Corporate Taxation Exam Solutions
Course Introduction
Corporate Taxation examines the principles, rules, and practices governing the taxation of corporations and their shareholders. The course explores topics such as the formation and capitalization of corporations, taxation of corporate income, distributions to shareholders, mergers and acquisitions, and liquidation. Students will analyze how corporate tax policy impacts business decisions, studying key provisions of the Internal Revenue Code and relevant regulations. Through case studies and problem-solving exercises, learners develop practical skills to understand, apply, and plan for tax consequences in various corporate scenarios.
Recommended Textbook
South Western Federal Taxation 2011 Comprehensive 34th Edition by William H. Hoffman
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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) A parent employs his twin daughters,age 17,in his sole proprietorship.The daughters are not subject to FICA coverage.
A)True
B)False
Answer: True
Q2) Timothy recently converted a warehouse into apartment lofts,which he is renting to single professionals.In making the conversion,he emphasized improvements that were portable in nature.Thus,the sprinkler system,heating and cooling units,and room dividers are all removable from the building.In terms of ad valorem property taxes,what was Timothy trying to accomplish?
Answer: When personality is permanently attached to real estate so that its removal will cause irreparable damage,it becomes a fixture.Consequently,it ceases to be personality and is now regarded as realty.The classification of an asset is important because different ad valorem taxes apply to realty than to personality.For one thing,the ad valorem tax on realty is less easily avoided.Also to be considered is the possibility that the ad valorem tax on personality (even if it cannot be avoided)could be lower than that applicable to realty.
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Page 3
Chapter 2: Working With the Tax Law
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Sample Questions
Q1) Proposed Regulations have the force and effect of law.
A)True
B)False
Answer: False
Q2) Neither the 1939 nor the 1954 Code substantially changed the tax law existing on the date of its enactment.
A)True
B)False
Answer: True
Q3) The granting of a Writ of Certiorari indicates that at least five members of the Supreme Court believe that an issue is of sufficient importance to be heard by the full court.
A)True
B)False
Answer: False
Q4) Accessing tax documents through electronic means offers limited advantages over a strictly paper-based approach.
A)True
B)False Answer: False
Page 4
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Chapter 3: Computing the Tax
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Sample Questions
Q1) Derek,age 46,is a surviving spouse.If he has itemized deductions of $11,600 for 2010,Derek should not claim the standard deduction.
A)True
B)False
Answer: True
Q2) An "above the line" deduction refers to a deduction for AGI.
A)True
B)False
Answer: True
Q3) For the year a spouse dies,the surviving spouse is considered married for the entire year for income tax purposes.
A)True
B)False Answer: True
Q4) The IRS facilitates the filing of income tax returns by persons in the U.S.illegally through the issuance of ITINs.
A)True
B)False Answer: True
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Chapter 4: Gross Income: Concepts and Inclusions
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Sample Questions
Q1) Amos is the sole shareholder of an S corporation that earned $100,000 in 2010 and distributed $25,000 to Amos.Amos must recognize $25,000 as income from the S corporation in 2010.
A)True
B)False
Q2) With respect to the prepaid income from services,which of the following is true?
A)The treatment of prepaid income is the same for tax and financial accounting.
B)A cash basis taxpayer can spread the income over the period services are to be provided if all of the services will be completed by the end of the tax year following the year of receipt.
C)An accrual basis taxpayer can spread the income over the period services are to be provided if all of the services will be completed by the end of the tax year following the year of receipt.
D)An accrual basis taxpayer can spread the income over the period services are to be provided on a contract for three years or less.
E)None of the above.
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Chapter 5: Gross Income: Exclusions
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Sample Questions
Q1) Amber received a scholarship to be used as follows: tuition $6,000;room and board
$4,000;and books and laboratory supplies $1,000.Amber is required to include only $4,000 in her gross income.
A)True
B)False
Q2) Emily is in the 35% marginal tax bracket.She can purchase a York County school bond yielding 5% interest,but she is interested in earning a higher return for comparable risk.
A)If she buys a corporate bond that pays 8% interest,her after-tax rate of return will be greater than if she purchased the York County school bond.
B)If she buys a U.S.government bond paying 6%,her after-tax rate of return will be less than if she purchased the York County school bond.
