Corporate Taxation
Final Exam Questions
Course Introduction
Corporate Taxation explores the fundamental principles, rules, and regulations governing the taxation of corporations and their shareholders. The course covers topics such as the formation, operation, and dissolution of corporations; calculation of taxable income; tax treatment of distributions, dividends, and redemptions; and the tax consequences of mergers, acquisitions, and reorganizations. Emphasis is placed on navigating the Internal Revenue Code and Treasury Regulations, understanding key judicial decisions, and applying tax planning strategies to real-world corporate scenarios. The course prepares students for advanced study in tax law, legal practice, or careers in accounting, finance, and business management.
Recommended Textbook
Pearsons Federal Taxation 2018 Comprehensive 31st Edition by Timothy J. Rupert
Available Study Resources on Quizplus
34 Chapters
4096 Verified Questions
4096 Flashcards
Source URL: https://quizplus.com/study-set/3275 Page 2
Chapter 1: Tax Research
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/65036
Sample Questions
Q1) George's case was handled under the "small tax case procedure." He does not agree with the findings of the Tax Court.He would like to appeal the decision.Which one of the following is true?
A)There is no appeal.
B)He can appeal the case,but only if the amount of tax involved is greater than $5,000.
C)He would appeal first to the U.S.Court of Appeals for the Federal Circuit.
D)He would appeal first to the U.S.Court of Federal Claims.
Answer: A
Q2) Regulations are
A)equal in authority to legislation.
B)equal in authority to legislation if statutory.
C)presumed to be valid and to have almost the same weight as the IRC.
D)equal in authority to legislation if interpretative.
Answer: C
Q3) Are letter rulings of precedential value to third parties?
Answer: Not really.A letter ruling is binding only on the taxpayer to whom the ruling was issued.However,the rulings can be useful in proving insights as to the IRS opinion about the tax consequences of various transactions.
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/65028
Sample Questions
Q1) Jeremy transfers Sec.351 property acquired three years earlier having a $100,000 basis and a $160,000 FMV to Jeneva Corporation.Jeremy receives all 200 shares of Jeneva stock having a $140,000 FMV,and a $20,000 90-day Jeneva note.What is Jeremy's recognized gain?
A)$0
B)$60,000
C)$20,000
D)$160,000
Answer: C
Q2) Which of the following statements is incorrect?
A)Limited partners' liability for partnership debt is limited to their amount of investment.
B)In a general partnership,all partners have unlimited liability for partnership debts.
C)In a limited partnership,all partners participate in managerial decision making.
D)All of the above are correct.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
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/65027
Sample Questions
Q1) Walter,who owns all of the Ajax Corporation stock,purchases a truck from Ajax Corporation in January.The truck cost $12,000 and has a $10,000 adjusted basis.Walter pays the truck's $8,000 FMV.Later in the same year,Walter sells the truck to an unrelated party for $13,000.With respect to these transactions,
A)Ajax Corporation reports a loss of $2,000 and Walter reports a gain of $5,000.
B)Ajax Corporation reports no loss and Walter reports a gain of $3,000.
C)Ajax Corporation reports a loss of $4,000 and Walter reports a gain of $5,000.
D)Ajax Corporation reports no loss and Walter reports a gain of $5,000.
Answer: B
Q2) James Corporation purchased residential real estate in 2007 for $225,000,of which $25,000 was allocated to land and $200,000 was allocated to the building.James Corporation took straight-line MACRS deductions of $30,000 during the years 2005-2009.In 2012,James Corporation sold the property for $285,000,of which $60,000 is allocated to the land and $225,000 is allocated to the building.What are the amounts and character of James Corporation's recognized gain or loss on the sale?
Answer: Land:
11ea7cb8_550d_b6bc_928c_9b8388716ba5_TB1258_00
11ea7cb8_550d_b6bd_928c_bf69e20f82ae_TB1258_00
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/65026
Sample Questions
Q1) Corporations recognize gains and losses on the distribution of property to shareholders if the property's fair market value differs from its basis.
A)True
B)False
Q2) Identify which of the following increases Earnings & Profits.
A)a capital contribution
B)life insurance proceeds payable to the spouse
C)tax-exempt interest income
D)All of the above increase E&P of a corporation.
