Income Tax Planning Exam Review
Course Introduction
Income Tax Planning is a comprehensive course designed to equip students with a thorough understanding of the principles and practices involved in effective income tax management for individuals and businesses. The course covers key topics such as tax law fundamentals, tax compliance, deductions, credits, tax-saving strategies, and recent regulatory changes. Students will explore methods for minimizing tax liabilities through careful planning and learn to navigate the complexities of tax codes and documentation. Through case studies and practical exercises, participants will also analyze real-world scenarios, develop critical thinking skills, and gain confidence in applying tax planning strategies to achieve financial goals while adhering to legal requirements.
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) The citation "Rev.Rul.2006-8,2006-1 C.B.541" refers to
A)the eighth ruling of 2006 found on page 541 in Vol.1 of the 2006 Cumulative Bulletin.
B)the eighth ruling of 2006 found on page 541 in the 2006 volume of the Cumulative Bulletin.
C)the 541st ruling of 2006 found on page eight in Vol.1 of the 2006 Cumulative Bulletin.
D)the 1st ruling of 2006 found on page 541 in the 2006 volume of the Cumulative Bulletin.
Answer: A
Q2) 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.
Answer: A
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) On January of the current year,Rae purchases 100% of Sun Corporation stock for $30,000.Sun Corporation reports taxable income of $25,000 in the current year,on which it pays tax of $3,750.None of the remaining $21,250 is distributed to Rae.However,on January 1 of the next year,Rae sells her stock to Lee for $51,250.What are the tax consequences to Rae of the sale?
Answer: Rae must report a capital gain of $21,250 ($51,250 - $30,000).Thus,Sun Corporation's profit is taxed twice - once at the corporate level and again at the shareholder level when the stock is sold.
Q2) Three members form an LLC in the current year.Which of the following statements is incorrect?
A)The LLC's default classification under the check-the-box rules is as a partnership.
B)The LLC can elect to have its default classification ignored.
C)The LLC can elect to be taxed as a C corporation with no special tax consequences.
D)If the LLC elects to use its default classification,it can elect to change its status to being taxed as a C corporation beginning with the third tax year after the initial classification.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 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) How does the use of an NOL differ for individual and corporate taxpayers?
Answer: An individual must make adjustments to his taxable income to calculate his NOL.A corporation's NOL is simply the excess of its deductions over its income.
Q2) Identify which of the following statements is true.
A)When a corporation donates appreciated capital gain property to a charity,the amount of the contribution deduction generally equals the property's FMV.
B)When a corporation donates appreciated capital gain property to a private nonoperating foundation,the corporation's contribution is limited to the property's FMV minus the ordinary gain that would have resulted from the property's sale.
C)When a corporation contributes appreciated property to a charity,the charitable contribution deduction is the property's FMV or adjusted basis,depending on the election made by the taxpayer.
D)All of the above are false.
Answer: A
Q3) What are some of the advantages and disadvantages of filing a consolidated return?
Answer: Advantages include:
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) A corporation distributes land and the related liability to Meg,its sole shareholder.The land has an FMV of $60,000 and is subject to a liability of $70,000.The corporation has current and accumulated E&P of $80,000.The corporation's adjusted basis for the property is $70,000.What effect does the transaction have on the corporation?
A)A recognized loss of $10,000; its E&P is reduced by $70,000.
B)A recognized loss of $10,000; its E&P is unchanged.
C)No recognized gain or loss; its E&P is reduced by $60,000.
D)No recognized gain or loss; its E&P is unchanged by the distribution.
Q2) Hogg Corporation distributes $30,000 to its sole shareholder,Ima.At the time of the distribution,Hogg's E&P is $14,000 and Ima's basis in her stock is $10,000.Ima's gain from this transaction is a
A)$6,000 capital gain.
B)$14,000 capital gain.
C)$20,000 capital gain.
D)$30,000 capital gain.
Q3) Corporate distributions that exceed earnings and profits are always capital gains.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
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) Identify which of the following statements is true.
A)The corporate alternative minimum tax rate is 35%.
B)No credits are allowed when computing the tentative minimum tax.
