Principles of Taxation Test
Questions
Course Introduction
Principles of Taxation introduces students to the foundational concepts and legal frameworks underpinning modern tax systems. The course explores the objectives and functions of taxation, types of taxes, tax policy, and basic principles such as equity, efficiency, and simplicity. Students will examine the structure of income, corporate, and indirect taxes, focusing on how tax law affects individuals, businesses, and governments. Key topics include tax administration, compliance requirements, tax planning, and the social and economic impacts of taxation. This course provides a comprehensive overview essential for understanding public finance and making informed decisions in both professional and personal contexts.
Recommended Textbook
South Western Federal Taxation 2019 Comprehensive 42nd Edition by David M. Maloney
Available Study Resources on Quizplus
28 Chapters
4038 Verified Questions
4038 Flashcards
Source URL: https://quizplus.com/study-set/438 Page 2
Chapter 1: An Introduction to Taxation and Understanding
the Federal Tax Law
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/182054
Sample Questions
Q1) Paige is the sole shareholder of Citron Corporation. During the year, Paige leases a building to Citron for a monthly rental of $80,000. If the fair rental value of the building is $60,000, what are the income tax consequences to the parties involved?
Answer: The rent charged by Paige is not "arms length"? as such, Citron Corporation's rent deduction is $60,000 (not $80,000). The $20,000 difference is a nondeductible dividend distribution. For Paige, the change merely requires reclassification. Instead of $80,000 of rent income, she has $60,000 of rent income and $20,000 of dividend income.
Q2) In terms of revenue neutrality, comment on a tax cut enacted by Congress that:
a. contains revenue offsets.
b. includes a sunset provision.
Answer: a. Ideally, to achieve revenue neutrality all tax cuts should be accompanied by revenue offsets.
b. A sunset provision does not account for the immediate revenue losses generated by a tax cut. It merely provides that such losses will not continue beyond a specified date when the tax cut expires and the former tax law is reinstated.
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Working with the Tax Law
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/7709
Sample Questions
Q1) Which of the following is not an administrative source of tax law?
A) Field Service Advice
B) Revenue Procedure
C) Technical Advice Memoranda
D) General Counsel Memorandum
E) All of these are administrative sources.
Answer: E
Q2) The following citation could be a correct citation: Rev. Rul. 95-271,1995-64 I.R.B. 18.
A)True
B)False
Answer: False
Q3) If these citations appeared after a trial court decision, which one means that the decision was overruled?
A) Aff'd 633 F.2d 512 (CA-7, 1980).
B) Rem'd 399 F.2d 800 (CA-5, 1968).
C) Aff'd 914 F.2d 396 (CA-3, 1990).
D) Rev'd 935 F.2d 203 (CA-5, 1991).
E) None of the above.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Computing the Tax
Available Study Resources on Quizplus for this Chatper
180 Verified Questions
180 Flashcards
Source URL: https://quizplus.com/quiz/182055
Sample Questions
Q1) An individual taxpayer uses a fiscal year of March 1 to February 28. The due date of this taxpayer's Federal income tax return is May 15 of each tax year.
A)True
B)False
Answer: False
Q2) Married taxpayers who file a joint return cannot later (i.e., after the filing due date) switch to separate returns for that year.
A)True
B)False
Answer: True
Q3) Which, if any, of the following is a deduction for AGI?
A) State and local sales taxes.
B) Interest on home mortgage.
C) Charitable contributions.
D) Unreimbursed moving expenses of an employee (not in the military).
E) None of these.
Answer: E
Q4) An uncle who lives with taxpayer.
Answer: b
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Gross Income: Concepts and Inclusions
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/7711
Sample Questions
Q1) Arnold was employed during the first six months of the year and earned a $90,000 salary. During the next 6 months, he collected $7,200 of unemployment compensation, borrowed $6,000 (using his personal residence as collateral), and withdrew $1,000 from his savings account (including $60 interest). When he left his former employer, he withdrew his retirement benefits (a qualified annuity) in a lump-sum of $50,000. He made no contributions to the plan. Arnold's parents loaned him $10,000 (interest-free) on July 1 of the current year, when the Federal rate was 3%. Arnold did not repay the loan during the year and used the money for living expenses. Calculate Arnold's adjusted gross income for the year.
