Graduate Taxation Seminar
Exam Solutions
Course Introduction
The Graduate Taxation Seminar is an advanced course designed to engage students in critical analysis of contemporary tax issues and policies. Through a combination of lectures, case studies, and student-led discussions, participants explore topics such as tax planning, corporate taxation, international tax law, and recent legislative developments. The seminar emphasizes research, oral presentation skills, and the application of tax theory to real-life scenarios. Students are expected to complete significant research projects and contribute thoughtfully to class debates, preparing them for complex tax challenges in professional practice or further academic study.
Recommended Textbook Principles of Taxation for Business and Investment Planning 2019 22nd Edition by Sally Jones
Available Study Resources on Quizplus
18 Chapters
1798 Verified Questions
1798 Flashcards
Source URL: https://quizplus.com/study-set/196 Page 2
Chapter 1: Taxes and Taxing Jurisdictions
Available Study Resources on Quizplus for this Chatper
90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/2802
Sample Questions
Q1) Ad valorem property taxes are the major source of revenue for local governments.
A)True
B)False
Answer: True
Q2) A revenue ruling is an example of:
A) Judicial authority
B) Administrative authority
C) Legislative authority
D) Editorial authority
Answer: B
Q3) Payment of a tax entitles the payer to a specific good or service from the government.
A)True
B)False
Answer: False
Q4) The federal government does not levy property taxes or a general sales tax.
A)True
B)False Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Policy Standards for a Good Tax
Available Study Resources on Quizplus for this Chatper
85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/2803
Sample Questions
Q1) A dynamic forecast of the revenue effect of a tax rate change assumes that the tax base does not change.
A)True
B)False
Answer: False
Q2) Mr and Mrs Boln earn $63,000 annual income and pay 20% in state and federal income tax. If tax rates increase so that the couple's annual rate increases to 25%, how much additional income must they earn to maintain their after-tax standard of living?
Answer: The Bolns' after-tax income before the rate increase is $50,400 ($63,000[$63,000 × 20%]). To maintain their after-tax income after the rate increase, the Bolns must earn $4,200 additional income to increase their before-tax income to $67,200 ($50,400 / 75%) on which they will pay $16,800 tax.
Q3) A convenient tax has low compliance costs for taxpayers and low collection and enforcement costs for the government.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Taxes as Transaction Costs
Available Study Resources on Quizplus for this Chatper
82 Verified Questions
82 Flashcards
Source URL: https://quizplus.com/quiz/2804
Sample Questions
Q1) Tax law uncertainty is the risk that the Internal Revenue Service will challenge a taxpayer's tax treatment on audit.
A)True
B)False
Answer: False
Q2) The tax savings from a transaction represents a cash inflow.
A)True
B)False
Answer: True
Q3) TallBoy Inc. is a local furniture manufacturer and Leley Company is a retail furniture store. The two companies have no owners in common. Leley recently negotiated to purchase $845,000 of furniture from TallBoy. This purchase is an example of a/an:
A) Related party transaction
B) Public market transaction
C) Arm's length transaction
D) None of the above
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Maxims of Income Tax Planning
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/2805
Sample Questions
Q1) Mrs Day structures a transaction to shift income from her 20Y1 tax year to her 20Y2 tax year. This tax planning strategy may be taking advantage of the:
A) Entity variable
B) Time period variable
C) Jurisdiction variable
D) Character variable
Q2) Which of the following statements about the time period variable is false?
A) If Congress replaced the current progressive income tax rates with a proportionate rate applying to all taxpayers, the time period variable would no longer be a factor in tax planning.
B) The time period variable becomes more important as the taxpayer's discount rate for computing NPV increases.
C) Tax planning strategies based on the time period variable must involve at least two different taxable years.
D) Tax planning strategies based on the time period variable reflect the time value of money.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Tax Research
Available Study Resources on Quizplus for this Chatper
82 Verified Questions
82 Flashcards
Source URL: https://quizplus.com/quiz/2806
Sample Questions
Q1) A citator:
A) Is not an important tax research resource.