C)Tax preference items always increase alternative minimum taxable income.
D)All of the above are false.
Q2) When computing the accumulated earnings tax,the dividends-paid deduction is not available for
A)dividends paid during the tax year.
B)throwback dividends.
C)stock dividends.
D)All of the above are deductible.
Q3) Foster Corporation has gross income for regular tax purposes of $100,000,which includes a net Sec.1231 gain of $10,000 and a net capital gain of $10,000.Ordinary gross income for personal holding company purposes is
A)$70,000.
B)$80,000.
C)$90,000.
D)$100,000.
Q4) Define personal holding company income.
Q5) What is a personal holding company?
Page 7
To view all questions and flashcards with answers, click on the resource link above.
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) Identify which of the following statements is false.
A)An individual taxpayer,who is assessed an additional payment of money based on stock ownership in a corporation whose stock is redeemed in a complete liquidation,may recognize a capital loss to the extent of the additional assessment.
B)The open transaction doctrine defers the shareholder's gain or loss from a liquidation until the assets can be valued by sale or collection.
C)The open transaction doctrine as applied to complete corporate liquidations refers to the numerous planning alternatives available when liquidating a corporation.
D)The IRS asserts that the open transaction doctrine should be used only in extraordinary circumstances.
Q2) Under the general liquidation rules,Kansas Corporation is liquidated,with Sam Topeka receiving $20,000 in cash plus other property having a $24,000 FMV.Sam Topeka's basis in his Kansas stock is $32,000.What is Sam Topeka's amount realized and gain recognized on the liquidation?
Q3) What attributes of a controlled subsidiary corporation are carried over to the parent when the subsidiary is liquidated?
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) Pacific Corporation acquires 80% of the stock of Jackson Corporation for $3,000,000 in the current year.Jackson's assets have a basis of $2,000,000 and its liabilities are $800,000.The assets are worth $3,500,000.What gain is recognized by Jackson Corporation on the deemed sale of its assets if a Sec.338 election is made?
Q2) Identify which of the following statements is true.
A)The step-transaction doctrine has always been used by the IRS to convert a tax-free transaction into a taxable transaction.
B)Tax attributes carry over from the target corporation to the acquiring corporation in all acquisitive reorganizations.
C)In a Type A reorganization,the net operating loss carryover can be used by the acquiring corporation without limitation in its first tax year that ends after the acquisition date.
D)All of the above are false.
Q3) Identify which of the following statements is true.
A)A plan of reorganization must be a written document.
B)Advance rulings are required for all reorganizations.
C)The IRS will issue an advance ruling on any proposed tax-free reorganization.
D)All of the above are false.
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) Toby owns all of the single class of stock of James and Mony Corporations.James Corporation owns all of Volt Corporation's stock.Mony owns all of Wegnin Corporation.Mony and Wegnin Corporations are foreign corporations.Toby,James,and Volt are domestic corporations.Are the corporations part of an affiliated group?
Q2) Alpha,Beta,Gamma,and Delta Corporations form a controlled group.Delta is a nonincludible regulated investment company.Only Alpha,Beta,and Gamma are able to file their income tax returns on a consolidated basis.What options are available for allocating the 15%,25%,and 34% tax rates to the members of the controlled group?
Q3) Which of the following is not reported by an affiliated group on a consolidated basis?
A)capital gain
B)section 1231 gain
C)casualty & theft gain
D)All of the above are included.
Q4) Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.
A)True
B)False
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) Identify which of the following statements is true.
A)A partnership cannot have an NOL carryback or carryforward.
B)A partnership cannot make charitable contributions.
C)Dividends received by a partnership from a domestic corporation are included in the partnership's ordinary income.
D)All of the above are false.
Q2) Latoya owns a 10% interest in the ABC Partnership from January 1 through June 30 (the 181st day of the tax year)of the current year (a non-leap year).On July 1,Latoya buys an additional 10% interest in the partnership.The XYZ Partnership's ordinary income is $109,500 and it is earned evenly throughout the year.Latoya's distributive share of the ordinary income is
A)$16,380.
B)$16,425.
C)$16,470.