Q3) Identify which of the following statements is true.
A)The Sec.318 family attribution rules can be waived for purposes of the Sec.302(b)(3)complete termination rules even though the redeeming shareholder is a creditor of the corporation.
B)Waiver of the Sec.318 family attribution rules is permitted for all related party stock transactions.
C)For a redemption to be essentially equivalent to a dividend,the shareholder must not have control of the corporation immediately following the redemption.
D)All of the above are false.
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/65025
Sample Questions
Q1) Which of the following statements regarding the minimum tax credit is correct?
A)It can only be carried forward.
B)It must be carried back before being carried forward.
C)Taxpayers may elect to forgo the carryback period and carry the credit forward.
D)There are not carryforwards or carrybacks of the minimum tax credit.
Q2) All of the following are recognized as reasons for accumulating earnings except A)working capital needs.
B)product liability loss reserves.
C)redemption of stock of deceased shareholder.
D)All of the above are recognized reasons for accumulating earnings.
Q3) Certain adjustments must be made to alternative minimum taxable income (AMTI)to arrive at adjusted current earnings (ACE).Which one of the following adjustments increases AMTI to arrive at ACE?
A)federal income taxes paid
B)the 80% dividends-received deduction
C)gain realized on the installment sale of noninventory property
D)excess of capital losses over capital gains
Q4) What is the effect of the two-pronged test that allows the exclusion from PHCI of certain AIR (adjusted income from rents)?
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
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/65024
Sample Questions
Q1) Generally,a corporation recognizes a gain,but not a loss,on a liquidating distribution.
A)True
B)False
Q2) Under Illinois Corporation's plan of liquidation,the corporation distributes land to one of its shareholders,Springer.The land,which is used in Illinois trade or business,has a $20,000 adjusted basis and a $60,000 FMV on the distribution date.What are the tax consequences of this distribution to Illinois and Springer?
Q3) Identify which of the following statements is true.
A)A loss recognized by a shareholder upon complete liquidation of a corporation may not qualify for ordinary loss treatment if the stock is Sec.1244 stock.
B)The loss that is recognized by an individual shareholder on the liquidation of a corporation is a capital loss,up to certain limits,if the stock is Sec.1244 stock.
C)The loss recognized by a corporate shareholder on the worthlessness of the controlled subsidiary's stock is an ordinary loss.
D)All of the above are false.
Q4) Are liquidation and dissolution the same? Explain your answer.
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
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/65023
Sample Questions
Q1) Identify which of the following statements is true.
A)Able Corporation (New York)transfers its assets to Able Corporation (Delaware)in exchange for all of its stock.Able Corporation (New York)is liquidated.This exchange is a Type F reorganization.
B)Strict adherence to legislative guidelines with regard to reorganizations is sufficient for tax-free treatment.
C)A suitable business purpose for a tax-free reorganization is to permit the minimization of shareholder taxes.
D)All of the above are false.
Q2) John Van Kirk owns all the stock of Monmouth Restaurant Corporation in Pittsburgh.John would like to sell his business and retire to sunny Florida now that he has turned 65.Pam,a long-time bartender at Monmouth Restaurant,offers to purchase all the business's noncash assets in exchange for a 25% down payment,with the remaining 75% being paid in five equal annual installments.Interest will be charged at a 10% rate on the unpaid installments.John plans to liquidate the corporation that has operated the restaurant and have Monmouth Restaurant distribute the installment notes and any remaining assets.What tax issues should Monmouth Restaurant,John,and Pam consider with respect to the purchase transaction?
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
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/65022
Sample Questions
Q1) Which of the following statements is incorrect with respect to the consolidated alternative minimum tax?
A)A separate alternative minimum taxable income computation is made for each individual group member.These amounts are then totaled to arrive at consolidated alternative minimum taxable income.
B)Positive adjustments that are made with respect to one group member can be offset by negative adjustments that are made with respect to another group member in computing consolidated alternative minimum taxable income.
C)The affiliated group's alternative minimum tax payment is available as a credit against its regular tax amount in future tax years.
D)The estimated tax payment rules apply to the alternative minimum tax.
