Introduction to Taxation Question Bank
Course Introduction
Introduction to Taxation offers a comprehensive overview of the fundamental principles and concepts that underpin modern tax systems. The course explores the objectives of taxation, different types of taxes, and key aspects of tax law, administration, and compliance. Students will gain an understanding of how taxation affects individuals, businesses, and society, as well as acquire basic skills in tax calculation and the application of tax rules. Emphasis is placed on practical examples and case studies to illustrate core concepts and provide a solid foundation for advanced study or professional practice in taxation and related fields.
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) Identify which of the following statements is false.
A)Regular and memorandum decisions of the Tax Court are published by the government in the Tax Court of the United States Reports.
B)The citation Cristofani,97 T.C.74 (1991)indicates that the decision is a regular decision of the Tax Court.
C)The citation Estate of Newhouse,94 T.C.193 (1990),nonacq.1991-1 C.B.1 indicates that the IRS did not formally disagree with this 1990 Tax Court decision until 1991.
D)The Board of Tax Appeals preceded the Tax Court.
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) Explain how committee reports can be used in tax research.What do they indicate?
Answer: Committee reports can help resolve ambiguities in statutory language by revealing Congressional intent.They are indicative of this intent.
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) Tanicia owns all 100 shares of Midwest Corporation's stock,valued at $100,000.Gwen owns property that has a $15,000 adjusted basis and a $100,000 FMV.Gwen contributes the property to Midwest Corporation in exchange for 100 shares of newly issued Midwest stock.Does Sec.351 apply to Gwen's exchange? What is the amount of her realized gain or loss? How much is recognized?
Answer: Section 351 does not apply because Gwen owns only 50% of the Midwest stock after the exchange and is not in control of Midwest Corporation.Gwen has a realized gain of $85,000 ($100,000 - $15,000),all of which must be recognized.
Q2) Bread Corporation is a C corporation with earnings of $100,000.It paid $20,000 in dividends to its sole shareholder,Gerald.Gerald also owns 100% of Butter Corporation,an S corporation.Butter had net taxable income of $80,000 and made a $15,000 distribution to Gerald.What income will Gerald report from Bread and Butter's activities?
A)$35,000
B)$95,000
C)$100,000
D)$180,000
Answer: C
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) In 2011,Summer Corporation earns domestic gross receipts of $2 million and incurs allocable expenses of $800,000.It has $400,000 of income from other sources,resulting in taxable income of $1.6 million before the U.S.production activities deduction.What is its U.S.production activities deduction?
A)$120,000
B)$108,000
C)$60,000
D)$36,000
Answer: B
Q2) If a controlling shareholder sells depreciable property to a controlled corporation and the property is depreciable by the purchaser,any gain on the sale is a 1231 gain.
A)True
B)False
Answer: False
Q3) Corporate estimated tax payments are due April 15,June 15,September 15,and January 15.
A)True
B)False
Answer: False
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) What are the consequences of a stock redemption to the distributing corporation?
A)The corporation recognizes a gain or loss as if it had sold the distributed property for its FMV immediately before the redemption.
B)If the redemption is treated as a dividend,E&P is reduced in the same manner as for a regular dividend.
C)If the redemption is treated as a sale,only accumulated earnings and profits is reduced.
D)All of the above are correct.
Q2) What is a constructive dividend? Under what circumstances are constructive dividends most likely to arise?
Q3) 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
Q4) Gould Corporation distributes land (a capital asset)worth $90,000 to Gerry,a shareholder.The land has a $30,000 basis to Gould.What is the amount and character of the gain or loss recognized by Gould?
Q5) Define Sec.306 stock.
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) The personal holding company tax might be imposed
A)on both partnerships and corporations.
B)on companies whose gross income arises solely from rentals,if the lessors render no services to the lessees.
C)if more than 50% of the company is owned by five or fewer individuals for the entire year.
D)on small business investment companies licensed by the Small Business Administration.