D)$21,900.
Q3) What is included in partnership taxable income?
Q4) Does the contribution of services to a partnership in exchange for an unrestricted partnership interest qualify for Sec.721 nontaxable treatment?
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) Derrick's interest in the DEF Partnership is liquidated when his basis in the interest is $30,000.He receives a liquidating distribution of $20,000 cash and inventory with a basis of $8,000 and an FMV of $30,000.Derrick will recognize
A)no gain or loss.
B)$2,000 capital loss.
C)$2,000 ordinary loss.
D)$10,000 capital loss and $20,000 ordinary loss.
Q2) When must a partnership make mandatory basis adjustments?
A)on any sale of a 20% or greater partnership interest
B)on any sale of a partnership interest for $250,000 or more
C)on any distribution of assets with a value of $250,000 or more
D)on any sale of a partnership interest where the partnership's adjusted basis in its assets exceeds their fair market value by $250,000 or more
Q3) Do most distributions made by a partnership require a Sec.751 calculation?
Q4) A partnership cannot recognize a gain or loss on a current distribution.
A)True
B)False
Q5) What is the character of the gain/loss on the sale of a partnership interest?
Q6) What is included in the definition of unrealized receivables?
Page 12
To view all questions and flashcards with answers, click on the resource link above.
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) Identify which of the following statements is true.
A)Long-term capital gains may be subject to double taxation if the gains are subject to both the excess net passive income tax rules and the built-in gains tax rules.
B)Special allocations of ordinary income or loss and separately stated items that are available for partnerships are also permitted with S corporations.
C)When an S corporation's shares are sold by a shareholder during a tax year,the transferee's share of the earnings is reported from the day after the transfer date through the end of the tax year.
D)All of the above are false.
Q2) Identify which of the following statements is true.
A)An election for an S corporation to use the Sec.179 expensing election is made by the corporation and not by its shareholders.
B)The S corporation's separately stated items are in general the same ones that apply in partnership taxation.
C)An S corporation cannot claim a dividends-received deduction.
D)All of the above are true.
Q3) What is a permitted year?
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) Why are Crummey trusts popular for minors?
A)They are considered gifts of a future interest and allow the donor to take an exclusion.
B)They are considered gifts of a present interest,permitting an annual gift tax exclusion.
C)Crummey trusts require annual distributions to minors.
D)Donors are only subject to the gift tax when funds are distributed from Crummey trusts.
Q2) Identify which of the following statements is true.
A)If the annual exclusion for gifts is not used in the current year,the unused portion can be carried forward to subsequent years.
B)Individuals may not give more than $14,000 per person in gifts each year before being taxed on the transfer.
C)For transfer tax purposes,both the charitable contribution deduction and the marital deduction are unlimited.
D)All of the above are false.
Q3) Gift tax returns are filed on a calendar-year basis.
A)True
B)False
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) A terminable interest is one that ceases upon the passage of time or the occurrence of some event.
A)True
B)False
Q2) Four years ago,David gave land to Mike that he purchased for $70,000,which is presently worth $100,000.Three years ago,Mike exchanged the land (then worth $150,000)along with a $100,000 cash contribution made by David for a new piece of land worth $250,000.The new land is titled with David and Mike as joint tenants with the right of survivorship.When Mike dies this year,the land is worth $300,000.Mike's estate will include
A)$0.
B)$150,000.
C)$180,000.
D)$300,000.
Q3) The estate tax return is due,ignoring extensions,3-1/2 months after the decedent's date of death.
A)True
B)False
Q4) Outline and briefly describe the estate tax computation,beginning with the gross estate.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
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) In which of the following situations will the grantor trust rules apply?
A)The trust is revocable and mandates the distribution of income to the named beneficiary.
B)The trust is irrevocable,and the trustee,who is also the grantor,has the power to distribute or accumulate income for the named beneficiary.
C)The trust is irrevocable,the income must be paid out currently,and the trust assets will revert to the grantor at the end of nine years.
D)The grantor trust rules will apply in each of the situations.
Q2) Identify which of the following statements is true.