Q2) A separate return year is a corporation's tax year for which it files a separate tax return or files a consolidated tax return with another affiliated group. A)True B)False
Q3) What is the consequence of having losses subject to the SRLY limitations?
Q4) What issues determine whether an affiliated group exists?
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
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/65021
Sample Questions
Q1) Martin is a limited partner in a card shop.At the end of the partnership's tax year,Martin's basis in the partnership interest is $25,000 ($5,000 cash investment plus a $20,000 share of nonqualified nonrecourse financing).Martin's distributive share of partnership losses for the tax year is $33,000.Martin has $30,000 of passive income this year from other activities.How much of the $33,000 partnership loss can be used by Martin in the year of the loss?
A)$5,000
B)$25,000
C)$30,000
D)$33,000
Q2) The Troika Partnership has an ordinary loss of $48,000 for the year.Before allocation of the loss at the end of the year,Shaad's one-third limited partnership interest has an adjusted basis of $5,000.Shaad's only other income or loss is his $30,000 salary from a factory job.What amount can Shaad deduct on his tax return as his share of the partnership's loss?
Q3) A partner's share of nonrecourse debt increases that partner's share of basis.
A)True
B)False
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/65035
Sample Questions
Q1) The AB,BC,and CD Partnerships merge into the ABCD Partnership.AB (owned by Austin and Ben)contributes assets worth $100,000.BC (owned by Ben and Charlie)contributes assets worth $200,000.CD (owned by Charlie and Dennis)contributes assets worth $300,000.The capital and profits interest in ABCD is owned by: Austin,10%; Ben,30%; Charlie,25%; and Dennis,35%.ABCD Partnership is a continuation of A)AB.
B)BC.
C)CD.
D)none of the partnerships.
Q2) Carlos has a basis in his partnership interest of $30,000.He receives a current distribution of $6,000 cash,unrealized receivables (FMV $11,000,basis $10,000),inventory (FMV $8,000,basis $4,000),land held as an investment (FMV $7,000,basis,$6,000),and building (FMV $21,000,basis $9,000).The partners' relative interests in the Sec.751 assets do not change as a result of the current distribution.Carlos's basis in the building is A)$2,500.
B)$6,000.
C)$7,500.
D)$9,000.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: S Corporations
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/65034
Sample Questions
Q1) Which of the following statements about stock ownership is not correct?
A)A C corporation can own stock of an S corporation.
B)An S corporation can own stock of a C corporation.
C)A tax-exempt charity can own stock of an S corporation.
D)An S corporation can own stock of a Qualified Subchapter S Subsidiary.
Q2) A testamentary trust can be an S shareholder for two years,beginning on the date the stock transfers to the trust.
A)True
B)False
Q3) Identify which of the following statements is true.
A)All of the shareholders of an S corporation must consent to a revocation of the S election.
B)A revocation of an S corporation election can be retrospective to any date.
C)An S election will not be terminated due to excess passive income if the corporation does not have Subchapter C E&P.
D)All of the above are true.
Q4) Garret and Hans own all the stock of GH Corporation.Garret sells all his GH stock to Olga on February 12.The next day,GH makes an S election.For the election to apply to the current year,who must consent to the election?
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/65033
Sample Questions
Q1) On July 1,Frank loans his brother Matt $200,000.The loan is evidenced by an interest-free demand note.The loan is still outstanding on December 31.The applicable interest rate is 12%.Frank is treated as having made a gift of
A)$200,000.
B)$24,000.
C)$12,000.
D)$0.
Q2) Tia funds an irrevocable trust with $100,000,naming Vonda to receive income for life.Tia also grants Vonda a general power of appointment during her life.During the next year,Vonda directs the trustee to give $100,000 to Rick.Which of the following statements is not correct?
A)Tia made a $100,000 gift to Rick.
B)Vonda makes a $100,000 gift to Rick.
C)Tia has made a gift of $100,000 to Vonda.
D)Exercising a general power of appointment constitutes a gift.
Q3) Connie has some acreage that is valued at $1,500,000.Her daughter would like to build a home on it,but can only afford $500,000.Connie agrees to sell it to her daughter for $500,000.Is there any gift tax consequence as a result of this transaction?