B) May be used to determine the status of tax judicial decisions, revenue rulings, and revenue procedures.
C) Is published by the federal government.
D) Provides an editorial explanation of tax judicial decisions.
Q2) Which of the following statements regarding secondary authorities is false?
A) In paper format, commercial tax services are organized either topically or by Code section.
B) Commercial tax services provide legislative history of each Internal Revenue Code section.
C) Only topically-organized commercial tax services provide a detailed topical index.
D) The organization and content of the major topically-oriented services differs considerably.
Q3) The advantages of electronic tax research libraries do not include:
A) The ease with which such libraries can be updated for new developments.
B) Portability.
C) Speed of access and search.
D) All of the above are advantages of electronic tax research libraries.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Taxable Income from Business Operations
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/2807
Sample Questions
Q1) Murray Inc., a calendar year, accrual basis corporation, accrued $946,000 salary and wage expense at the end of 2018. Murray paid the entire amount of the accrued liability on January 13, 2019. Murray can deduct the entire $946,000 accrued expense in 2018.
A)True
B)False
Q2) Eddy Corporation engaged in a transaction that generated $100,000 book income but only $81,000 taxable income. Which of the following is true?
A) If the $19,000 excess of book income over taxable income is temporary, the transaction has no effect on Eddy's deferred tax accounts.
B) The $19,000 excess of book income over taxable income is an unfavorable difference.
C) If the $19,000 excess of book income over taxable income is permanent, the transaction has no effect on Eddy's deferred tax accounts.
D) None of the above is true.
Q3) An unfavorable temporary book/tax difference generates a deferred tax asset.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Property Acquisitions and Cost Recovery
Deductions
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/2808
Sample Questions
Q1) Molton Inc. made a $60,000 cash expenditure this year (year 0). Use Appendix A of your textbook provided to compute the after-tax cost if Molton must capitalize the expenditure and amortize it ratably over three years, beginning in year 0. Molton has a 21% marginal tax rate and uses a 7% discount rate.
A) $41,632
B) $48,206
C) $45,052
D) None of the above
Q2) A corporation that incurs $28,500 organization costs must capitalize the costs and amortize them over 180 months.
A)True
B)False
Q3) Cosmo Inc. paid $15,000 plus $825 sales tax plus a $200 delivery charge for a new business asset. Cosmo's tax basis in the asset is $15,200, and it can deduct the sales tax.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Property Dispositions
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/2809
Sample Questions
Q1) In 2017, TPC Inc. sold investment land with a $388,000 book and tax basis for $523,000. The purchaser paid $60,000 in cash and gave TPC a note for the $463,000 balance of the price. In 2018, TPC received a $67,800 payment on the note ($40,000 principal + $27,800 interest). In 2018, TPC's use of the installment sale method results in a:
A) $10,325 favorable permanent book/tax difference
B) $17,496 unfavorable temporary difference
C) $17,496 favorable temporary difference
D) None of the above
Q2) Kuong Inc. sold a commercial office building used in the corporate business for $1.5 million. Kuong purchased the building in 2000 for a cost of $1.4 million and had deducted $538,000 MACRS depreciation through date of sale. Kuong should characterize the $638,000 gain recognized on sale as:
A) $127,600 ordinary gain and $510,400 Section 1231 gain
B) $107,600 ordinary gain and $530,400 Section 1231 gain
C) $538,000 ordinary gain and $100,000 Section 1231 gain
D) Section 1231 gain
Q3) The sale of business inventory always generates ordinary income or loss.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Nontaxable Exchanges
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/2810
Sample Questions
Q1) Compute OMG's gain recognized on the exchange and its tax basis in the property received from Babex.
A) $175,000 gain recognized; $514,500 basis in Babex property.