Q2) Identify which of the following statements is false.
A)The corporate AMT produces relatively little tax revenue.
B)The small corporation AMT exemption exempts 95% of all corporations from the AMT.
C)The corporate AMT is similar to the AMT for individuals.
D)The starting point for computing a corporation's AMT is book income.
Q3) Door Corporation's alternative minimum taxable income before the statutory exemption is $200,000.What is Door's tentative minimum tax before credits?
Q4) What is a personal holding company?
Q5) How is alternative minimum taxable income computed?
Q6) Define personal holding company income.
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) A liquidation must be reported to the Internal Revenue Service on Form 966
A)within 60 days of the adoption of a plan of liquidation.
B)that is filed with the national IRS office.
C)whether the shareholders' realized gain is recognized or not.
D)by the shareholders.
Q2) In a Sec.332 liquidation,can a subsidiary corporation recognize losses on distributions to either the parent corporation or minority shareholders?
Q3) Sales having a tax-avoidance purpose - Loss recognition is restricted where property is transferred to the corporation in a Sec.351 transaction or capital contribution after a date two years before the date that the corporation adopts a plan of complete liquidation.Tax avoidance is inferred in these situations unless the corporation uses the property in its trade or business.
A less-often encountered situation involves distributions or sales of a subsidiary corporation's stock.A corporation can elect under Sec.336(e)to treat the sale,exchange,or distribution of a subsidiary's stock as a disposition of all the subsidiary's assets,resulting in no gain or loss being recognized on the sale,exchange,or distribution of the stock.
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 false.
A)When determining the use of an NOL carryover following a change of ownership,the old loss corporation and the new loss corporation may be the same for Sec.382 purposes.
B)A new loss corporation that does not continue the business enterprise of the old loss corporation during the two-year period beginning on the date of the stock ownership change cannot use the net operating loss carryover.
C)One advantage of a tax-free reorganization is that losses realized as part of a tax-free reorganization are not recognized.
D)For purposes of Sec.382,ownership changes are tested any time a 5% shareholder has a stock transaction affecting his ownership.
Q2) The assets of Bold Corporation have a $1,000,000 basis and a $3,000,000 FMV.Its liabilities are $500,000.Tidel Corporation acquires 80% of the Bold Corporation stock for $2,000,000.What gain is recognized by Bold Corporation if a timely Sec.338 election is made by Tidel Corporation? What is the total basis of the assets to Bold Corporation following the deemed sale? Assume a 34% corporate tax rate.
Q3) What are the two steps of a Sec.338 deemed liquidation election?
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) A consolidated return's tax liability is owed by
A)all group members in equal portions.
B)the group member responsible for that portion of the tax liability.
C)all group members who are severely liable.
D)the parent corporation.
Q2) P and S are members of an affiliated group that has filed consolidated tax returns for a number of years.The sale of inventory by P that was acquired from S in an intercompany transaction outside the affiliated group triggers the recognition of gain by S.
A)True
B)False
Q3) 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?
Q4) Explain the requirements a group of corporations must meet in order to elect to file a consolidated return.
Q5) What is the consequence of having losses subject to the SRLY limitations?
Q6) How do intercompany transactions affect the calculation of capital gains/losses?
Page 10
To view all questions and flashcards with answers, click on the resource link above.
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) Briefly explain the aggregate and entity theories as they relate to partnerships.
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) ABC Partnership distributes $12,000 to partner Al.Al's distributive share of partnership income is $20,000.Al is taxed on $20,000.
A)True
B)False
Q4) A partner's basis for his partnership interest can be negative.
A)True
B)False
Q5) 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) What is the definition of "substantially appreciated inventory"?
A)inventory with a FMV greater than its basis
B)inventory and unrealized receivables with a FMV greater than their basis
C)inventory with a FMV greater than 120% of its basis
D)inventory and unrealized receivables with a FMV greater than 120% of their basis
Q2) What are the advantages of a firm being formed as a limited liability company (LLC)instead of as a limited partnership?