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/65032
Sample Questions
Q1) Sasha gives $1,000,000 to her granddaughter.Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption.What is the amount of her tax on this transfer?
A)$450,000
B)$400,000
C)$1,450,000
D)$652,500
Q2) Guy died this year.His estate includes a closely held business interest valued at $400,000 and other property valued at $675,000.Guy's allowable Sec.2053 and 2054 deductions total $75,000.Within three years of death,partly in hopes of qualifying his estate for the installment payment allowed under Sec.6166 treatment,Guy made gifts of listed securities of $350,000 (at 2002 valuations)and paid no gift tax on the gift.Is Guy's estate eligible for Sec.6166 treatment?
Q3) Wally died on November 15.His gross estate includes 100 shares of ABC Corporation stock.On November 15,ABC's stock trades were at a high of $100,a low of $92,and a close of $94.What is the per-share value of the stock in Wally's estate?
Q4) Explain why living trusts are popular tax-planning vehicles.
To view all questions and flashcards with answers, click on the resource link above.
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/65031
Sample Questions
Q1) A trust must distribute all of its income annually.Capital gains are allocated to principal.The trust has dividend income of $12,000,capital gains of $6,000,and no expenses.Calculate the trust's taxable income.
Q2) A trust that is required to distribute all of its income annually receives a personal exemption for the year of A)$0,because it retains no income.
B)$100.
C)$300.
D)$600.
Q3) Ed Camby sold an apartment building in May 2008 for a small amount of cash and a note payable over five years.Principal and interest payments are due annually on the note in April of 2009 through 2013.Ed died in August 2008.He willed all his assets to his daughter Anna.Ed's gross estate is about $3 million,and his estate tax deductions are very small.What tax issues should the executor of his estate consider with respect to reporting the sale of the building and the collection of the installments?
Q4) Explain to a client the significance of the income and principal categorization scheme used for fiduciary accounting purposes.
Q5) Explain how to determine the deductible portion of trustee's fees.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Administrative Procedures
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/65030
Sample Questions
Q1) Jeff's tax liability for last year was $30,000.Jeff projects that his tax for this year will be only $25,000.Jeff is self-employed and,thus,will have no withholding.His AGI for last year did not exceed $150,000.How much estimated tax,at a minimum,should Jeff pay for this year to avoid the penalty for underpayment of estimated taxes? How would your answer change if his income exceeded last year's due to a large capital gain at the end of the year?
Q2) In order to appeal to the Appeals Division,a taxpayer must submit a protest letter to the IRS
A)if an office audit is involved.
B)as a response to receiving a 30-day letter.
C)in a field audit involving an assessment of taxes,interest,and penalties in excess of $25,000.
D)if a TCMP audit is involved.
Q3) Kelly,a calendar-year taxpayer,files her 2008 individual return on March 30,2013,and pays the amount due at the same time.Later,she discovers some deductions that she should have claimed on the return.By what date must she file a claim for refund?
Q4) Explain how the Internal Revenue Service is organized to be efficient and client-oriented.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Ustaxation of Foreign-Related Transactions
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/65029
Sample Questions
Q1) Identify which of the following statements is true.
A)When a cash-basis taxpayer elects to take a credit for accrued foreign income taxes,certain other income and expense items must likewise be accrued.
B)The taxpayer may revoke an election to exclude foreign-source earned income if a loss is incurred from foreign employment.
C)A nonresident alien can elect to be considered a resident alien if the nonresident alien is married to a U.S.citizen or a resident alien sometime during the tax year and both spouses consent.
D)All of the above are true.
Q2) Jacque,a single nonresident alien,is in the United States for 80 days in the current year engaging in the conduct of a U.S.trade or business.Jacque has $3,000 of interest income earned on a bank account in his home country and $1,800 of interest income earned on a bank account located in Addison,Illinois.How will the interest be taxed and how will the tax be collected?
Q3) Describe the financial statement implications of the foreign tax credit and a foreign subsidiary.
Q4) What is the branch profits tax? Explain the Congressional intent behind its enactment.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: An Introduction to Taxation
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/65020
Sample Questions
Q1) Describe the types of audits that the IRS conducts.
