received ($14,400) are taxable.
E)None of these.
Q2) Melissa is a compulsive coupon clipper.She often brags about the time she purchased a cart full of groceries for $5.00,when the cost without coupons would have been $50.Discuss whether Melissa realizes gross income from her coupon clipping.
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Chapter 5: Gross Income: Exclusions
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Sample Questions
Q1) Christie sued her former employer for a back injury she suffered on the job in 2017.As a result of the injury,she was partially disabled.In 2018,she received $240,000 for her loss of future income,$160,000 in punitive damages because of the employer's flagrant disregard for the employee's safety,and $15,000 for medical expenses.The medical expenses were deducted on her 2017 return,reducing her taxable income by $12,000.Christie's 2018 gross income from the above is:
A)$415,000.
B)$412,000.
C)$255,000.
D)$175,000.
E)$172,000.
Q2) Nicole's employer pays her $150 per month towards the cost of parking near a railway station where Nicole catches the train to work.The employer also pays the cost of the rail pass,$75 per month.Nicole can exclude both of these payments from her gross income.
A)True
B)False
Q3) What Federal income tax benefits are provided for college students?
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Chapter 6: Deductions and Losses: in General
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Sample Questions
Q1) What is the appropriate tax treatment for expenditures paid by a taxpayer for another's benefit?
Q2) The legal cost of having a will prepared is not deductible.
A)True
B)False
Q3) In order to protect against rent increases on the building in which she operates a dance studio,Mella signs an 18-month lease for $36,000.The lease commences on October 1,2017.How much of the $36,000 payment can she deduct in 2017 and 2018?
a.If Mella is an accrual basis taxpayer?
b.If Mella is a cash basis taxpayer?
Q4) During the year,Jim rented his vacation home for 200 days and lived in it for 19 days.During the remaining days,the vacation home was available for rental use.Is the vacation home subject to the limitation on the deductions of a personal/rental vacation home?
Q5) Ordinary and necessary business expenses,other than cost of goods sold,of an illegal drug trafficking business do not reduce taxable income. A)True B)False
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Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Sample Questions
Q1) A cash basis taxpayer must include as income the proceeds from the sale of an account receivable to a collection agency.
A)True
B)False
Q2) "Other casualty" means casualties similar to those associated with fires,storms,or shipwrecks.
A)True
B)False
Q3) A theft loss is taken in the year of the theft.
A)True
B)False
Q4) Several years ago,John purchased 2,000 shares of Red Corporation § 1244 stock from Mark for $40,000.Last year,John sold one-half of his Red Corporation stock to Mike for $12,000.During the current year,John sold the remaining Red Corporation stock for $3,000.John has a $17,000 ($3,000 - $20,000) ordinary loss for the current year.
A)True
B)False
Q5) How is qualified production activities income (QPAI) calculated?
Page 9
Q6) Why was the domestic production activities deduction (DPAD) enacted by Congress?
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Chapter 8: Depreciation, cost Recovery, amortization, and Depletion
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Sample Questions
Q1) The "luxury auto" cost recovery limits change if mid-quarter cost recovery is used.
A)True
B)False
Q2) On June 1,2017,Irene places in service a new automobile that cost $21,000.The car is used 70% for business and 30% for personal use.(Assume this percentage is maintained for the life of the car.) She does not take additional first-year depreciation.Determine the cost recovery deduction for 2018.
A)$3,160
B)$3,290
C)$3,570
D)$6,720
E)None of the above
Q3) Norm purchases a new sports utility vehicle (SUV) on October 12,2017,for $60,000.The SUV has a gross vehicle weight of 6,200 lbs.It is used 100% of the time for business and it is the only business asset acquired by Norm during 2017.Compute the maximum deduction with respect to the SUV for 2017.Norm does not take additional first-year depreciation.
Q4) Discuss the reason for the inclusion amount with respect to leased automobiles.
Page 11
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Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
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Sample Questions
Q1) In terms of IRS attitude,what do the following expenses have in common?
a.Cost of a CPA exam review course.
b.Cost of a review course for the bar exam.
c.Cost of a law degree by a taxpayer who does not intend to practice law.
Q2) Which,if any,of the following factors is not a characteristic of independent contractor status?
A)Work-related expenses are reported on Form 2106.
B)Receipt of a Form 1099 reporting payments received.
C)Workplace fringe benefits are not available.
D)Services are performed for more than one party.