C)If she buys a common stock paying 6% dividend,her after-tax rate of return will be higher than if she purchased the York County school bond.
D)All of the above are correct.
E)None of the above are correct.
Q3) What Federal income tax benefits are provided for college students?
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Page 7
Chapter 6: Deductions and Losses: in General
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Q1) Legal fees incurred in connection with a criminal defense are deductible if the crime is associated with a trade or business.
A)True
B)False
Q2) Susan rents part of her personal residence in the summer for 10 days for $1,000.Anne rents all of her personal residence for 3 weeks in December for $2,500.Anne must include the $2,500 in her gross income whereas Susan is not required to include the $1,000 in her gross income.
A)True
B)False
Q3) For a vacation home to be classified in the personal/rental use category,what attributes must be present?
Q4) Are there any circumstances under which lobbying expenditures are deductible?
Q5) Legal expenses incurred in connection with rental property are deductions from AGI. A)True B)False
Q6) What losses are deductible by an individual taxpayer?
Q7) Briefly discuss the disallowance of deductions for capital expenditures.
Page 8
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Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Sample Questions
Q1) Why was the domestic production activities deduction (DPAD)enacted by Congress?
Q2) On June 2,2009,Fred's TV Sales sold Mark a large HD TV,on account,for $12,000.Fred's TV Sales uses the accrual method.In 2010,when the balance on the account was $8,000,Mark filed for bankruptcy.Fred was notified that he could expect to receive 60 cents on the dollar of the amount owed to him.In 2011,final settlement was made and Fred received $5,000.How much bad debt loss can Fred deduct and in which years?
A)2009-$12,000.
B)2009-$0;2010-$8,000.
C)2009-$0;2010-$3,200;2011-$0.
D)2010-$4,800.
E)None of the above.
Q3) Losses on rental property are classified as deductions for AGI.
A)True
B)False
Q4) Research and experimental expenditures do not include expenditures for ordinary testing of materials for quality control.
A)True
B)False
Q5) How is qualified production activities income (QPAI)calculated?
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Chapter 8: Depreciation,cost Recovery,amortization,and Depletion
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Sample Questions
Q1) Percentage depletion enables the taxpayer to recover more than the cost of an asset.
A)True
B)False
Q2) Any § 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year.
A)True
B)False
Q3) Goodwill associated with the acquisition of a business cannot be amortized.
A)True
B)False
Q4) In 2009,Gail had a § 179 deduction carryover of $15,000.In 2010,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2010 is $127,000.Determine Gail's § 179 deduction for 2010.
A)$15,000.
B)$115,000.
C)$128,000.
D)$130,000.
E)None of the above.
Page 10
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Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
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Sample Questions
Q1) A taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of tolls and parking.
A)True
B)False
Q2) 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 (up to $250)purchased by a fifth grade teacher.
D)Union dues of an employed machinist.
E)None of the above.
Q3) Contributions to a Roth IRA can be made up to the due date (including extensions)of the taxpayer's income tax return.
A)True
B)False
Q4) A taxpayer takes six clients to an NBA playoff game.If all of the tickets (list price of $120 each)are purchased on the Internet for $1,800 ($300 each),only $150 ($300 * 50% cutback adjustment)per ticket is deductible.
A)True
B)False
Page 11
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Chapter 10: Deductions and Losses: Certain Itemized
Deductions
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Sample Questions
Q1) Barbara,who is self-employed,paid $3,600 for medical insurance coverage.She can include 100% of the $3,600 when calculating her itemized medical expense deduction.
A)True
B)False
Q2) In April 2010,Hiram,a calendar year cash basis taxpayer,paid the state of Nebraska additional income tax for 2009.Since it relates to 2009,for Federal income tax purposes the payment qualifies as a tax deduction for tax year 2009.
A)True
B)False
Q3) In 2010,Michelle,single,paid $2,500 interest on a qualified student loan.Her MAGI was $65,000.She may deduct the $2,500 interest as a deduction for AGI.
A)True
B)False
Q4) Victor sold his personal residence to Colleen and paid real estate taxes of $9,450 for the year,$3,250 of which was apportioned to Colleen based on the period she owned the property during the year.What are the income tax consequences to each party?