Q2) Organizing a corporation as an S Corporation results in a single level of taxation. A)True B)False
Q3) Regressive tax rates decrease as the tax base increases.
A)True
B)False
Q4) Charlie makes the following gifts in the current year: $40,000 to his spouse,$30,000 to his church,$18,000 to his nephew,and $25,000 to a friend.Assuming Charlie does not elect gift splitting with his wife,his taxable gifts in the current year will be
A)$13,000.
B)$15,000.
C)$25,000.
D)$41,000.
Q5) A taxpayer's average tax rate is the tax rate applied to an incremental amount of taxable income that is added to the tax base.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Determination of Tax
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/65010
Sample Questions
Q1) Vincent,age 12,is a dependent of his parents.During 2017,Vincent's earned income from wages is $2,600 and Vincent received $3,000 of interest income.The parent's marginal rate is 28% and Vincent's marginal rate is 10%.Vincent's tax is
A)$265.
B)$742.
C)$412.
D)None of the above.
Q2) Husband and wife,who live in a common law state,are eligible to file a joint return for 2017,but elect to file separately.They do not have dependents.Wife has adjusted gross income of $25,000 and has $2,200 of expenditures which qualify as itemized deductions.She is entitled to one exemption.Husband deducts itemized deductions of $11,200.What is the taxable income for the wife?
A)$14,600
B)$18,750
C)$20,950
D)None of the above.
Q3) Discuss reasons why a married couple may choose not to file a joint return.
Q4) What options are available for reporting and paying tax on the unearned income of a child under age 24?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Gross Income: Inclusions
Available Study Resources on Quizplus for this Chatper
144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/65009
Sample Questions
Q1) Natasha,age 58,purchases an annuity for $40,000.Natasha will receive $400 per month for the rest of her life.The expected return multiple is 20.0.At age 65,the amount that Natasha may exclude from income is A)$0.
B)$2,000.
C)$2,800.
D)$4,000.
Q2) Todd and Hillary,husband and wife,file separate returns.Todd and Hillary live in a community property state that considers separate property income to be community income.Todd's salary is $82,000 and Hillary's salary is $80,000.Hillary receives dividend income of $7,000 from stock inherited from her parents.Todd receives interest income of $5,000 from bonds purchased with his salary after marriage.Todd and Hillary receive $10,000 dividend income from stock they purchased jointly.Todd's income would be A)$92,000.
B)$93,000.
C)$94,500.
D)$97,000.
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: Gross Income: Exclusions
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/65008
Sample Questions
Q1) "No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.
A)True
B)False
Q2) Trisha is married and has young children.The couple is in the 39.6% tax bracket.In order for Trisha and her husband to work,they pay $5,000 for daycare which earns them a $1,000 dependent care credit.Trisha has been offered a new job.The new job will pay a $5,000 lower salary,but the new employer will offer $5,000 of paid child care.Trisha cannot claim the dependent care credit if she receives employer-paid child care.Which of the following statements is correct? (Ignore payroll taxes. )
A)Trisha will have $980 additional after-tax income if she accepts the new job.
B)Trisha will lose $4,000 net value if she accepts the new job.
C)Trisha will have $1,980 additional after-tax income if she accepts the new job.
D)Trisha will lose $3,020 of net value if she accepts the new job.
Q3) Discuss the requirements for meals provided by employers to be excluded from their employees' income.How is the de minimis rule distinguished from these requirements?
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Property Transactions: Capital Gains and Losses
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/65007
Sample Questions
Q1) A taxpayer sells an asset with a basis of $25,000 to an unrelated party for $28,000.The taxpayer has a realized gain of $3,000.
A)True
B)False
Q2) Everest Inc.is a corporation in the 35% marginal tax bracket.It sold two stockholdings this year,resulting in a long-term capital gain of $15,000 on stock A and a short-term capital loss of $5,000 on stock B.What is the extra tax that Everest will pay due to the sales of these stocks?
A)$3,500
B)$1,500
C)$2,250
D)$5,250
Q3) Antonio owns land held for investment with a basis of $28,000.The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000.What is Antonio's realized gain?
A)$0
B)$20,000
C)$28,000
D)$48,000
Page 23
To view all questions and flashcards with answers, click on the resource link above.