A)Income in respect of a decedent (IRD)is the gross income the decedent earned before death but had not collected before death.
B)An estate may deduct up to $5,000 of capital losses against the ordinary income taxable in the estate.
C)An example of income in respect of a decedent (IRD)is the gain recognized on property sold by the estate after the decedent's death.
D)All of the above are false.
Q3) What is the benefit of the 65-day rule?
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) In which of the situations below will a taxpayer not be assessed interest on the tax remitted?
A)An extension is obtained and the tax is paid within the extension period.
B)A timely return is filed but the taxpayer must delay payment of the taxes.
C)The return is audited and additional tax is owed.
D)None of the above situations.
Q2) The innocent spouse relief provision from tax liability covers all of the following except
A)improper deductions.
B)improper credits.
C)improper basis.
D)All are understatements subject to minimum thresholds.
Q3) A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.
A)True
B)False
Q4) For innocent spouse relief to apply,five conditions must be met.Explain them.
Q5) Pete has reported a tax liability of $3,500 on his 2012 tax return.His 2013 withholding was $3,800.He did not file his 2013 return until June 12,2014.What penalties does Pete owe?
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) Perry,a U.S.citizen,is transferred by his employer to Japan for a three-year assignment.Which one of the following items is not excluded under Sec.911?
A)base salary
B)cost-of-living allowance
C)housing costs
D)premiums paid on first $50,000 of group term life insurance
Q2) Discuss the use of a "tax haven" nation to reduce taxes and the effect of Subpart F rules on such planning.
Q3) U.S.citizens and resident aliens working abroad may qualify for the foreign-earned income exclusion of $101,300 in 2016.
A)True
B)False
Q4) Nonresident aliens are not allowed to claim the standard deduction.
A)True
B)False
Q5) Excess foreign tax credits can be carried back one year and forward five years.
A)True
B)False
Q6) What is a corporate inversion and why was this provision enacted?
Page 18
To view all questions and flashcards with answers, click on the resource link above.
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) Kate files her tax return 36 days after the due date.When she files the return,she sends a check for $2,000 which is the balance of the tax owed by her.Kate's penalty for failure to file a return will be
A)0)5% per month (or factor thereof)up to a maximum of 25%.
B)5% per month (or factor thereof)up to a maximum of 25%.
C)20% per month (or factor thereof).
D)25%.
Q2) The unified transfer tax system
A)imposes a single tax upon transfers of property during an individual's lifetime only.
B)imposes a single tax upon transfers of property during an individual's life and at death.
C)imposes a single tax upon transfers of property only at an individual's death.
D)none of above.
Q3) The primary objective of the federal income tax law is to achieve various economic and social policy objectives.
A)True
B)False
Q4) Explain how returns are selected for audit.
To view all questions and flashcards with answers, click on the resource link above.
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) On June 1,2017,Ellen turned 65.Ellen has been a widow for five years and has no dependents.Her standard deduction is
A)$4,050.
B)$6,350.
C)$7,900.
D)$12,700.
Q2) If a 13-year-old has earned income of $500 and unearned income of $2,500,all of the income can be reported on the parent's return.
A)True
B)False
Q3) Discuss reasons why a married couple may choose not to file a joint return.
Q4) All of the following items are generally excluded from income except A)child support payments.
B)interest on corporate bonds.
C)interest on state and local government bonds.
D)life insurance proceeds paid by reason of death.
Q5) Avi and Rianna are considering marriage before year-end.They each earn a salary of about $150,000,have some investment income and some itemized deductions.What additional taxes will Avi and Rianna face as a married couple?
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) The cash receipts and disbursements method of accounting is used by most individual taxpayers and most noncorporate businesses that do not have inventories. A)True
B)False
Q2) Tarik,a single taxpayer,has AGI of $55,000 which includes $1,000 of qualified dividends.Tarik has $7,000 of itemized deductions.What is his 2017 federal income tax?
A)$7,638
B)$6,626
C)$7,739
D)$6,726
Q3) AAA Corporation distributes an automobile to Alexandria,a shareholder,in lieu of a cash dividend.Alexandria must report the value of the automobile as dividend income. A)True B)False
Q4) Ron and Eve are a married couple who plan to file separate tax returns.How will they determine how to split their income for tax reporting purposes?