E)None of these.
Q3) Which,if any,of the following expenses is subject to the 2%-of-AGI floor?
A)Gambling losses (to the extent of gambling gains).
B)Moving expenses (not reimbursed by employer).
C)Teaching supplies (in excess of $250) purchased by a fifth grade teacher.
D)Union dues of self-employed machinist.
E)None of these.
Q4) Deductible moving expense
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Q5) How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?
Chapter 10: Deductions and Losses: Certain Itemized
Deductions
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Sample Questions
Q1) Noah gave $750 to a good friend whose house was destroyed by an earthquake.In addition,Noah contributed his time,valued at $250,in the cleanup effort.Noah may claim a charitable deduction of $1,000 on his tax return for the current year.
A)True
B)False
Q2) Letha incurred a $1,600 prepayment penalty to a lending institution because she paid off the mortgage on her home early.The $1,600 is deductible as interest expense.
A)True
B)False
Q3) Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence.The appraisal fee qualifies as a deductible medical expense.
A)True
B)False
Q4) Linda is planning to buy Vicki's home.They want to keep the transaction simple,so the sales agreement will not apportion the property taxes that Vicki has already paid on the home.Comment on the tax implications for Linda and Vicki.
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Chapter 11: Investor Losses
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Sample Questions
Q1) Ken has a $40,000 loss from an investment in a partnership in which he does not materially participate.He paid $30,000 for his interest.How much of the loss is disallowed by the at-risk rules? How much is disallowed by the passive activity loss rules?
Q2) In the current year,Lucile,who has AGI of $70,000 before considering rental activities,is active in three separate real estate rental activities and is in the 28% tax bracket.She had $15,000 of losses from Activity A,$25,000 of losses from Activity B,and income of $20,000 from Activity C.She also had $3,100 of tax credits from Activity A.Calculate her deductions and credits currently allowed and the suspended losses and credits.
Q3) Joyce owns an activity (not real estate) in which she participates for 100 hours a year; her husband participates for 450 hours.Joyce qualifies as a material participant.
A)True
B)False
Q4) Nathan owns Activity A,which produces income,and Activity B,which produces passive activity losses.From a tax planning perspective,Nathan will be better off if Activity A is passive.
A)True
B)False
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Page 14
Chapter 12: Tax Credits and Payments
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Sample Questions
Q1) Which of the following statements concerning the credit for child and dependent care expenses is not correct?
A)A taxpayer is not allowed both an exclusion from income and the credit for child and dependent care expenses on the same amount.
B)A taxpayer is not allowed both a deduction as a medical expense and the credit for child and dependent care expenses on the same amount.
C)If a taxpayer's adjusted gross income exceeds $43,000, the rate for the credit for child and dependent care expenses is 20%.
D)If a taxpayer's adjusted gross income exceeds $15,000 but is not over $17,000, the rate for the credit for child and dependent care expenses is 35%.
E)All of the above statements are correct.
Q2) If a taxpayer chooses to claim a foreign tax credit,those foreign income taxes paid can also be claimed as a deduction.
A)True
B)False
Q3) Discuss the treatment of unused general business credits.
Q4) Describe the withholding requirements applicable to employers.
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Chapter 13: Property Transactions: Determination of Gain or
Loss, basis Considerations, and Nontaxable Exchanges
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Sample Questions
Q1) Milton purchases land and a factory building for his business for $300,000 with $100,000 being allocated to the land.During the first year,Milton deducts cost recovery of $4,922.Milton's adjusted basis for the building at the end of the first year is $195,078 ($200,000 - $4,922).
A)True
B)False
Q2) Mandy and Greta form Tan,Inc.,by transferring the following assets to the corporation in exchange for 5,000 shares of stock each.
Mandy: Cash of $450,000
Greta: Land (worth $450,000; adjusted basis of $90,000).
How much gain must Tan recognize on the receipt of these assets?
Q3) A realized gain on an indirect (conversion into money) involuntary conversion of business property can be postponed,but a realized loss on an indirect involuntary conversion of business property cannot be postponed.
A)True
B)False
Q4) What kinds of property do not qualify under the like-kind provisions?
Q5) Distinguish between a direct involuntary conversion and an indirect involuntary conversion.