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Page 12
Chapter 11: Investor Losses
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Sample Questions
Q1) Josh has investments in two passive activities.Activity A (acquired three years ago)produces income of $30,000 this year,while Activity B (acquired two years ago)produces a loss of $50,000.What is the amount of Josh's suspended loss for the year?
A)$0.
B)$18,000.
C)$20,000.
D)$50,000.
E)None of the above.
Q2) Vail owns interests in a beauty salon,a natural foods store,and a tanning salon.Several full-time employees work at each of the enterprises.As of the end of November of the current year,Vail has worked 180 hours in the beauty salon,220 hours at the natural foods store,and 80 hours at the tanning salon.These three ventures collectively will produce income.Vail also owns one other passive activity that is producing a loss (a limited partnership in which she has reported no participation).How should Vail plan her activities for the remainder of the year?
Q3) Identify how the passive loss rules broadly classify various types of income and losses.Provide examples of each category.
Q4) What special passive loss treatment is available to real estate activities?
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Chapter 12: Tax Credits and Payments
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Sample Questions
Q1) The education tax credits (i.e. ,the American Opportunity credit and the lifetime learning credit)are available to help defray the cost of higher education regardless of the income level of the taxpayer.
A)True
B)False
Q2) An employer's tax deduction for wages is not affected by the work opportunity tax credit.
A)True
B)False
Q3) If a taxpayer chooses not to claim a foreign tax credit,the foreign income taxes paid can be claimed as a deduction.
A)True
B)False
Q4) Child and dependent care expenses include amounts paid for general household services.
A)True
B)False
Q5) Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.
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Chapter 13: Part 1--Property Transactions: Determination of
Gain or Loss,basis Considerations,and Nontaxable Exchanges
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Sample Questions
Q1) Molly exchanges a small machine (adjusted basis of $85,000;fair market value of $78,000)used in her business and investment land (adjusted basis of $10,000;fair market value of $15,000)for a large machine (fair market value of $93,000)to be used in her business in a like-kind exchange.What is Molly's recognized gain or loss?
A)$0.
B)$5,000.
C)($2,000).
D)($7,000).
E)None of the above.
Q2) The amount received for a utility easement on land is included in the gross income of the taxpayer.
A)True
B)False
Q3) Angela receives stock (worth $11,000)as a gift from her aunt.Her aunt's adjusted basis is $7,000 and the transfer did not result in a gift tax.Angela's basis in the stock is $11,000.
A)True
B)False
Page 15
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Chapter 13: Part 2--Property Transactions: Determination of
Gain or Loss,basis Considerations,and Nontaxable Exchanges
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Sample Questions
Q1) On January 5,2010,Bill sells his principal residence with an adjusted basis of $185,000 for $500,000.He has owned and occupied the residence for 18 years.He pays $30,000 in commissions and $1,200 in legal fees in connection with the sale.One month before the sale,Bill painted the house at a cost of $4,000 and repaired various items at a cost of $2,500.On October 15,2010,Bill purchases a new home for $400,000.On November 15,2011,he pays $25,000 for completion of a new room on the house,and on January 14,2012,he pays $15,000 for the construction of a pool.What is the Bill's recognized gain on the sale of his old principal residence and what is the basis for the new residence?
Q2) Amanda uses a delivery van in her business.The adjusted basis is $21,000,and the fair market value is $18,000.The delivery van is stolen and Amanda receives insurance proceeds of $18,000.Determine Amanda's realized and recognized gain or loss.
Q3) Discuss the effect of a liability assumption on the seller's amount realized and the buyer's adjusted basis.
Q4) Why is it generally undesirable to pass property by death when its fair market value is less than basis?
Q5) Identify two tax planning techniques that can be used to avoid the wash sale disallowance of loss.
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Chapter 14: Property Transactions: Capital Gains and Losses,1231,and
Recapure Provisions
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Q1) In 2010,Satesh has $4,000 short-term capital loss,$14,000 0%/15% long-term capital gain,and $7,000 qualified dividend income.Satesh is single and has other taxable income of $15,000.Which of the following statements is correct?
A)No more than $14,000 of Satesh's taxable income is taxed at 0%.