Chapter 22: Deductions and Losses
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/65006
Sample Questions
Q1) Laura,the controlling shareholder and an employee of Southtown Corporation,receives an annual salary of $750,000.Based on several factors including the size of the corporation's operations and a comparison of salary received by officers of comparably sized corporations,the IRS contends that Laura's salary should be no higher than $600,000.The Court upheld the IRS's position.As a result,which of the following is true?
A)$600,000 is deductible by the corporation; $600,000 is taxable to Laura.
B)$600,000 is deductible by the corporation; $750,000 is taxable to Laura.
C)$750,000 is deductible by the corporation; $750,000 is taxable to Laura.
D)$750,000 is deductible by the corporation; $600,000 is taxable to Laura.
Q2) Which of the following factors is not used to determine whether an activity is a hobby or a business?
A)the taxpayer's expertise in the activity
B)the taxpayer's financial status
C)the personal pleasure derived from the activity
D)the success of the taxpayer in other dissimilar activities
Q3) Discuss tax planning considerations which a taxpayer may use to possibly avoid classification of an activity as a hobby.
Q4) Discuss when expenses are deductible under the accrual method of accounting.
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Itemized Deductions
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/65005
Sample Questions
Q1) Investment interest expense is deductible
A)as an offset to net investment income.
B)as a capital loss.
C)as an itemized deduction.
D)as a deduction for AGI.
Q2) Don's records contain the following information: 1.Donated stock having a fair market value of $3,600 to a qualified charitable organization.He acquired the stock five months previously at a cost of $2,400.
2)Paid $700 to a church school as a requirement for the enrollment of his daughter.
3)Paid $200 for annual homeowner's association dues.
4)Drove 400 miles in his personal auto.The travel was directly related to volunteer services he performed for his church.
How much can Don deduct as a charitable contribution?
A)$2,456
B)$3,156
C)$3,356
D)$3,656
Q3) Explain how tax planning may allow a deduction of qualified medical expenses.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Losses and Bad Debts
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/65004
Sample Questions
Q1) The amount realized by Matt on the sale of property to Caitlin includes all of the following with the exception of A)cash received by Matt.
B)mortgage on the property that is assumed by Caitlin.
C)mortgage on the property paid off by Matt prior to the sale.
D)the FMV of any other property received by Matt in the transaction.
Q2) Individuals who actively participate in the management of rental real property may deduct up to $25,000 in losses,subject to AGI limitations.
A)True
B)False
Q3) The amount of loss realized on the sale of property is computed by subtracting adjusted basis from amount realized.
A)True
B)False
Q4) A passive activity includes any rental activity or any trade or business in which the taxpayer does not materially participate.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
26
Chapter 25: Employee Expenses and Deferred Compensation
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/65003
Sample Questions
Q1) Jack takes a $7,000 distribution from his Health Savings Account.$2,000 is used to pay for X-rays and dental surgery.The other $5,000 is used to make a down payment on a new car.What are the tax consequences to Jack?
Q2) Personal travel expenses are deductible as miscellaneous itemized deductions subject to the 2% of AGI floor.
A)True
B)False
Q3) Raul and Jenna are married and are both working.They are both over age 50.Jenna participates in her employer's Sec.401(k)plan and makes the maximum contribution and enjoys a company matching contribution.Raul's employer does not maintain a retirement plan so he would like to save as much as possible in a tax-advantaged manner for retirement.They expect to report $190,000 of AGI for 2017.
a.What is the maximum amount that Raul can contribute to a traditional IRA and how much can he deduct?
b.What is the maximum amount that Raul can contribute to a Roth IRA and how much can he deduct?
c.How could Raul contribute to both the traditional IRA and Roth IRA to maximize current and future tax savings?
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 26: Depreciation, cost Recovery, amortization, and Depletion
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/65019
Sample Questions
Q1) Depreciable property includes business,investment,and personal-use assets.
A)True
B)False
Q2) If personal-use property is converted to trade or business use,the basis for depreciation is the lesser of adjusted basis or FMV on the date of conversion.
A)True
B)False
Q3) The client is a corporation which uses high-tech equipment to manufacture its product.Because of the high level of wear and tear due to long production runs and frequent technology changes,the client usually replaces the equipment every two years.According to IRS guidance,the MACRS life of the equipment is five years.In order to accelerate depreciation deductions,which tax depreciation option should the client elect?