Q3) For Sec.751 purposes,"substantially appreciated inventory" means property held for sale to customers whose market value exceeds its adjusted basis.
A)True
B)False
Q4) In a current distribution,the partner's basis in the partnership interest is reduced by the amount of money received and by the partnership's bases in the distributed property.
A)True
B)False
Q5) All states have adopted laws providing for limited liability companies.Describe a limited liability company (LLC).
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) Troy owns 50% of Dot.Com,an e-commerce company.His S corporation stock basis at the beginning of the year is $300,000.Dot.Com has not done well this year and will report an ordinary loss of $875,000.Troy's marginal tax rate for the current year is 35%.What tax issues should Troy consider with respect to the loss?
Q2) Which one of the following is not one of the corporation-related requirements for S corporation status?
A)The corporation must be a domestic corporation.
B)The corporation must not have any foreign-sourced income.
C)The corporation must not be an "ineligible" corporation.
D)The corporation must have only one class of stock.
Q3) David owns 25% of an S corporation's stock (a capital asset)for the first three months of the S corporation's tax year.During the year,the S corporation has $16,000 of ordinary income and $32,000 of long-term capital gain.David starts the year with a basis of $50,000 in his S corporation stock and sells the stock for $56,000 on April 1 of the year.Assuming all months have 30 days,how much gain/loss does David report on the sale of the stock and what is its character?
Q4) List and discuss five advantages and five disadvantages of electing to be taxed as an S corporation over a C corporation or a partnership.
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) Barbara sells a house with an FMV of $170,000 to her daughter for $120,000.From this transaction,Barbara is deemed to have made a gift (before the annual exclusion)of
A)$50,000.
B)$170,000.
C)$120,000.
D)$0.
Q2) Identify which of the following statements is false.
A)If an individual transfers property in trust and reserves the right to the trust's income for life,the individual retains a life estate.
B)An individual who receives a remainder interest will receive property after the death of the holder of a life estate.
C)If a grantor transfers property in trust and names a beneficiary to receive only a term-certain interest and then the property is to return to the grantor,the transaction is not subject to gift tax.
D)Life estates are valued using actuarial tables.
Q3) What is the due date for the gift tax return? Are there any exceptions? If so,what are they?
Q4) Contrast the Crummey trust with the Sec.2503(c)trust.
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) Praneh Patel,a widower,died in March of the current year.His gross estate is $5,325,000,and at the time of his death,he owed debts of $40,000.His will made a charitable bequest of $280,000 and left the rest of his property to his children.His administrative expenses are estimated to be about $55,000.What tax issues should the estate's CPA consider when preparing Praneh's estate tax return and his estate's income tax return?
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) A terminable interest is one that ceases upon the passage of time or the occurrence of some event.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 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) Texas Trust receives $10,000 interest on U.S.Treasury bonds and $15,000 interest on State of New York bonds.All $25,000 is distributed to the trust beneficiary,Gary.Which of the following statements is correct?
A)Gary has $25,000 of ordinary gross income.
B)Gary has $10,000 of taxable interest income and $15,000 of tax-free interest income.
C)Gary has no taxable income because the trust must pay the tax.
D)Gary has $10,000 of capital gain and $15,000 of tax-free interest income.
Q2) Explain how to determine the deductible portion of trustee's fees.
Q3) Apple Trust reports net accounting income of $40,000,all from taxable sources.The trustee is required to distribute $15,000 annually to Megan.The trustee also makes discretionary distributions of $30,000,$7,500 to Megan and $22,500 to Caroline.The trust pays $5,000 of the discretionary distributions from corpus.What is the taxable amount of the Megan's tier-2 distribution?
A)$7,500
B)$6,250
C)$15,000
D)$22,500
Q4) List some common examples of principal and income items.
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) Which of the following statements regarding Circular 230 is false?
A)Circular 230 applies to all tax return preparers.
