Business Taxation
Final Test Solutions
Course Introduction
Business Taxation is a comprehensive course that explores the principles, laws, and practices related to the taxation of businesses. Students will learn about various forms of business organizations such as sole proprietorships, partnerships, corporations, and how taxation impacts each structure. The course covers topics including income determination, allowable deductions, tax compliance requirements, planning strategies, and recent legislative developments. Emphasis is placed on understanding tax forms and filings, dealing with tax authorities, and integrating tax considerations into business decision-making processes, preparing students for practical challenges in the field of business taxation.
Recommended Textbook
MP Fundamentals of Taxation 2015 8th Edition by Ana Cruz
Available Study Resources on Quizplus
15 Chapters
1645 Verified Questions
1645 Flashcards
Source URL: https://quizplus.com/study-set/2907 Page 2
Chapter 1: Introduction to Taxation, the Income Tax
Formula, and Form 1040ez
Available Study Resources on Quizplus for this Chatper
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/57907
Sample Questions
Q1) On Form 1040EZ,the permitted deduction from income for married taxpayers is:
A) $1,500.
B) $10,150.
C) $20,300.
D) $30,450.
Answer: C
Q2) The tax liability for a single individual with taxable income of $77,593 is:
A) $11,106.
B) $15,250.
C) $15,255.
D) $15,345.
Answer: B
Q3) Which of the following types of Regulations take the place of the Internal Revenue Code and have the full effect of law?
A) Final.
B) Legislative.
C) Temporary.
D) Proposed.
Answer: B
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter
2:
Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/57906
Sample Questions
Q1) Marital status of a taxpayer is determined on the last day of the tax year.
A)True
B)False
Answer: True
Q2) The IRS can impose a _______ penalty on any portion of understatement of tax that is attributable to fraud.
A) 20%
B) 25%
C) 75%
D) 5%
Answer: C
Q3) What is the amount of the tax liability for a qualifying widow(er)with a dependent child and having taxable income of $121,600? All answers should be rounded to the nearest dollar.
A) $25,234.
B) $22,113.
C) $30,400.
D) $27,665.
Answer: B
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Gross Income: Inclusions and Exclusions
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/57905
Sample Questions
Q1) Which one of the following items is not exempt under the umbrella of compensation for injuries or sickness?
A) Payments received for damages as a result of personal physical injuries.
B) Employer-provided adoption assistance.
C) Payments received under workers' compensation acts.
D) Disability income received from a terrorist attack in a foreign country while employed by the U.S.government.
Answer: B
Q2) The amount of savings bond interest exempt from tax is phased out completely when an individual is married and his or her modified AGI reaches:
A) $91,000.
B) $112,050.
C) $117,000.
D) $143,950.
Answer: D
Q3) Welfare payments received by a taxpayer must be reported in income.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Adjustments for Adjusted Gross Income
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/57894
Sample Questions
Q1) All of the following are requirements for a payment to be considered alimony except,
A)Payments cannot be a transfer of services.
B)Payments are not required after the death of the recipient spouse.
C)Payments are required by a divorce or separation agreement.
D)Payments can either be in cash or property.
Q2) For 2014,taxpayers can take an above-the-line deduction for qualified tuition and related expenses paid during the year for the taxpayer,taxpayer's spouse,or a dependent.
A)True
B)False
Q3) Roberto files his tax return as married filing separately.He has not lived with his wife for over three years.In the current year,by order of the court,he paid her $500 per month for 12 months as separate maintenance.He will be able to deduct $6,000 as alimony for the year.
A)True
B)False
Q4) For 2014,the amount of the student loan interest deduction is limited to $3,500.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Itemized Deductions
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/57893
Sample Questions
Q1) Prescription drugs obtained outside the United States,such as from Canada,are never deductible on a U.S.tax return.
A)True
B)False
Q2) What is usually the largest miscellaneous itemized deduction category? Does it require any special treatment?
Q3) Moesha paid $60 for Girl Scout cookies and $50 for Cub Scout cracker jacks.Moesha may claim the full $110 as a charitable contribution deduction.
A)True
B)False
Q4) Which of the following miscellaneous itemized deductions is not subject to the 2% of adjusted gross income limitation?
A)Unreimbursed employee business expenses.
B)Gambling losses up to the amount of gambling winnings.
C)Union or professional dues and subscriptions.
D)Tax return preparation fees.