B) No gain recognized; $689,500 basis in Babex property.
C) No gain recognized; $514,500 basis in Babex property.
D) None of the choices are correct.
Q2) Compute Johnson's gain recognized on the exchange and its tax basis in the property received from C&K.
A) $25,000 gain recognized; $593,000 basis in C&K property.
B) $25,000 gain recognized; $793,000 basis in C&K property.
C) $225,000 gain recognized; $593,000 basis in C&K property.
D) None of the choices are correct.
Q3) Yelano Inc. exchanged an old forklift used in its business for a new forklift. This exchange qualifies as a nontaxable like-kind exchange.
A)True
B)False
Q4) Tax neutrality for asset exchanges is the exception rather than the rule.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Sole Proprietorships
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/2811
Sample Questions
Q1) The shareholders of an S corporation must pay self-employment tax on their share of the corporation's ordinary income.
A)True
B)False
Q2) The FICA taxes authorized by the Federal Insurance Contribution Act is imposed upon all of the employee's wages for the year.
A)True
B)False
Q3) Haddie's Hats is a regular corporation. The business must file an income tax return each year to report its taxable income or loss and pay any related taxes.
A)True
B)False
Q4) What is Mr Chips' tax basis in its partnership interest?
A) $500,000
B) $850,000
C) $650,000
D) $300,000
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: The Corporate Taxpayer
Available Study Resources on Quizplus for this Chatper
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/2812
Sample Questions
Q1) If a corporation has accumulated minimum tax credits from tax years prior to 2018, 100 percent of such credits are refundable on their 2018 tax return.
A)True
B)False
Q2) Westside, Inc. owns 15% of Innsbrook's common stock. This year, Westside generated $50,000 operating income and received $20,000 dividends from Innsbrook. Westside's taxable income is:
A) $60,000
B) $70,000
C) $50,000
D) $40,000
Q3) Frazier, Inc. paid a $150,000 cash dividend to its shareholders. The corporation cannot deduct this payment on its corporate income tax return.
A)True
B)False
Q4) At least three corporations are required to form an affiliated group.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: The Choice of Business Entity
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/2813
Sample Questions
Q1) Mr Longwood and Mrs Kennett are the equal shareholders in LK Corporation. Both shareholders have a 37 percent marginal tax rate on ordinary income. LK's financial records show the following:
Gross income from sales $ 875,000
Operating expenses (420,000 )
Interest paid on debt to shareholders (75,000 )
Dividend distributions:
Mr Longwood (50,000 )
Mrs Kennett (50,000 )
a. Compute the combined tax cost for LK, Mr Longwood, and Mrs Kennett attributable to LK's operations.
b. How would your computation change if the interest on the shareholder debt was $175,000 and LK paid no dividends?
Q2) During a recent IRS audit, the revenue agent decided that the Emig family used their closely held corporation, Gamekeeper, to avoid shareholder tax by accumulating earnings beyond the reasonable needs of the business. Gamekeeper's taxable income was $800,000, it paid no dividends, and it had no business need to retain any income. Compute Gamekeeper's accumulated earnings tax assuming that it had accumulated $2 million of after-tax income in prior years.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Jurisdictional Issues in Business Taxation
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/2814
Sample Questions
Q1) Compute its worldwide tax burden as a percentage of its pretax income.
A) 21%
B) 14.18%
C) 13.125%
D) 18.44%
Q2) S. parent corporation that receives a dividend from a wholly-owned foreign subsidiary that pays a 45% income tax to its home country typically does not owe any U.S. tax on the dividend.
A)True
B)False
Q3) Article 1 of the U.S. Constitution, referred to as the commerce clause, prohibits a state from charging an extra 10 cent tax per gallon on gasoline sold to trucks with out-of-state license plates.
A)True
B)False
Q4) S. taxpayer can make an annual election to take a credit or a deduction for foreign income taxes paid.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: The Individual Tax Formula
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/2815
Sample Questions
Q1) Which of the following statements regarding the calculation of regular tax liability is false?