B)No more than $7,000 of Satesh's taxable income is taxed at 0%.
C)No more than $17,000 of Satesh's taxable income is taxed at 0%.
D)None of Satesh's taxable income is taxed at 0%.
E)All of Satesh's taxable income is taxed at 0%.
Q2) Vertigo,Inc. ,has a 2010 net § 1231 loss of $64,000 and had a $32,000 net § 1231 gain in 2009.For 2010,Vertigo's net § 1231 loss is treated as:
A)Ordinary loss.
B)Ordinary gain.
C)Capital loss.
D)Capital gain.
E)None of the above.
Q3) For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.
A)True
B)False
Page 17
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Chapter 15: Alternative Minimum Tax
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Sample Questions
Q1) If a single taxpayer has regular income tax liability of $19,500 and AMTI of $130,000,calculate the AMT for 2010.
A)$3,296.
B)$3,426.
C)$22,796.
D)$42,325.
E)None of the above.
Q2) For the ACE adjustment,discuss the relationship between ACE and unadjusted AMTI.
Q3) Erin owns a mineral property that had a basis of $10,000 at the beginning of the year.The property qualifies for a 15% depletion rate.Gross income from the property was $120,000 and net income before the percentage depletion deduction was $50,000.What is Erin's tax preference for excess depletion?
A)$8,000
B)$10,000.
C)$18,000.
D)$0.
E)None of the above.
Q4) What effect do deductible gambling losses for regular income tax purposes have in calculating AMTI?
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Chapter 16: Accounting Periods and Methods
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Q1) An S corporation's tax year,generally,is determined by the tax year of its principal shareholders.
A)True
B)False
Q2) Which of the following statements regarding the matching principle is correct?
A)The matching principle is never relevant to tax accounting.
B)The matching principle of financial accounting is an important component of the cash method of accounting.
C)The matching principle of financial accounting is the cornerstone of accrual basis tax accounting.
D)The matching principle of financial accounting is sometimes relevant to timing deductions for an accrual basis taxpayer's recurring items.
E)None of the above.
Q3) If interest paid is attributed to the taxpayer's building which is under construction,the taxpayer must add the interest to the cost of the building.
A)True
B)False
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Chapter 17: Corporations: Introduction and Operating Rules
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Q1) To close perceived tax loopholes,Congress enacted two limitations on the amount of any dividends received deduction.Briefly describe the two loophole closing provisions and explain why Congress felt they were necessary.
Q2) Albatross,a C corporation,had $125,000 net income from operations and a $10,000 short-term capital loss in 2010.Albatross Corporation's taxable income is $115,000.
A)True
B)False
Q3) Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions - subtractions = taxable income.Which of the following items is a subtraction on Schedule M-1.
A)Book depreciation in excess of allowable tax depreciation.
B)Federal income tax per books.
C)Premiums paid on life insurance policy on key employee.
D)Tax-exempt interest.
E)None of the above.
Q4) Briefly describe the accounting methods available for adoption by a C corporation.
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Page 20
Chapter 18: Corporations: Organization and Capital Structure
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Q1) Kim owns 100% of the stock of Cardinal Corporation.In the current year Kim transfers an installment obligation,tax basis of $30,000 and fair market value of $200,000,for additional stock in Cardinal worth $200,000.
A)Kim recognizes no taxable gain on the transfer.
B)Kim has a taxable gain of $170,000.
C)Kim has a taxable gain of $180,000.
D)Kim has a basis of $200,000 in the additional stock she received in Cardinal Corporation.
E)None of the above.
Q2) When forming a corporation,a transferor-shareholder may choose to receive some corporate debt along with stock.Identify some of the issues the transferor must consider when deciding whether debt should be a part of the transaction.
Q3) When depreciable property is transferred to a controlled corporation under § 351,any recapture potential disappears and does not carry over to the corporation.
A)True
B)False
Q4) What is the rationale underlying the tax deferral treatment available under § 351?
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Chapter 19: Corporations: Distributions Not in Complete Liquidation
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Q1) When computing current E & P,taxable income is not adjusted for the deferred gain in a § 1033 involuntary conversion.