Q5) In order for a personal property tax to be deductible as an itemized deduction,what three tests are required?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Self-Employed Business Income
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/57904
Sample Questions
Q1) The §179 expense deduction is limited to earned income.
A)True
B)False
Q2) The standard mileage rate encompasses depreciation or lease payments,maintenance and repairs,gasoline,oil,insurance,and vehicle registration fees.
A)True
B)False
Q3) On November 30,2014,Constance purchased an apartment building for $750,000.Determine her cost recovery deduction for 2014 rounded to the nearest dollar?
A) $0.
B) $2,400.
C) $3,413.
D) $26,138.
Q4) Xavier bought furniture and fixtures (7-year property)on September 15,2014 for $505,000.He elects to expense as much as possible under Section 179 but does not elect the 50% bonus.Xavier's earned income for the year is $500,000.What is the maximum deduction Xavier can take in 2014 for the equipment? (Round answers to the nearest dollar)
Q5) Describe each of the depreciation conventions and when each is applicable.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Capital Gains and Other Sales of Property
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/57903
Sample Questions
Q1) Which of the following statements is correct regarding the sale of ordinary assets?
A) the sale of inventory for a profit is considered to be a sale of an ordinary asset.
B) the sale of an asset outside the normal course of a trade or business is a sale of an ordinary asset.
C) the sale of business property held for more than a year is a sale of an ordinary asset.
D) the sale of any business property regardless of holding period is a sale of an ordinary asset.
Q2) Ordinary gains or losses produced outside the normal course of business relate to the sale of business property held less than one year and do not include the sale of accounts receivable.
A)True B)False
Q3) Inventory on hand at the end of the year is Section 1231 property. A)True
B)False
Q4) Jim,the owner of a sole proprietorship,sold the following assets in 2014:
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Rental Property, Royalties, and Income From
Flow-Through Entities
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/57902
Sample Questions
Q1) What are the rules concerning the deductibility of travel as it relates to rental properties? How are travel expenses to and from rental properties calculated?
Q2) Brad and Kate received $9,500 for rent from Mike and Janet,who are renting their home in Santa Ana,California.Brad and Kate did not use this property for personal use.The rent covers eight months from August 1 of the current year to March 31 of the following year.The amount also includes a security deposit of $1,500.How much should Brad and Kate report as rental income in the current tax year?
A) $1,500
B) $5,000
C) $8,000
D) $9,500
Q3) A personal/rental property (that is not a trade or business)may report its income and expenses on Schedule A.
A)True
B)False
Q4) When reporting the income and expenses of a rental property,what determines the use of the Schedule C versus the Schedule E?
Q5) What are the different types of income that may be reported on Schedule E?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Tax Credits
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/57901
Sample Questions
Q1) A student can only receive the American opportunity tax credit if he/she is enrolled in the first four years of postsecondary education.
A)True B)False
Q2) The calculation for the credit for the elderly or disabled requires that the appropriate base amount be adjusted by two items.What are those two items and how is the base amount adjusted?
Q3) Matt is a single father.He paid $5,000 in qualifying expenses for his son,Kyle,to attend the University of Oregon.Kyle is a sophomore.Matt's AGI is $47,000.What is his allowable American opportunity tax credit after the credit phaseout based on AGI is taken into account?
A) $0.
B) $2,500.
C) $4,000.
D) $5,000.
Q4) A qualifying child for the child tax credit must be a dependent and under the age of 14.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Payroll Taxes
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/57900
Sample Questions
Q1) Form 4070 is used by employers to record employees' tips subject to tax withholding and FICA taxes.
A)True
B)False
Q2) Employers with a payroll tax liability of less than $2,500 at the end of a quarter can pay the payroll tax liability at the end of the next month following the quarter with Form 941.
A)True
B)False
Q3) The penalty for the filing of W-2s containing mismatched names and social security numbers is:
A) 0.
B) $15 per form.
C) $30 per form.
D) $50 per form.
Q4) In the lookback period,if the employer reported total payroll taxes of more than $50,000,the employer is a semiweekly schedule depositor.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Retirement and Other Tax-Deferred Plans and Annuities
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/57899
Sample Questions
Q1) Under what circumstances might an individual want to establish an annuity contract in retirement?