Q2) In all community property states, the income from property that was inherited by a spouse after the marriage is treated as all earned by the spouse who inherited the property.
A)True
B)False
Q3) Rachel owns rental properties. When Rachel rents to a new tenant, she usually requires the tenant to pay an amount in addition to the first month's rent. The additional amount serves as security for damages to the property and the tenant's failure to pay future rents. How should the payments be characterized (e.g., on lease documents) to minimize Rachel's current tax liability?
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Gross Income: Exclusions
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/7712
Sample Questions
Q1) Iris collected $150,000 on her deceased husband's life insurance policy. The policy was purchased by the husband's employer under a group policy. Iris's husband had included $5,000 in gross income from the group term life insurance premiums during the years he worked for the employer. She elected to collect the policy in 10 equal annual payments of $18,000 each.
A) None of the payments must be included in Iris's gross income.
B) The amount she receives in the first year is a nontaxable return of capital.
C) For each $18,000 payment that Iris receives, she can exclude $500 ($5,000/$180,000 × $18,000) from gross income.
D) For each $18,000 payment that Iris receives, she can exclude $15,000 ($150,000/$180,000 × $18,000) from gross income.
E) None of these.
Q2) The CEO of Cirtronics Inc., discovered that the company's competitor had adopted a cafeteria plan for its employees. The CEO is concerned about retaining his talented employees and would like you to provide a brief explanation as to why a cafeteria plan may be attractive to the company's employees.
Q3) What Federal income tax benefits are provided for college students?
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Deductions and Losses: In General
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/7713
Sample Questions
Q1) An advance payment received in June 2018 by an accrual basis and calendar year taxpayer for services to be provided over a 36-month period can be spread over four tax years.
A)True
B)False
Q2) In determining whether an activity should be classified as a business or as a hobby, the satisfaction of the presumption (i.e., profit in at least 3 out of 5 years) ensures treatment as a business.
A)True
B)False
Q3) Can a trade or business expense be deductible if it is necessary but not ordinary?
Q4) The portion of property tax on a vacation home that is attributable to personal use is an itemized deduction.
A)True
B)False
Q5) Salaries are considered an ordinary and necessary expense of a trade or business if they meet what other requirement? What are the tax consequences if this requirement is not met?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
Available Study Resources on Quizplus for this Chatper
94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/7714
Sample Questions
Q1) What are the three methods of handling research and experimental expenditures incurred in a trade or business?
Under what circumstances would you choose each?
Q2) "Other casualty" means casualties similar to those associated with fires, storms, or shipwrecks.
A)True
B)False
Q3) The amount of a loss on insured personal use property is reduced by the insurance coverage if no claim is made against the insurer.
A)True
B)False
Q4) Losses on rental property are classified as deductions for AGI.
A)True B)False
Q5) The purpose of the "excess business loss" rules are to limit the amount of non-business income (e.g., salaries, interest, dividends, etc.) that can be "sheltered" from tax as a result of business losses.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Depreciation, Cost Recovery, Amortization, and Depletion
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/7715
Sample Questions
Q1) All personal property placed in service in 2018 and used in a trade or business qualifies for additional first-year depreciation.
A)True
B)False
Q2) On April 5, 2018, Orange Corporation purchased, and placed in service, seven-year class assets costing $1,030,000 and five-year class assets costing $140,000. Orange elects to expense the maximum amount under § 179. Orange does not take additional first-year depreciation. Assume taxable income is not a limitation. Determine Orange Corporation's maximum cost recovery with respect to the assets for 2018.
Q3) On August 20, 2018, May placed in service a building for her business. On November 28, 2018, May paid $80,000 for improvements to the building. What is May's cost recovery deduction for the building improvements in 2018?
Q4) Under MACRS, the double-declining balance method is used for property other than real estate with a recovery period of 15 or 20 years.
A)True
B)False
Q5) Discuss the reason for the inclusion amount with respect to leased automobiles.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/7716
Sample Questions
Q1) Which of the following miscellaneous expenses is deductible in 2018?
A) Unreimbursed employee business expenses.
B) Job hunting expenses.
C) Union dues.
D) Losses from Ponzi-type investment schemes.