B)Circular 230 defines practice before the IRS.
C)Circular 230 provides guidance as to the level of authority necessary for a CPA to take a tax return position.
D)Circular 230 applies to CPAs,enrolled agents,enrolled actuaries,and attorneys.
Q2) The maximum failure to file penalty is a total of 25% of the underpayment.
A)True
B)False
Q3) For innocent spouse relief to apply,five conditions must be met.Explain them.
Q4) Which of the following items can be omitted from a taxpayer's request for a ruling?
A)names,addresses,and taxpayer identification numbers of all interested parties
B)a detailed explanation of the transaction
C)the particular conclusion desired by the taxpayer
D)the location of the IRS district office that has examination jurisdiction
Q5) If the taxpayer has credible evidence,the IRS bears the burden of proof in a tax dispute.
A)True
B)False
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) If foreign taxes on foreign income exceed U.S.taxes on foreign income,the excess foreign taxes are credited against U.S.taxes in the current year.
A)True
B)False
Q3) Music Corporation is a CFC incorporated in Country M.Music receives interest and dividends from its two foreign subsidiary corporations,Sharp Corporation and Flat Corporation.Sharp is incorporated in Country S and conducts all of its activities in that country.Flat is incorporated in Country M and conducts all of its activities in that country.Are the interest and dividends received by Music Corporation FPHCI?
Q4) Nonresident aliens are not allowed to claim the standard deduction.
A)True
B)False
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) During the current tax year,Frank Corporation generated gross income of $1,900,000 and had ordinary and necessary deductions of $1,400,000.What is the amount of Frank Corporation's corporate income tax for the year?
Q2) The tax law encompasses administrative and judicial interpretations,such as Treasury regulations,revenue rulings,revenue procedures,and court decisions,as well as statutes.
A)True
B)False
Q3) Martha is self-employed in 2017.Her self employment income is $140,000.What is her self-employment tax?
A)$19,462
B)$19,833
C)$21,420
D)None of the above.
Q4) Larry and Ally are married and file a joint return.They are considering purchasing a personal residence that will generate two deductions: $10,000 in home mortgage interest and $8,000 in real estate taxes.Their marginal tax rate is 25%.If Larry and Ally purchase the residence,what will be the after-tax cost of the additional $18,000 in expenditures?
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) Steve and Jennifer are in the 33% tax bracket for ordinary income and the 15% bracket for capital gains.They have owned several blocks of stock for many years.They are considering the sale of two blocks of stock.The sale of one would produce a gain of $12,000 while the sale of the other would produce a loss of $18,000.For purposes of this problem,ignore personal exemptions,itemized deductions,phase-outs and additional investment taxes.They have no other gains and losses this year.
a.How much tax will they save if they sell the block of stock that produces a loss?
b.How much additional tax will they pay if they sell the block of stock that produces a gain?
c.What will be the impact on their taxes if they sell both blocks of stock?
Q2) Silver Inc.is an S corporation.This year it earned $50,000 of taxable income and paid a $10,000 distribution to Daisy,its sole shareholder.Daisy has a marginal tax rate of 25%.Due to the corporation's results and the distribution paid,the IRS will receive total taxes of
A)$9,000.
B)$12,500.
C)$14,000.
D)$10,000.
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) On January 1,1997,Erika Greene purchased a single premium annuity for $15,000 that will pay her $5,000 every year for life beginning on January 1,2017.Based on actuarial tables published by the IRS,her life expectancy multiple is 10.
a.What is the amount to be excluded in Erika's income for 2017?
b.What is the amount to be excluded in Erika's income for the year 2027?
Q2) Mark purchased 2,000 shares of Darcy Corporation for $13,200.This year,Darcy declared a 10% nontaxable stock dividend,and Mark received 200 shares.After the dividend Mark's per share basis will be
A)$6.00.
B)$6.57.
C)$6.60.
D)$7.26.