A)True
B)False
Q2) Hawk Corporation has 300 shares of stock outstanding: Marina owns 60 shares,Kent owns 90 shares,and Tom owns 75 shares.Blackbird Partnership owns the remaining 75 shares of stock in Hawk Corporation.Marina,Kent,and Tom,all unrelated,are equal partners of Blackbird Partnership.With respect to the stock attribution rules under § 318:
A)Marina owns,directly and indirectly,85 shares in Hawk Corporation.
B)Tom owns,directly and indirectly,150 shares in Hawk Corporation.
C)Kent owns,directly and indirectly,90 shares in Hawk Corporation.
D)Blackbird Partnership owns,directly and indirectly,150 shares in Hawk Corporation.
E)None of the above.
Q3) Cash distributions received from a corporation with a deficit balance in accumulated E & P at the beginning of the year will not be taxed as dividend income.
A)True
B)False
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Chapter 20: Distributions in Complete Liquidation and an
Overview of Reorganizations
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Q1) Brown Corporation purchased 85% of the stock of Green Corporation five years ago for $1.2 million.In the current year,Brown Corporation liquidates Green Corporation and acquires assets with a basis to Green Corporation of $800,000 (fair market value of $1.3 million).Brown Corporation will have a basis in the assets of $1.2 million,the same as Brown's basis in the Green stock.
A)True
B)False
Q2) United States tax policy tries to encourage business development.
A)True
B)False
Q3) For purposes of the § 338 election,a corporation must acquire,in a taxable transaction,at least 50% of the stock (voting power and value)of another corporation within an 12-month period.
A)True
B)False
Q4) For a corporate restructuring to qualify as a tax-free reorganization,the transaction must have a sound business purpose.
A)True
B)False
Page 23
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Chapter 21: Partnerships
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Q1) Which of the following statements is always correct regarding assets acquired by a newly formed partnership? If a partner contributes:
A)Depreciable property: the partnership treats the property as newly acquired depreciable property,and may claim a § 179 deduction.
B)Unrealized (cash-basis)receivables: the partnership will report a capital gain when the receivable is collected.
C)Inventory (in the partner's hands): the partnership reports ordinary income if the property is held as a capital asset and sold within five years of the contribution date.
D)Land valued at less than its basis: the partnership reports a § 1231 loss if the property is sold at a loss.
E)None of these statements is correct.
Q2) If a partnership allocates losses to the partners,the partners must first apply the basis limitation,then the at-risk limitations,and finally the passive loss limitations.If all three hurdles are met,the partner may deduct the loss.
A)True
B)False
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Chapter 22: S Corporations
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Q1) An S shareholder who dies during the corporate tax year must report his or her share of the pro rata income (or loss)up to the date of death on the final individual tax return.
A)True
B)False
Q2) An S corporation with substantial AEP has operating revenues of $410,000,taxable interest income of $390,000,operating expenses of $260,000,and deductions attributable to the interest of $150,000.The § 1375 penalty tax payable,if any,is:
A)$0.
B)$40,923.
C)$116,923.
D)$136,500.
E)None of the above.
Q3) An S shareholder's basis is increased by stock purchases and capital contributions. A)True B)False
Q4) Explain how the domestic production activities deduction is used for an S corporation.
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Chapter 23: Exempt Entities
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Q1) Which requirements must be satisfied for an exempt organization to be classified as an unrelated trade or business? Is being classified as an unrelated trade or business good or bad?
Q2) The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes and thus be classified as a feeder organization.
A)True
B)False
Q3) Which of the following statements is correct?
A)The unrelated business income tax (UBIT)does not apply to exempt organizations that receive broad public support.
B)The unrelated business income tax (UBIT)treats the tax-exempt entity as if it were subject to the corporate income tax on its unrelated business income.
C)Unrelated business income is income derived from activities not related to the exempt purpose of the exempt organization.
D)Only b.and c.are correct.
E)a. ,b. ,and c.are correct
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Chapter 24: Multistate Corporate Taxation
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Q1) Summarize the principles of multistate tax planning.
Q2) A use tax:
A)Applies when a State A resident purchases a new automobile from a State A dealership.
B)Applies when a State A resident purchases a new automobile from a State B dealership,then driving the car home.