E) All of the above expenses are miscellaneous itemized deductions.
Q2) Marvin lives with his family in Alabama. He has two jobs: one in Alabama and one in North Carolina. Marvin's tax home is where he lives (Alabama).
A)True
B)False
Q3) Jackson gives his supervisor and her husband each a $30 box of chocolates at Christmas. Jackson may claim only $25 as a deduction.
A)True
B)False
Q4) Flamingo Corporation furnishes meals at cost to its employees by means of a cafeteria it maintains. The cost of operating the cafeteria is not subject to the overall limitation (50%).
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Deductions and Losses: Certain Itemized
Deductions
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/7717
Sample Questions
Q1) Edna had an accident while competing in a rodeo. She sustained facial injuries that required cosmetic surgery. While having the surgery done to restore her appearance, she had additional surgery done to reshape her chin, which was not injured in the accident. The surgery to restore her appearance cost $9,000 and the surgery to reshape her chin cost $6,000. How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the 10%-of-AGI floor)?
A) $0
B) $6,000
C) $9,000
D) $15,000
E) None of the above
Q2) Chad pays the medical expenses of his son, James. James would qualify as Chad's dependent except that he earns $7,500 during the year. Chad may claim James' medical expenses even if he is not a dependent.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Investor Losses
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/7718
Sample Questions
Q1) During the current year, Ryan performs personal services as follows: 700 hours in his management consulting practice, 650 hours in a real estate development business, and 550 hours in an apartment leasing operation. He expects that losses will be realized from the two real estate ventures while his consulting practice will show a profit. Ryan files a joint return with his spouse whose salary is $125,000. Discuss the character and treatment of the income and losses generated by these activities.
Q2) Kim dies owning a passive activity with a basis of $75,000, a fair market value of $140,000, and suspended losses of $80,000. All of the $80,000 passive activity loss can be deducted on Kim's final income tax return.
A)True
B)False
Q3) Mary Jane participates for 100 hours during the year in an activity she owns. She has no employees and is the only participant in the activity. The activity is a significant participation activity.
A)True
B)False
Q4) Material participation.
Q5) Treatment of a disposition of a passive activity by gift.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Tax Credits and Payments
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/7719
Sample Questions
Q1) A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.
A)True
B)False
Q2) Unused foreign tax credits can be carried back three years and forward fifteen years.
A)True
B)False
Q3) Describe the withholding requirements applicable to employers.
Q4) The child tax credit is based on the number of the taxpayer's qualifying children under age 17.
A)True
B)False
Q5) During 2018, Barry (who is single and has no children) earned a salary of $13,100. He is age 30. His earned income credit for the year is:
A) $0.
B) $176.
C) $353.
D) $519.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Property Transactions: Determination of Gain or
Loss, Basis Considerations, and Nontaxable Exchanges
Available Study Resources on Quizplus for this Chatper
285 Verified Questions
285 Flashcards
Source URL: https://quizplus.com/quiz/7720
Sample Questions
Q1) If a taxpayer reinvests the net proceeds (amount received - related expenses) received in an involuntary conversion in qualifying replacement property within the statutory time period, it is possible to defer the recognition of the realized gain.
A)True
B)False
Q2) If the amount of a corporate distribution is less than the amount of the corporate earnings and profits, the return of capital concept does not apply and the shareholders' adjusted basis for the stock remains unchanged.
A)True
B)False
Q3) The adjusted basis of an asset is the original cost (or basis) plus capital recoveries less capital additions.
A)True
B)False
Q4) Under what circumstance is there recognition of some or all of the realized gain associated with the giving of boot by the taxpayer in a like-kind exchange?
Q5) Define an involuntary conversion.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Property Transactions: Capital Gains and
Losses, Section 1231, and Recapture Provisions
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/7721
Sample Questions
Q1) For § 1245 recapture to apply, accelerated depreciation must have been taken on the property.
A)True
B)False
Q2) Thoren has the following items for the year: $4,000 of short-term capital gain, $5,000 of 0%/15%/20% long-term capital gain, and $1,500 of 28% capital loss. Which of the following is correct?
A) The $1,500 loss will first be offset by the $4,000 short-term gain.