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Chapter 14: Property Transactions, capital Gains and
Losses, sec1231, and Recapture Provisions
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Sample Questions
Q1) Sara is filing as head of household and has 2017 taxable income of $57,000 which includes $3,000 of net long-tem capital gain.The net long-term capital gain is made up of $1,000 25% gain and $2,000 0%/15%/20% gain.What is the tax on her taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.
A)$0
B)$8,503.
C)$8,203.
D)$8,303.
E)None of the above
Q2) If § 1231 asset casualty gains and losses net to a gain,the gain is treated as a § 1231 gain.
A)True
B)False
Q3) Section 1231 lookback losses may convert some or all of § 1245 gain into ordinary income.
A)True
B)False
Q4) Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.
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Chapter 15: Alternative Minimum Tax
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Sample Questions
Q1) Cher sold undeveloped land that originally cost $150,000 for $225,000.There is a positive AMT adjustment of $75,000 associated with the sale of the land.
A)True
B)False
Q2) Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They report taxable income of $192,000 and tax preferences of $53,000 in 2017.What is their AMT base for 2017?
A)$0.
B)$212,587.
C)$215,550.
D)$269,850.
Q3) Which of the following statements is incorrect?
A)AMTI calculated under the direct and indirect methods produces the same amount. B)AMTI calculated under the direct and the indirect methods produces different amounts.
C)The tax forms use the direct method to calculate the AMT.
D)Only b.and c.are incorrect.
E)a.,b.,and c.are incorrect.
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Chapter 16: Accounting Periods and Methods
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Q1) A C corporation's selection of a tax year,generally,is independent of the tax year of its principal shareholders.
A)True
B)False
Q2) A CPA practice that is incorporated earns 40% of its annual revenues in the months of March and April.Although the CPA practice is a professional services corporation (PSC),it may use a fiscal year ending April 30th.
A)True
B)False
Q3) Sandstone,Inc.,has consistently included some factory overhead as a current expense,rather than as a cost of producing goods.As a result,the beginning inventory for 2017 is understated by $40,000.If Sandstone voluntarily changes accounting methods effective January 1,2017,the positive adjustment to the inventory is a § 481 adjustment and $10,000 must be added to taxable income for each year 2017,2018,2019,and 2020.
A)True
B)False
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Chapter 17: Corporations: Introduction and Operating Rules
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Q1) Albatross,a C corporation,had $140,000 net income from operations and a $25,000 short-term capital loss in the current year.Albatross Corporation's taxable income is $140,000.
A)True
B)False
Q2) Which of the following statements is incorrect with respect to the treatment of net operating losses by corporations?
A)A corporation may elect to forgo the carryback period and just carryforward an NOL.
B)A corporation may claim a dividends received deduction in computing an NOL.
C)An NOL is generally carried back 2 years and forward 20 years.
D)Unlike individuals, corporations do not adjust their NOLs for net capital losses or nonbusiness deductions.
E)None of the above.
Q3) The passive loss rules apply to closely held C corporations and to personal service corporations but not to S corporations.
A)True
B)False
Q4) Briefly discuss the requirements for the dividends received deduction.
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Chapter 18: Corporations: Organization and Capital Structure
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Q1) Because services are not considered property under § 351,a taxpayer must report as income the fair market value of stock received for such services.
A)True
B)False
Q2) Amy owns 20% of the stock of Wren Corporation,which she acquired several years ago at a cost of $10,000.Amy is Vice-President of Wren and earns a salary of $80,000 annually.Last year,Wren Corporation was experiencing financial problems,and Amy loaned the corporation $25,000.In the current year,Wren becomes bankrupt,and both her stock investment and the loan become worthless.Amy has a nonbusiness bad debt deduction this year of $25,000.
A)True
B)False
Q3) Ashley,a 70% shareholder of Wren Corporation,transfers property with a basis of $250,000 and a fair market value of $900,000 to Wren Corporation for additional stock.Ashley owns 78% of Wren after the transfer.Two other shareholders in Wren transfer a nominal amount of property to Wren along with Ashley's transfer so that Ashley and the two shareholders own 90% of the Wren stock after the transfer.Does Ashley have taxable gain on the transfer?
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Chapter 19: Corporations: Distributions Not in Complete Liquidation
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Sample Questions
Q1) Loss on sale between related parties in 2017.
Q2) Robin Corporation,a calendar year taxpayer,has a deficit in current E & P of $200,000 and a $580,000 positive balance in accumulated E & P.If Robin determines that a $700,000 distribution to its shareholders is appropriate at some point during the year,what is the maximum amount of the distribution that could potentially be treated as a dividend?