Q2) Quentin and Janelle would like to establish a Coverdell Education Savings Account (CESA)for their daughter,age 5,and their nephew (the son of Quentin's brother),age 8.Their AGI is $145,000.Quentin's brother has already contributed $1,500 to a CESA for his son.
a.What is the maximum amount Quentin and Janelle can contribute to a CESA for their daughter and their nephew?
b.If their AGI were $208,000,what is the maximum amount they can contribute to a CESA for their daughter and their nephew?
Q3) If only one spouse is employed,and that spouse is not covered under an employer-sponsored retirement plan,then the non-working spouse can make a deductible contribution to his or her own IRA.
A)True
B)False
Q4) There are two types of IRAs: a traditional IRA and a Roth IRA.
A)True
B)False
Q5) What is an annuity contract? Who are the parties to an annuity contract?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Special Property Transactions
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/57898
Sample Questions
Q1) Matt and Opal were married in April of 2014.Matt has lived in his personal residence for fifteen years and Opal moved into the house after the marriage.Matt died in October 2014.Opal sold the house at a $300,000 gain in December,2014.How much of the gain can Opal exclude?
A) $0.
B) $250,000.
C) $300,000.
D) None of these.
Q2) A wash sale occurs when:
A) A taxpayer sells and buys substantially identical stock.
B) A taxpayer sells stock and buys substantially identical stock within 30 days before or after the sale.
C) A taxpayer sells stock and buys substantially identical stock within 60 days before or after the sale.
D) When a taxpayer sells stock at the end of the year to offset a gain recognized earlier in the year.
Q3) A dealer of equipment can recognize gains using the installment method.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: At-Riskpassive Activity Loss Rules and the
Individual Alternative Minimum Tax
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/57897
Sample Questions
Q1) Claudia invested $50,000 cash in the C&S General Partnership and received a 20% interest.The partnership borrowed $200,000 of full recourse debt from a local bank.Assuming that Claudia is personally liable for $40,000 if the partnership defaults on the loan,what is Claudia's at-risk amount before considering any partnership income or loss?
A) $0.
B) $40,000.
C) $50,000.
D) $90,000.
Q2) The term "active participation" is used to determine:
A) Whether an activity is considered passive.
B) Whether a taxpayer is a material participant.
C) Whether a taxpayer is eligible for the $25,000 rental offset.
D) None of these.
Q3) If a limited partner materially participates in the trade or business of a limited partnership,the passive loss rules still apply.
A)True
B)False
Q4) Identify factors that increase or decrease the at-risk amount.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Partnership Taxation
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/57896
Sample Questions
Q1) A partner can recognize a loss on a liquidating distribution.
A)True
B)False
Q2) Molly has a $15,000 basis in her partnership interest when she receives a liquidating distribution from the partnership.Molly receives cash of $6,000.What is Molly's recognized gain or loss on the liquidating distribution?
A) $0.
B) $(6,000).
C) $(9,000).
D) $(15,000).
Q3) Rich is a partner in RKW partnership.Rich owned 50% from January 1,2014 to April 30,2014,when he bought Kevin's 25% interest.He owned 75% for the rest of the year (assume a 365-day year).The partnership had ordinary income of $150,000 and $25,000 in long-term capital gains.Barring any special allocations in a partnership agreement,Rich's share of the income items is:
A) $75,000 ordinary income; $12,500 capital gain.
B) $100,172 ordinary income; $16,696 capital gain.
C) $112,500 ordinary income; $18,750 capital gain.
D) $150,000 ordinary income; $25,000 capital gain.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Corporate Taxation
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/57895
Sample Questions
Q1) Caesar owns 100% of Roman Company and his basis in its stock is $35,000.He receives cash of $10,000 and property with FMV of $30,000 and basis of $50,000 in complete liquidation of his ownership interest.As a result of this transaction,which of the following statements is incorrect?
A) Caesar reports dividend income of $40,000.
B) Caesar has a nontaxable return of capital of $35,000.
C) Roman Company records a loss of $20,000.
D) Caesar reports a capital gain of $5,000.
Q2) If a corporation has a net capital loss,it can carry that loss back three years and then forward six.
A)True
B)False
Q3) PQR Corporation has taxable income before DRD of $60,000 that includes a dividend of $10,000 from a large publicly-traded domestic corporation.What is the tax liability of PQR Corporation?
A) $7,500.
B) $8,000.
C) $8,250.
D) $10,000.
To view all questions and flashcards with answers, click on the resource link above.
Page 17