A) Regardless of filing status, the highest marginal rate for individual taxpayers is 37%.
B) The individual tax rate schedules are adjusted annually for inflation.
C) All of the tax brackets in the married-filing-separately rate schedule are one-half of the brackets in the married-filing-jointly rate schedule.
D) None of the above is false.
Q2) Mr and Mrs Steel, who file a joint return, have $513,200 taxable income in 2018. Compute their regular tax liability.
A) $105,062
B) $130,999
C) $179,620
D) None of the above
Q3) Eileen, a single individual, had $125,000 taxable income. Compute her income tax assuming that:
a. Taxable income includes no capital gains.
b. Taxable income includes $14,000 capital gain eligible for the 15% preferential rate.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Compensation and Retirement Planning
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/2816
Sample Questions
Q1) Section 401(k) plans allow employees to contribute a portion of their current wages or salary to a tax-exempt retirement account. However, the contributed portion is still taxable compensation to the employee.
A)True
B)False
Q2) Employers typically use nonqualified deferred compensation plans to provide additional retirement savings for rank-and-file employees.
A)True
B)False
Q3) Any individual taxpayer who earns any amount of compensation or self-employment income can contribute $5,500 to a traditional IRA.
A)True
B)False
Q4) An independent contractor is not entitled to the same fringe benefits as an employee.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Investment and Personal Financial Planning
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/2817
Sample Questions
Q1) Mr and Mrs Philips recognized the following capital gains and losses this year.
Short-term capital gain $ 10,000
Short-term capital loss $ (4,000 )
Long-term capital gain $ 45,000
Long-term capital loss $ (60,000 )
Their AGI before consideration of these gains and losses was $140,000. Compute their AGI.
A) $140,000
B) $131,000
C) $137,000
D) $143,000
Q2) Beverly earned a $75,000 salary and recognized a $7,200 loss on the sale of corporate stock this year. Compute her AGI in each of the following independent cases.
a. Beverly had no other capital transactions this year.
b. Beverly recognized a $13,500 capital gain on the sale of mutual fund shares.
c. Beverly received a $9,500 capital gain distribution from a mutual fund and had a $3,200 capital loss carryforward from a previous year.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Tax Consequences of Personal Activities
Available Study Resources on Quizplus for this Chatper
85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/2818
Sample Questions
Q1) A taxpayer must have owned and lived in a personal residence at least two of the last five years in order to qualify for the maximum exclusion of gain on sale of that residence.
A)True
B)False
Q2) Bjorn contributed $600,000 cash to qualified public charities this year. Her AGI was $814,000. Which of the following statements is true?
A) Ms. Bjorn's charitable contribution deduction is limited to $488,400, and she has a $111,600 contribution carryover to future years.
B) Ms. Bjorn's charitable contribution deduction is $360,000.
C) Ms. Bjorn's charitable contribution deduction is limited to $488,400. The $111,600 nondeductible amount will never result in a tax benefit.
D) Ms. Bjorn's charitable contribution deduction is $600,000.
Q3) Recipients of the Nobel Peace Prize must include the prize in gross income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: The Tax Compliance Process
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/2819
Sample Questions
Q1) Which of the following should increase the likelihood that Mr Clarke's Form 1040 will be selected for audit by the IRS?
A) Mr. Clarke is self-employed and reported $723,900 net profit on his Schedule C.
B) Mr. Clarke has four dependent children under age 17.
C) Mr. Clarke is a resident of California.
D) None of the above should increase the likelihood of audit.
Q2) Macy filed her 2017 tax return on its extended due date of October 17, 2018. The IRS has until December 31, 2020, to audit this return.
A)True
B)False
Q3) The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a tax deficiency.
A)True
B)False
Q4) Corporations are allowed to deduct interest paid on an income tax deficiency as a business expense.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
20