To view all questions and flashcards with answers, click on the resource link above.
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) Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2017.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?
A)$118,436
B)$102,100
C)$109,764
D)$149,000
Q2) In 2015 Betty loaned her son,Juan,$10,000 to help him buy a car.In 2017,before he repaid the $10,000,Betty told Juan that she was "tearing up" the $10,000 note as a graduation present.How should Juan treat the amount forgiven?
A)taxable income in year of loan
B)taxable income in year of forgiveness
C)excludible gift in year of loan
D)excludible gift in year of forgiveness
Q3) Sam received a scholarship for room and board.This scholarship is excludible from income.
A)True
B)False
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) Darla sold an antique clock in 2017 for $3,000.She had purchased the clock in 2009 for $2,000.If she is otherwise in the 33% marginal tax bracket,what is the maximum tax rate on the capital gain on the sale of the clock?
A)33%
B)15%
C)28%
D)20%
Q2) If a nontaxable stock dividend is received and is not the same type of stock as that owned before the dividend,the original stock's basis is allocated to all shares
A)based on the par value of the stock.
B)equally to all shares owned after the stock dividend.
C)based on relative fair market values at the time of the stock dividend.
D)None of the above.
Q3) If the shares of stock sold or exchanged are not specifically identified,the FIFO (first-in,first-out)method of identification must be used.
A)True
B)False
Q4) What are arguments for and against preferential treatment of capital gains?
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) List those criteria necessary for an expenditure to be deductible as business or investment expenses.
Q2) If an activity produces a profit for at least two years during a consecutive five-year period,the burden of proof shifts to the IRS to show that the activity is not profit-motivated.
A)True
B)False
Q3) During the current year,Martin purchases undeveloped land as an investment.Martin intends to rent the land as pastureland and hopefully sell it later for a profit.In the current year,Martin receives no rent but he does pay taxes of $2,800,mortgage interest of $900 and liability insurance of $500.How much of these expenses can Martin deduct (before any limitations)on his current tax return?
A)$0
B)$1,400
C)$3,700
D)$4,200
Q4) During the current year,Charlene borrows $10,000 to purchase Kansas City bonds.Charlene incurs $800 of interest on her outstanding loan.How much interest expense may Charlene deduct in the current year?
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) Medical expenses incurred on behalf of children of divorced parents are deductible by the parent who pays the expenses but only if that parent also is entitled to the dependency exemption.
A)True
B)False
Q2) Patrick's records for the current year contain the following information. -He donated stock having a fair market value of $5,000 to a qualified charitable organization.Patrick acquired the stock two years ago at a cost of $3,000.
-He paid $1,000 for membership in an athletic scholarship program maintained by the university.The only benefit of the membership is that Patrick is entitled to purchase a season ticket to the university's home football games.
-He also donated $7,500 cash to a qualified charitable organization.Patrick's adjusted gross income for the year is $100,000.
What is the amount of his charitable contribution deduction?
A)$11,300
B)$11,500
C)$13,300
D)$13,500
To view all questions and flashcards with answers, click on the resource link above. Page 25
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) Jorge owns activity X which produced a $20,000 passive loss last year.Jorge's only income last year was wages of $30,000.Jorge is a material participant in activity X this year when it produces a $14,000 loss.This year,Jorge's wages are $40,000.This year,Jorge also has passive activity income from activity Y of $16,000.What is the total passive activity loss carryover to next year?
A)$0
B)$3,000
C)$4,000
D)$18,000
Q2) What is required for an individual to be considered as actively participating in a real estate activity for purposes of utilizing the $25,000 ceiling on rental real estate losses?
Q3) When business property involved in a casualty is totally destroyed,the amount of the loss is limited to the lesser of the taxpayer's adjusted basis in the property or the reduction in FMV.
A)True
B)False
Q4) How is a claim for refund of taxes filed by an individual who carries an NOL deduction back to a prior year?