C)Applies when a State A resident purchases groceries from a neighborhood store.
D)Applies when a State A resident purchases hardware from sears.com rather than at the Best Buy store at the local mall.
Q3) A state wants to increase its income tax collections,but politically it would be unwise to raise taxes on in-state individuals or businesses.Identify some changes to the income tax apportionment formula that would shift the scheduled income tax increases to out-of-state businesses.
Q4) In conducting multistate tax planning,the taxpayer should:
A)Review tax opportunities in light of their effect on the overall business.
B)Consider additional administrative costs generated by the plan.
C)Exploit inconsistencies among the statutes and formulas of the states.
D)Recognize that minimizing state tax costs may not always be prudent.
E)All of the above are true.
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Chapter 25: Taxation of International Transactions
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Sample Questions
Q1) Which of the following statements regarding the sourcing of gross income is true?
A)Foreign persons not engaged in a U.S.trade or business are indifferent as to whether any of their income is U.S.source.
B)All income earned by foreign persons not engaged in a U.S.trade or business is treated as foreign source.
C)U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S.trade or business.
D)Certain U.S.-source investment income earned by foreign persons not engaged in a U.S.trade or business may be subject to a U.S.withholding tax.
Q2) Discuss the policy reasons for the § 367 cross-border transfer rules.Provide two examples of transactions to which § 367 would apply.
Q3) A "U.S.shareholder" for purposes of CFC classification is any U.S.person who owns directly,indirectly,or constructively at least 10% of the voting power or value of a foreign corporation.
A)True
B)False
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Chapter 26: Tax Practice and Ethics
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) The penalty for substantial understatement of tax liability does not apply if:
A)The taxpayer has substantial authority for the treatment taken on the tax return.
B)The relevant facts affecting the treatment are adequately disclosed in the return or on Form 8275.
C)The IRS failed to meet its burden of proof in showing the taxpayer's error.
D)All of the above statements are correct.
E)None of the above statements are correct.
Q2) Orville,a cash basis,calendar year taxpayer,filed his income tax return 100 days after the due date.Orville never extended his return,and with the return he paid the taxes that were due.What penalties will Orville incur,and how much is the penalty if his additional tax is $5,000? Disregard any additional interest he must pay.
Q3) In the context of civil fraud,the burden of proof is on the IRS to show by a "preponderance of the evidence" that the taxpayer had a specific intent to evade a tax.
A)True
B)False
Q4) According to the IRS,the annual "Tax Gap" totals about $______________________ billion.
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Chapter 27: The Federal Gift and Estate Taxes
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Joint tenancies and tenancies by the entirety avoid probate,while tenancies in common and community property do not.Why?
Q2) In 2009,grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter.The maximum annual exclusion allowed to them is $65,000 ($13,000 * 5 years).
A)True
B)False
Q3) Harry and Brenda are husband and wife.Using his funds,Harry purchases real estate which he lists as: "Harry and Brenda,tenants by the entirety with right of survivorship." If Brenda dies first,none of the real estate will be included in her gross estate.
A)True
B)False
Q4) Lila is the owner and beneficiary of a policy on the life of her husband,Austin.Upon Austin's prior death,the insurance proceeds paid to Lila qualify for the marital deduction.
A)True
B)False
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Chapter 28: Income Taxation of Trusts and Estates
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) The distributable net income (DNI)of a fiduciary taxpayer:
A)Constitutes the maximum amount for the fiduciary's distribution deduction.
B)Specifies the character of the distributions in the hands of the year's income beneficiaries.
C)Marks the maximum amount of gross income that income beneficiaries must report when receiving distributions.
D)All of the above.
Q2) If provided for in the trust agreement,a trust might terminate when the income beneficiary reaches age 30.
A)True B)False
Q3) Remainder beneficiary Shelley receives a $50,000 net operating loss carryover when the Malone Trust terminates.Shelley deducts this amount ____________________ (for/from)AGI on her Form 1040.
Q4) A Form 1041 must be filed by an estate that recognizes $____________________ or more gross income for the tax year.
Q5) How is entity accounting income computed? What role does it play in Subchapter J?
Q6) How does the alternative minimum tax affect fiduciary entities?
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