Q3) As a result of a divorce,Matthew pays Jasmine alimony of $75,000 in year one and $25,000 per year in subsequent years.How much is deductible by Matthew in year one?
A)$25,000
B)$35,000
C)$40,000
D)$75,000
To view all questions and flashcards with answers, click on the resource link above.
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) A business provides $45,000 of group-term life insurance to all workers,including the partners who work in the business.All of the workers can exclude the value of this fringe benefit from their gross income.
A)True
B)False
Q2) Upon the sale of property,a portion of the selling price equal to the basis in the property is considered a return of capital to the seller and is,therefore,not taxable.
A)True
B)False
Q3) 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
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) Erik purchased qualified small business corporation stock on December 1,2010 and sold it for a $500,000 gain on December 12,2017.The gain subject to tax is
A)$0.
B)$500,000.
C)$250,000.
D)$125,000.
Q2) Adam purchased 1,000 shares of Airco Inc.common stock for $22,000 on February 3,2014.On April 1,2017,Adam received 100 new shares in a nontaxable stock dividend.As of April 1,the stock was trading at $25 per share.Adam sells the 100 new shares on June 15,2017 for $2,400.Due to the stock sale,Adam will recognize a
A)$100 STCL.
B)$2,400 STCG.
C)$400 STCG.
D)$400 LTCG.
Q3) What are arguments for and against preferential treatment of capital gains?
Q4) Gain on sale of a patent by an inventor generally is ordinary income.
A)True
B)False
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) Generally,expenses incurred in an investment activity other than those incurred to produce rent and royalties are deductions from AGI.
A)True
B)False
Q2) Efrain owns 1,000 shares of RJ Inc.common stock which he purchased three years ago for $36,000.Efrain sells the 1,000 shares on October 15,2017,for $10,000.On November 12,he purchases 400 shares of RJ Inc.preferred stock for $8,000.Efrain's recognized loss on the sale of the 1,000 shares will be
A)$0.
B)$10,400.
C)$15,600.
D)$26,000.
Q3) Eugene,a hardware store owner in Detroit,incurs $7,000 in an attempt to influence the Detroit City Council on the matter of a new tax assessment on hardware stores in Detroit.Explain what amount Eugene can deduct.
Q4) Discuss when expenses are deductible under the accrual method of accounting.
Q5) Discuss why the distinction between deductions for AGI and from AGI is important to individuals.
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) Explain under what circumstances meals and lodging en route to a medical facility may be deductible.
Q2) When both borrowed and owned funds are mingled in the same account,for purposes of categorizing interest expense,a repayment of the debt is allocated first to A)personal expenditures.
B)trade or business expenditures.
C)investment expenditures.
D)passive activity expenditures in real estate.
Q3) What is the treatment of charitable contributions in excess of the applicable limits for the current year?
Q4) All casualty loss deductions,regardless of the type of asset,are allowed as itemized deductions.
A)True
B)False
Q5) Medical expenses are deductible as a from AGI deduction to the extent that they exceed 2 percent of the taxpayer's AGI.
A)True B)False
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) Myriah earns salary of $80,000 and $20,000 of dividend income from her stock portfolio this year.Myriah owns a passive activity from which she incurs a $10,000 loss.In addition,the passive activity has generated tax credits this year,and Myriah's share is $5,000.What portion of the $5,000 of tax credits can Myriah apply against her tax liability this year?
A)$0
B)$1,000
C)$2,000
D)$5,000
Q2) All of the following are true of losses from the sale or worthlessness of small business corporation (Section 1244)stock with the exception of
A)the stock must be owned by an individual or a partnership. B)the stock must have been issued by a domestic corporation. C)the stock must have been issued for cash or property other than stock or securities. D)a single taxpayer may deduct,as ordinary losses,up to a maximum of $100,000 per tax year with the remainder treated as capital losses.
Q3) What are some factors which indicate that a debt may be worthless?