To view all questions and flashcards with answers, click on the resource link above. Page 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) The key distinguishing factor for classifying a worker as either an employee or self-employed includes the right to control and direct the worker with respect to both the end result and the means to accomplish that end result.
A)True
B)False
Q2) Tyler (age 50)and Connie (age 48)are a married couple.Tyler is covered under a qualified retirement plan at his job and earned $175,000 in 2017.Connie is employed as a lab technician and earned $30,000 but is not covered under a qualified retirement plan.They file a joint return; have interest and dividend income of $30,000.What is their maximum for AGI deduction for contributions to a traditional IRA?
A)$0
B)$5,500
C)$6,500
D)$12,000
Q3) Why did Congress establish Health Savings Accounts (HSAs)? How do HSAs operate?
Q4) Generally,50% of the cost of business gifts is deductible up to $25 per donee per year.
A)True
B)False
Page 27
To view all questions and flashcards with answers, click on the resource link above.
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) Under the MACRS system,the same convention that applies in the year of acquisition (e.g. ,half-year,mid-quarter,or mid-month)also applies in the year of disposition.
A)True
B)False
Q2) When depreciating 5-year property,the final year of depreciation will be year A)3)
B)4)
C)5) D)6)
Q3) Sec.179 tax benefits are recaptured if at any time an asset is converted to personal use.
A)True
B)False
Q4) Intangible assets are subject to MACRS depreciation. A)True
B)False
Q5) The basis of an asset must be reduced by the depreciation allowable.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 28
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) Marissa sold stock of a non-publicly traded corporation with an adjusted basis of $36,000 for $48,000.Marissa received a down payment of $12,000 with the balance due in equal payments over the next two years.
a.What is the amount of gross profit to be recognized in the year of sale?
b.Assume that the buyer defaulted on the final payment.Marissa sued and was able to repossess the stock.The fair market value of the stock on the date of repossession is $36,000; legal fees were $1,500.What is the gain or loss on the repossession?
Q2) Bergeron is a local manufacturer of off-shore drilling platforms.This year,Bergeron entered into a contract to construct a drilling platform,which will be placed in the North Atlantic Ocean.The total contract price is $5,000,000,and Bergeron estimates the total construction cost at $2,000,000.Actual costs incurred this year are $600,000.If Bergeron uses the completed contract method,the gross profit for this year is
A)$0.
B)$400,000.
C)$600,000.
D)$2,000,000.
Q3) What is the significance of the Thor Power Tool Co.case?
Q4) Discuss the purpose of the imputed interest rules.
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) Pamela owns land for investment purposes.The land is worth $300,000 (basis of $260,000 to Pamela).Pamela exchanges the land,plus $20,000 cash,for a warehouse to be used in her business.The FMV of the warehouse is $400,000,but the warehouse is subject to a mortgage of $80,000,which is assumed by Pamela.Pamela must recognize a gain of
A)$ 0.
B)$ 40,000.
C)$ 120,000.
D)$ 140,000.
Q2) Which of the following statements with respect to a like-kind exchange is false?
A)Property of one class must be exchanged for property of the same class.
B)An exchange of inventory does not qualify as a like-kind exchange.
C)Personal property must be exchanged for personal property.
D)A sale of property and subsequent purchase of like-kind property will always qualify as a like-kind exchange.
Q3) For purposes of nontaxable exchanges,cash and non-like-kind property constitute boot.
A)True
B)False
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) A corporation owns many acres of timber,which it acquired three years ago,and which has a $150,000 basis for depletion.The timber is cut during the current year for use in the corporation's business.The FMV of the timber on the first day of the current year is $280,000.If the corporation makes the appropriate election,the tax result is
A)recognition of a Sec.1231 gain of $130,000.
B)no recognition of gain or loss since the timber is used in the business.
C)recognition of a gain at the time of sale if the timber is later sold with the gain equal to the sales price less the basis in the timber.
D)recognition of a gain if the timber is later sold with the gain equal to the sales price less $280,000 (FMV on the first day of the year of the cutting).
Q2) If realized gain from disposition of business equipment exceeds total depreciation or cost recovery,a portion of the gain will receive Sec.1231 treatment if the equipment's holding period is more than one year.