A)alternative depreciation system (ADS)
B)regular MACRS treatment
C)MACRS with a straight-line election
D)units-of-production method
Q4) Why would a taxpayer elect to use the alternative depreciation system rather than the MACRS rules?
Page 28
To view all questions and flashcards with answers, click on the resource link above.
Chapter 27: Accounting Periods and Methods
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/65018
Sample Questions
Q1) This year,a contractor agrees to build a building for $2,000,000,which will be completed by the end of next year.The builder's cost is estimated to be $1,700,000.The actual costs this year are $800,000 and next year's actual costs are $800,000.If the tax rate is 20% and the interest rate is 10%,the look back interest for the percentage of completion method is
A)$ 0.
B)$1,176.
C)$2,000.
D)$6,000.
Q2) Which entities may elect a fiscal year? Discuss how certain tax entities may circumvent the requirement of using a calendar year.
Q3) C corporations and partnerships with a corporate partner may use the cash method of accounting if average annual gross receipts for the three preceding tax years do not exceed $10 million.
A)True
B)False
Q4) Discuss the purpose of the imputed interest rules.
Q5) What is the significance of the Thor Power Tool Co.case?
To view all questions and flashcards with answers, click on the resource link above. Page 29
Chapter 28: Property Transactions: Nontaxable Exchanges
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/65017
Sample Questions
Q1) An investor exchanges an office building located in Niagara Falls,NY,for an office building located in Niagara Falls,Ontario.The exchange does not qualify as like-kind. A)True
B)False
Q2) Ron and Fay live in Buffalo.They also own a condominium in Orlando (purchased in 2011)which they rent to vacationers.Ron and Fay will be retiring.They plan to live in the Orlando property for two and a half years.When they sell it,they will be able to exclude the full gain which is expected to be about $200,000.
A)True
B)False
Q3) Bobbie exchanges business equipment (adjusted basis $160,000)for other business equipment that has a FMV of $140,000.Bobbie also receives $30,000 cash.Bobbie's basis in the new equipment is
A)$130,000.
B)$140,000.
C)$160,000.
D)$170,000.
Q4) Discuss why a taxpayer would want to avoid like-kind exchange provisions.
To view all questions and flashcards with answers, click on the resource link above.
Page 30
Chapter 29: Property Transactions: Sec1231 and Recapture
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/65016
Sample Questions
Q1) Alejandro purchased a building in 1985,which he uses in his manufacturing business.Alejandro uses the ACRS statutory rates to determine the cost-recovery deduction for the building.Alejandro's original cost for the building is $500,000 and cost-recovery deductions allowed are $500,000.If the building is sold for $800,000,the tax results to Alejandro are
A)$500,000 Sec.1245 ordinary income and $300,000 Sec.1231 gain.
B)$800,000 Sec.1245 ordinary income.
C)$500,000 Sec.1245 ordinary income and $300,000 Sec.1250 income.
D)$800,000 Sec.1231 gain.
Q2) When corporate and noncorporate taxpayers sell real property placed in service after 1986,all depreciation taken will be taxed at a maximum rate of 25%.
A)True
B)False
Q3) Section 1250 does not apply to assets sold or exchanged at a loss.
A)True
B)False
Q4) Sec.1245 can increase the amount of gain recognized on an asset.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 31
Chapter 30: Special Tax Computation Methods, tax Credits, and Payment of Tax
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/65015
Sample Questions
Q1) Which of the following statements is not correct regarding the residential energy efficient property (REEP)credit?
A)Credits earned but not used in the current year can be carried forward to the next year.
B)The taxpayer's basis in the property is reduced by the credit.
C)Only solar property qualifies for the credit.
D)All of the above statements regarding the REEP credit are correct.
Q2) The qualified retirement savings contributions credit is based on a maximum contribution of $2,000.
A)True
B)False
Q3) In computing the alternative minimum taxable income,no deduction is allowed for A)alimony.
B)moving expenses.
C)personal exemptions.
D)individual retirement account contributions.
Q4) The earned income credit is refundable only if a tax has been withheld.