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) At her employer's request,Kim moves from Albany to Chicago.She incurs $20,000 of costs to move her household goods and to travel to the new location,plus $8,000 of temporary living expenses because the new home was not ready when she needed to start work.Her employer reimburses her the full $28,000 cost associated with the move.She cannot deduct the moving costs,but she is not economically impacted because she is fully reimbursed.
A)True
B)False
Q2) Chuck,who is self-employed,is scheduled to fly from Minneapolis to London on a business trip.His flight schedule included a connection through New York City.When Chuck arrived in New York City,he learned that his flight to London had been cancelled due to a volcanic eruption in Iceland.All air travel to Europe was delayed for five days because of significant amounts of ash in the air,causing Chuck to incur costs for hotel and meals in New York City.Since Chuck had never been to New York City before,he spent the time sightseeing.What tax issues are present?
Q3) SIMPLE retirement plans allow a higher level of employer contributions than do SEP IRAs.
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) On January 3,2014,John acquired and placed into service business tools costing $10,000.The tools have a 3-year class life.No other assets were purchased during that year.The depreciation in 2017 for those tools is (Sec.179 and bonus depreciation were not applied)
A)$0.
B)$741.
C)$1,920.
D)$3,333.
Q2) Most taxpayers elect to expense R&E expenditures because of the immediate tax benefit.
A)True B)False
Q3) Tronco Inc.placed in service a truck costing $40,000 on January 15 of this year.On November 1,the company placed in service $200,000 of construction equipment.Tronco is a calendar-year taxpayer.When calculating MACRS depreciation,Tronco must apply the mid-quarter convention to the construction equipment,but will use the half-year convention for the truck.
A)True B)False
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) In general,a change in accounting method must be approved by the IRS.
A)True
B)False
Q2) A taxpayer is selling land held for investment purposes.Payments will be received under the terms of a five-year installment note.Which of the following circumstances would suggest consideration of an election out of the installment method?
A)A taxpayer currently works full-time but next year will start a two-year leave from work while pursuing an MBA degree.
B)A taxpayer has a substantial capital loss carryforward.
C)A taxpayer plans to reduce her employment to part-time next year when she has her first child.She believes she will continue part-time until the child starts kindergarten.
D)Installment sale treatment is mandatory.
Q3) Owners of pass-through entities may defer income recognition by selecting a different tax year for the business if at least 25% of the business revenues occur during the last two months of the proposed year.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
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) In order for the gain on the sale of a personal residence to be excluded under Sec.121,a replacement residence must be purchased within two years.
A)True
B)False
Q2) A taxpayer exchanges an office building held as an investment asset for an office building to be used in her business.The exchange will qualify as like-kind.
A)True
B)False
Q3) Nicki is single and 46 years old.She sells her principal residence (adjusted basis $200,000)that she purchased ten years ago for $435,000.
a.What is the amount of Nicki's recognized gain on the sale?
b.Assume instead that Nicki sells the residence for $485,000.What is the amount of Nicki's recognized gain on the sale?
c.Assume instead that Nicki has been married to Mike for the entire time they have owned and lived in the home.If they sell the home for $485,000,what is the amount of their recognized gain on the sale?
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.
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) Which of the following assets is 1231 property?
A)a machine used in the company's manufacturing operations
B)an investment in corporate stock
C)land held for investment
D)items held for resale by a retailer
Q2) Sarah owned land with a FMV of $150,000 (adjusted basis $135,000)which is investment property (a capital asset).Sarah owned a second tract of land,a 1231 asset,with a FMV of $38,000 (adjusted basis $55,000).Both tracts were acquired in 2000 and condemned by the state this year.The state paid an amount equal to FMV.If there are no other transactions involving capital assets or 1231 assets,what is the amount that Sarah must report on her current year return?
Q3) The amount recaptured as ordinary income under either Sec.1245 or Sec.1250 can never exceed the realized gain.