A)True
B)False
Q3) What is the purpose of Sec.1245 and what is its significance?
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) An individual taxpayer who is self-employed and an active investor has qualified for foreign tax credits,nonrefundable personal tax credits and general business credits.Because he knows there are differing limitations on the application of these credits,with resulting interrelated aspects,he wants to know the appropriate order for their application.The appropriate order of the application of these three classes of tax credits is as follow:
A)(1)foreign tax credits; (2)general business credits; (3)nonrefundable personal tax credits.
B)(1)general business credits; (2)foreign tax credits; (3)nonrefundable personal tax credits.
C)(1)foreign tax credits; (2)nonrefundable personal tax credits; (3)general business credits.
D)(1)nonrefundable personal tax credits; (2)foreign tax credits; (3)general business credits.
Q2) Nonrefundable credits may offset tax liability but may not result in additional payments to the taxpayer.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 32
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) Compare and contrast "interpretative" and "statutory" regulations.
Q2) Does Title 26 contain statutory provisions dealing only with income taxation? Explain.
Q3) What is the purpose of a citator?
Q4) Appeals from the U.S.Tax Court are to the Court of Appeals for the Federal Circuit.
A)True
B)False
Q5) Are letter rulings of precedential value to third parties?
Q6) You have the following citation: Joel Munro,92 T.C.71 (1989).Which of the following statements is true?
A)The taxpayer,Joel Munro,won the case because there is no reference to the IRS.
B)The case appears on page 71 in Volume 92 of the official Tax Court of the United States Reports and the case was decided in 1989.
C)This citation refers to a taxpayer conference between the IRS and the taxpayer.
D)The case was tried in 1989 and was appealed in 1992.
Q7) Analyze the information; make analogies and reach a conclusion.
Q8) Use a key word search.
To view all questions and flashcards with answers, click on the resource link above. Page 33
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) A corporation is owned 70% by Jones and 30% by Smith.Jones owns 70 shares with a cost of $100 each.Smith owns 30 shares with a cost of $100 per share.The company redeems 5 shares from Smith at a redemption price of $400 per share.No stock is redeemed from Jones.This is not a redemption to pay death taxes,and it is not a partial liquidation.What is the tax impact on Smith?
A)$2,000 dividend
B)$2,000 capital gain
C)$1,500 dividend
D)$1,500 capital gain
Q2) In the current year,Bosc Corporation has taxable income of $100,000,and its regular tax liability is $22,250.Bartlett's AMT adjustments other than ACE are $70,000,and it has $320,000 of adjusted current earnings.What is the amount of Bosc Corporation's AMT liability?
Q3) Dividends paid from E&P are taxable to shareholders and are,therefore,deductible by the corporation.
A)True
B)False
Q4) 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 34
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) 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.
Q2) If a partner contributes depreciable property to a partnership in exchange for a partnership interest,the depreciation recapture potential of the contributed assets does not carry over to the partnership.
A)True
B)False
Q3) Discuss whether a C corporation,a partnership,or an S corporation form of organization would be preferred if net operating losses are anticipated in the initial years of operation.
Q4) An LLC that elects to be taxed like a partnership is also classified as a partnership for legal purposes.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 35
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) Willa is considering receiving either $20,000 of current salary or $30,000 of deferred compensation in two years.Her current tax rate is 35%,but she expects her tax rate to be 25% two years from now.Willa can invest any after-tax current salary at a 6% ATROR.If she receives the current salary and invests the after-tax amount,her investment will accumulate to
A)$16,854.
B)$14,607.
C)$22,472.
D)None of the above.
Q2) Jorge contributes $5,000 to a traditional nondeductible IRA in the current year and makes no subsequent contributions.Assume that the investment in the IRA yields 6% per year and that Jorge allows his investment to accumulate for 20 years.At the end of twenty years,he withdraws all of the amounts from the IRA when his marginal tax rate is 30%.What is his after-tax accumulation?
Q3) When given a choice between making a contribution to a Roth IRA or to a nondeductible traditional IRA,the taxpayer should choose the Roth IRA.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 36