A)True
B)False
32
To view all questions and flashcards with answers, click on the resource link above.
Chapter 31: Tax Research
Available Study Resources on Quizplus for this Chatper
133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/65014
Sample Questions
Q1) Indicate which courts decided the case cited below.Also indicate on which pages and in which publications the authority is reported.
U.S.v.Maclin P.Davis,397 U.S.301,25AFTR 2d 70-827,70-1 USTC &9289 (1970).
Q2) A Technical Advice Memorandum is usually
A)an internal IRS document describing alternative legislative proposals.
B)part of a Tax Court decision.
C)requested by the taxpayer before entering into a taxable transaction.
D)issued by the national office in response to an audit request.
Q3) There are no questions for this section.
Q4) Regular and memorandum decisions have the same precedential value.
Q5) Discuss the purposes and scope of temporary regulations.
Q6) Identify which of the following statements is false.
A)When tax advisors speak of the "tax law," they usually have in mind just the Internal Revenue Code.
B)Members from both the House and the Senate are on the Conference Committee.
C)Records of committee hearings are helpful in determining Congressional intent.
D)All of the above are false.
Q7) What is the purpose of Treasury Regulations?
Page 33
Q8) Are letter rulings of precedential value to third parties?
Q9) What is the purpose of a citator?
To view all questions and flashcards with answers, click on the resource link above. Page 34
Chapter 32: Corporations
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65013
Sample Questions
Q1) Danielle transfers land with a $100,000 FMV (basis $95,000)and $85,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $15,000.The corporation qualifies as a 351 transfer.The corporation assumes the $85,000 mortgage.What is the adjusted basis of the property to the corporation?
A)$0
B)$15,000
C)$95,000
D)$100,000
Q2) Blue Corporation distributes land and building having a $70,000 adjusted basis and a $200,000 FMV to its sole shareholder,Marina.Blue has current and accumulated E&P exceeding $200,000.The property is subject to a $120,000 mortgage,which Marina assumes.What is the amount of the taxable dividend received by Marina?
A)$0
B)$70,000
C)$80,000
D)$130,000
Q3) Discuss the tax consequences of a complete liquidation to the liquidated corporation and to the shareholders.
To view all questions and flashcards with answers, click on the resource link above.
Page 35
Chapter 33: Partnerships and S Corporations
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/65012
Sample Questions
Q1) DAD Partnership has one corporate partner,Domino Corporation,with a fiscal year-end of June 30.Domino has a 30% interest in DAD.The other partners are individuals with a calendar year for tax purposes,none of whom has a 5% or more interest in DAD Partnership.What are DAD Partnership's choices with respect to selecting a tax year?
Q2) Ben is a 30% partner in a partnership.The partnership guarantees Ben payments of $25,000 for the year.If the partnership has ordinary income of $15,000 before adjustment for the guaranteed payment,Ben must report
A)ordinary income of $22,000.
B)an ordinary loss of $3,000.
C)ordinary income of $25,000 and a partnership income of $4,500.
D)ordinary income of $25,000 and a partnership loss of $3,000.
Q3) Tess buys Harry's partnership interest in Oval Partnership.Oval holds several highly appreciated assets,and this appreciation is reflected in the price Tess paid for the partnership interest.Tess can make a Sec.754 election to increase the basis of her share of partnership assets.
A)True
B)False
Q4) What are special allocations of partnership items and when are they permitted?
To view all questions and flashcards with answers, click on the resource link above.
Page 36
Chapter 34: Taxes and Investment Planning
Available Study Resources on Quizplus for this Chatper
84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/65011
Sample Questions
Q1) The Roth IRA is an example of the Pension Model.
A)True
B)False
Q2) Examples of the Exempt Model include deductible IRAs,H.R.10 (Keogh)plans,Sec.401(k)plans,and tax deferred annuities.
A)True
B)False
Q3) The Current Model most closely describes a flow-through entity while a variation of the Deferred Model describes a C corporation.
A)True
B)False
Q4) An investment in a growth stock which does not pay dividends is an example of the Exempt Model.
A)True
B)False
Q5) Investments conforming to the Current Model provide no deferral advantages because earnings are taxed currently.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 37