A)True
B)False
Q4) WAM Corporation sold a warehouse during the current year for $830,000.The building had been acquired in 1992 at a cost of $730,000 and had total straight-line depreciation of $510,000. What is the amount and nature of the gain or loss on the sale of the warehouse?
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) All of the following statements regarding self-employment income/tax are true except
A)the self-employment tax is imposed on net earnings from self-employment when self-employment income is over $400.
B)self-employment tax is computed separately for married individuals filing joint returns.
C)independent contractors are subject to self-employment tax on the amount of net earnings from the self-employment activity.
D)employees who have a business in addition to their regular employment are not subject to the self-employment tax since FICA is withheld on their wages.
Q2) Assume you plan to volunteer at a Volunteer Income Tax Assistance (VITA)program for low income taxpayers and wish to prepare so you can help your clients achieve the maximum tax savings.Briefly discuss tax credits with which you should become familiar.
Q3) The alternative minimum tax applies to individuals only if it exceeds the taxpayer's regular income tax liability.
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) During the course of an audit,a CPA discovers an error in a prior return.According to the Statements on Standards for Tax Services,the CPA should
A)ask the client for permission to disclose the error to the IRS.
B)withdraw from the engagement.
C)inform the IRS of the error,regardless of whether the client grants permission.
D)correct the error in the current year's tax return.
Q2) Identify which of the following statements is true.
A)Paragraph references are most commonly used when citing or referring to the tax statutes.
B)Title 26 of the United States Code and the Internal Revenue Code of 1986 are synonymous.
C)Before 1939,tax statutes were codified or compiled into one document.
D)The Internal Revenue Code contains chapters,which are further subdivided into titles.
Q3) Taxpayers must pay the disputed tax prior to filing a case with the Tax Court.
A)True
B)False
Q4) Explain how committee reports can be used in tax research.What do they indicate?
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 liquidating corporation
A)recognizes gains and losses on the distribution of property.
B)never recognizes gains and losses on the distribution of property.
C)recognizes gains and losses only on the distribution of the specific property contributed in a Sec.351 transaction.
D)recognizes gains,but not losses,on the distribution of property.
Q2) A shareholder receives a distribution from a corporation in complete liquidation.The distribution will be taxed as a dividend to the extent of current or accumulated E&P.
A)True
B)False
Q3) Slimtin Corporation has $400,000 of regular taxable income.It has depreciation adjustments of $100,000 (MACRS depreciation in excess of 150% declining balance method),and its adjusted current earnings is $600,000.
Part A-Calculate Slimtin's AMT liability.
Part B-Slimtin has a $41,000 AMT credit carryover from last year.How much,if any,can be applied this year?
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) Joy is a material participant in a partnership.Her basis in her partnership interest is $250,000.Due to a major expansion,the partnership will generate a significant loss this year,and Joy's share is expected to be $300,000.The partners expect the partnership to report a large profit next year.Joy is in the top tax bracket this year,and she expects to be in a lower tax bracket next year.Due to her higher marginal tax rate this year,Joy would like to deduct her full share of the partnership loss this year.What strategies can she employ before year-end to assure full deduction of this year's loss?
A)As a material participant,Joy will be entitled to deduct her full share of the partnership loss this year.
B)Joy can make a loan to the partnership before year-end.
C)Joy can contribute capital to the partnership before year-end.
D)Either Response B or Response C will allow Joy to deduct her full share of the loss.
Q2) 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.
Q3) What is the effect of a change in a partner's interest in the partnership during the year?
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) One characteristic of the Pension Model is the fact that,like the Current and Deferred Models,only after-tax dollars are invested.
A)True
B)False
Q2) One of the characteristics of the Exempt Model is that earnings on the investment are exempt from explicit taxation.
A)True
B)False
Q3) 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
Q4) 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
Q5) What are the characteristics of the Pension Model?
Q6) Discuss the decision rules for current salary versus deferred compensation.
To view all questions and flashcards with answers, click on the resource link above. Page 36