A)$0
B)$380,000
C)$480,000
D)$580,000
E)None of the above
Q3) Thistle Corporation declares a nontaxable dividend payable in rights to subscribe to common stock.One right and $25 entitle the holder to subscribe to one share of stock.One right is issued for each share of stock held.Annette,a shareholder,owns 200 shares of stock that she purchased five years ago for $3,000.At the date of distribution of the rights,the market values were $50 per share for the stock and $25 for a right.Annette received 200 rights.She exercises 160 rights and purchases 160 additional shares of stock.She sells the remaining 40 rights for $1,080.What are the tax consequences to Annette?
Q4) State income tax paid in the current year.
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Chapter 20: Corporations: Distributions in Complete
Liquidation and an Overview of Reorganization
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Q1) During the current year,Ecru Corporation is liquidated and distributes its only asset,land,to Kena,the sole shareholder.On the date of distribution,the land has a basis of $250,000,a fair market value of $650,000,and is subject to a liability of $500,000.Kena,who takes the land subject to the liability,has a basis of $120,000 in the Ecru stock.With respect to the distribution of the land,which of the following statements is correct?
A)Kena recognizes a gain of $530,000.
B)Ecru Corporation recognizes a gain of $250,000.
C)Kena recognizes a gain of $30,000.
D)Kena has a basis of $250,000 in the land.
E)None of the above.
Q2) Dipper Corporation is acquiring Bulbul Corporation by exchanging 220,000 shares of Dipper stock and $80,000 cash for all of Bulbul's assets (valued at $500,000),liabilities ($200,000),and accumulated earnings and profits ($120,000).Betty purchased 40% of Bulbul five years ago for $60,000,and Keith purchased the remaining 60% for $90,000.What is the amount of the gain or loss that Betty and Keith recognize (if any),assuming that the exchange qualifies as a § 368 reorganization? What is the basis in their new Dipper stock?
Q3) Discuss the role of letter rulings in corporate reorganizations.
Page 23
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Chapter 21: Partnerships
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Q1) Ken and Lars formed the equal KL Partnership during the current year,with Ken contributing $100,000 in cash and Lars contributing land (basis of $60,000,fair market value of $40,000) and equipment (basis of $0,fair market value of $60,000).Lars recognizes a $40,000 gain on the contribution and his basis in his partnership interest is $100,000.
A)True
B)False
Q2) Meredith is a passive 30% member of the MNO LLC.She is not a managing member and she does not participate in any activities of the LLC.Her interest is more in the nature of an investment.In the current year,Meredith's distributive share of income from the LLC was $50,000.In addition,she received a guaranteed payment of $40,000 for the use of her capital.Assume that her income from other sources exceeds $500,000.How much of Meredith's LLC income will be subject to the self-employment (SE) tax (under the Proposed Regulations) and the net investment income (NII) tax? (Disregard the additional Medicare tax.)
A)$0 SE tax; $0 NII tax.
B)$0 SE tax; $40,000 NII tax.
C)$0 SE tax; $90,000 NII tax.
D)$50,000 SE tax; $40,000 NII tax.
E)$90,000 SE tax; $0 NII tax.
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Chapter 22: S Corporations
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Q1) Tax-exempt income at the corporate level flows through as exempt to S shareholders.
A)True
B)False
Q2) An S corporation's LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.
Q3) Some ____________________and taxation rules apply to an S corporation.
Q4) Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?
A)Payroll penalty.
B)Unreasonable compensation.
C)Life insurance proceeds (nontaxable to the recipient S corporation).
D)Taxable interest.
Q5) Distributions of appreciated property by an S corporation are not taxable to the entity.
A)True
B)False
Q6) If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.
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Chapter 23: Exempt Entities
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Q1) Which of the following is not an example of an exempt organization?
A)Religious, charitable, or educational organization.
B)Voluntary employees' beneficiary association.
C)Labor, agricultural, or horticultural organization.
D)Stock exchange.
E)All of the above can be exempt from tax.
Q2) Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.
A)True
B)False
Q3) If an exempt organization conducts a trade or business that is regularly carried on by the organization,where the business relates to the organization's exempt purpose,the organization is subject to the unrelated business income tax (UBIT).
A)True
B)False
Q4) What tax forms are used to apply for exempt status?