B) The $1,500 loss will first be offset by the $5,000 long-term gain.
C) The $4,000 short-term gain will first be offset by the $5,000 long-term gain.
D) The taxpayer will have a net short-term capital loss.
E) None of the above.
Q3) Which of the following assets held by a manufacturing business is a § 1231 asset?
A) Inventory.
B) Office furniture used in the business and held less than one year.
C) A factory building used in the business and held more than one year.
D) Accounts receivable.
E) All of the above.
Q4) May an individual that has purchased a patent be a holder of that patent?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Taxing Business Income
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/7722
Sample Questions
Q1) Aaron is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current year, ABC has net income of $325,000 after deducting Aaron's $100,000 salary. In addition to his compensation, ABC pays Aaron dividends of $250,000. What is Aaron's qualified business income?
A) $-0-.
B) $100,000.
C) $250,000.
D) $325,000.
E) None of the above.
Q2) There are three limitations on the qualified business income deduction.An overall limitation (based on modified taxable income), another that applies to high income taxpayers, and a third that applies to certain types of services businesses.
A)True
B)False
Q3) A "qualified trade or business" includes any trade or business including providing services as an employee.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Accounting Periods and Methods
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/7723
Sample Questions
Q1) A C corporation's selection of a tax year, generally, is independent of the tax year of its principal shareholders.
A)True
B)False
Q2) A C corporation that does not have a natural business year must use a calendar year as its tax year.
A)True
B)False
Q3) When the IRS requires a taxpayer to change accounting methods:
A) The taxpayer may be subject to penalties and interest.
B) The taxpayer generally is required to make the change as of the beginning of the earliest open year.
C) The adjustments due to the change cannot be spread over subsequent years.
D) Only a. and b. are correct.
E) a., b., and c. are correct.
Q4) Under both the cash and accrual method of accounting for tax purposes, a taxpayer may elect to defer prepaid revenue.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Corporations: Introduction and Operating Rules
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/7724
Sample Questions
Q1) For tax years ending after 2017, which of the following statements is incorrect with respect to the treatment of a net operating loss by a calendar year C corporation?
A) The deduction for any carryover year of the NOL is limited to 80% of taxable income (determined without regard to the NOL deduction).
B) A corporation may claim a dividends received deduction in computing an NOL.
C) An NOL is generally carried back 2 years and forward 20 years.
D) Unlike individuals, corporations do not adjust their NOLs for net capital losses or nonbusiness deductions.
E) None of the above.
Q2) Thrush Corporation, a calendar year C corporation, files it's 2018 Form 1120, which reports taxable income of $200,000 for the year. The corporation's tax is $61,250.
A)True
B)False
Q3) A calendar year personal service corporation with taxable income of $100,000 in the current year will have a tax liability of $21,000.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Corporations: Organization and Capital Structure
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/7725
Sample Questions
Q1) Rachel owns 100% of the stock of Cardinal Corporation. In the current year Rachel transfers an installment obligation, tax basis of $180,000 and fair market value of $350,000, for additional stock in Cardinal worth $350,000.
A) Rachel has a taxable gain of $180,000.
B) Rachel has a taxable gain of $170,000.
C) Rachel recognizes no gain on the transfer.
D) Rachel has a basis of $350,000 in the additional stock she received in Cardinal Corporation.
E) None of the above.
Q2) In structuring the capitalization of a corporation, the tax law is neutral for the investor as to debt versus equity financing.
A)True
B)False
Q3) Alan, an Owl Corporation shareholder, makes a contribution to capital of equipment to Owl, basis of $40,000 and fair market value of $50,000. Owl's basis of the equipment that Alan contributes is equal to $50,000, the property's fair market value.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Corporations: Distributions Not in Complete
Liquidation
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/7726
Sample Questions
Q1) For purposes of the waiver of the family attribution rules in a complete termination redemption, the former shareholder must notify the IRS within 30 days of acquiring a prohibited interest in the corporation during the 10-year period following the redemption.
A)True
B)False
Q2) Robin Corporation distributes furniture (basis of $40,000? fair market value of $50,000) as a property dividend to its shareholders. The furniture is subject to a liability of $55,000. Robin Corporation recognizes gain of:
A) $55,000.
B) $15,000.