Q5) The League of Women Voters is a § 501(c)(3) organization.
A)True
B)False
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Chapter 24: Multistate Corporate Taxation
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Q1) A unitary group of entities files a combined return that includes all of the affiliates' income and apportionment data.
A)True
B)False
Q2) Although apportionment formulas vary among jurisdictions,most states use the same three factors in the formula.The factors are ____________________,____________________,and
Q3) In the context of Federal and state corporate income taxation:
A)Many states collect their taxes using a "piggyback" on the Federal return.
B)Most state require that the taxpayer report to the state taxing agency the changes made to a return in a Federal audit.
C)Both a.and b.
D)Neither a.nor b.
Q4) State Q has adopted sales-factor-only apportionment for its corporate income tax.As a result,a ____________________ (larger/smaller) percentage of an out-of-state corporation's income is assigned to tax in the state.
Q5) Computer equipment purchased by a charity.
Q6) Training administrative personnel to use an update to ordering software.
Page 27
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Chapter 25: Taxation of International Transactions
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Q1) Which of the following statements regarding a non-U.S.person's U.S.tax consequences is true?
A)Non-U.S. persons may be subject to withholding tax on U.S.-source investment income even if not engaged in a U.S. trade or business.
B)Non-U.S. persons are subject to U.S. income or withholding tax only if they are engaged in a U.S. trade or business.
C)Non-U.S. persons are not taxed on gains from U.S. real property as long as such property is not used in a U.S. trade or business.
D)Once a non-U.S. person is engaged in a U.S. trade or business, the non-U.S. person's worldwide income is subject to U.S. taxation.
Q2) A business operation that accounts for profits and losses using its functional currency.
Q3) U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends. A)True B)False
Q4) Individual who is not a U.S.citizen or resident.
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Chapter 26: Tax Practice and Ethics
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Sample Questions
Q1) AICPA SSTS#1 requires that a client's tax return position:
A)Have a realistic possibility of being sustained if challenged by the Treasury of in the courts.
B)Be supported by substantial authority.
C)Agree with all pertinent IRS interpretations of the tax law.
D)Follow all interpretations of the tax law that were reflected on the immediately prior tax year's return.
Q2) Concerning the penalty for civil tax fraud:
A)The burden of proof is on the taxpayer to establish that no fraud was committed.
B)Fraudulent behavior is more than mere negligence on the part of the taxpayer.
C)The penalty is 100% of the underpayment.
D)Fraud is defined in Code §§ 6663(b) and (f).
Q3) In the context of civil tax fraud litigation,the burden of proof is on the taxpayer to show the court by a "preponderance of the evidence" that he or she was not acting with an intent to evade a tax.
A)True
B)False
Q4) Failure to deposit withholding tax.
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Chapter 27: The Federal Gift and Estate Taxes
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167 Verified Questions
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Sample Questions
Q1) In 2005,Mandy and Hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship.Of the $600,000 purchase price,Mandy provided $300,000 and Hal $300,000 (of which $200,000 had been received as a gift from Mandy).Hal dies first when the land is worth $3,000,000.As to the land,Hal's gross estate must include:
A)$500,000.
B)$1,500,000.
C)$2,500,000.
D)$3,000,000.
E)None of the above.
Q2) In full settlement of her marital rights,Henry transfers property to his wife,Nancy.Three months later,Henry and Nancy are divorced.
Q3) For Federal estate tax purposes,the gross estate cannot include property the decedent does not own.
A)True
B)False
Q4) Lily pays for her grandson's college expenses.Under what conditions might such payments not be a gift?
Q5) QTIP election
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Chapter 28: Income Taxation of Trusts and Estates
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167 Verified Questions
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Sample Questions
Q1) The entity's management generally is directed by the controlling document as to the date of the entity's termination.
Q2) Harry,the sole income beneficiary,received a $40,000 distribution from the Lucy Trust,in a year when the trust's distributable net income was $50,000.Harry's AGI can increase by as much as $50,000.
A)True
B)False
Q3) This year,the Huang Trust is a complex trust.This year,it distributed all of its accounting income and $5,000 from corpus,to its sole income beneficiary Kun.Huang's taxable income for the year is:
A)$0.
B)($100).
C)($300).
D)($5,000).
Q4) When a trust operates a trade or business,it can claim a deduction for wages paid to employees.
A)True
B)False
Q5) The entity is entitled to a personal exemption of $600.
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