C) $10,000.
D) $0.
E) None of the above.
Q3) In applying the § 318 stock attribution rules to a stock redemption, a shareholder is treated as owning the stock of her spouse, children, grandchildren, parents, and siblings. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Corporations: Distributions in Complete
Liquidation and an Overview of Reorganizations
Available Study Resources on Quizplus for this Chatper
71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/7727
Sample Questions
Q1) Which of the following statements is true concerning all types of tax-free corporate reorganizations?
A) Assets are transferred from one corporation to another.
B) Stock is exchanged with shareholders.
C) Liabilities that are assumed when cash is also used as consideration will be treated as boot.
D) Corporations and shareholders involved in the reorganization will recognize gains but not losses.
E) None of the above statements is true.
Q2) If a parent corporation makes a § 338 election, the subsidiary corporation is treated as a new corporation as of the day following the qualified stock purchase date.
A)True
B)False
Q3) The tax treatment of reorganizations almost parallels the Federal income tax treatment for like-kind exchanges.
A)True
B)False
Q4) Discuss the role of letter rulings in corporate reorganizations.
Page 22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: Partnerships
Available Study Resources on Quizplus for this Chatper
248 Verified Questions
248 Flashcards
Source URL: https://quizplus.com/quiz/7728
Sample Questions
Q1) Tim and Darby are equal partners in the TD Partnership. Partnership income for the year is $60,000. Tim needs cash in order to pay tax on his share of the partnership income, but Darby wants to leave the cash in the partnership for expansion. If the partners agree, it is acceptable for TD to distribute $8,000 to Tim, and no cash or other property to Darby.
A)True
B)False
Q2) On a partnership's Form 1065, which of the following statements is not true?
A) The partnership reconciles its "Income (Loss) per Books" with "Income (Loss) per Return" on Schedule M-1 or M-3.
B) The partnership balance sheet on Schedule L is generally presented on a financial (book) basis.
C) All taxable/deductible partnership income and expense items are reported on Form 1065, page 1.
D) The partnership's equivalent of taxable income is reported in the "Analysis of Income (Loss)."
E) The partnership deducts its allowable business interest expense on Form 1065, page 1, and allocates any excess to the partners for carryover.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: S Corporations
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/7729
Sample Questions
Q1) Post-termination distributions that are charged against OAA are received tax-free.
A)True
B)False
Q2) Discuss two ways that an S election may be terminated.
Q3) Mock Corporation converts to S corporation status in 2019. Mock used the LIFO inventory method in 2018 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election. How much tax must be added to Mock's 2018 corporate tax liability, assuming that Mock is subject to a 21% tax rate.
A) $0
B) $6,038
C) $24,150
D) $115,000
Q4) An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.
A)True
B)False
Q5) Stock basis first is increased by income items, then by distributions, and finally decreased by ____________________.
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Exempt Entities
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/7730
Sample Questions
Q1) Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax)?
A) Federal agencies.
B) Churches.
C) Exempt organizations whose annual gross receipts do not exceed $50,000.
D) Private foundations.
E) None of these entities must file Form 990.
Q2) What tax forms are used to apply for exempt status? Be specific.
Q3) What are the excise taxes imposed on private foundations, and why are they imposed?
Q4) Tax on excess business holdings
Q5) By default, an exempt entity is a:
A) Public charity.
B) Private foundation.
C) Private charity.
D) Feeder organization.
Q6) Agnes is aware that a feeder organization is subject to Federal income taxation. She wonders whether an organization otherwise taxable as a feeder organization can avoid such status if it remits less than 80% of its profits to the § 501(c)(3) entity.
Page 25
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Multistate Corporate Taxation
Available Study Resources on Quizplus for this Chatper
204 Verified Questions
204 Flashcards
Source URL: https://quizplus.com/quiz/7731
Sample Questions
Q1) When the taxpayer has exposure to a capital stock tax:
A) The pricing of inventory sales should reflect no more than inflation increases.
B) Subsidiary operations should be funded through direct capital contributions.
C) Dividends should be paid regularly to a parent based in a low-tax state.
D) Expansions should be funded with retained earnings.
Q2) The property factor includes business assets that the taxpayer owns, but also those merely used under a lease agreement.
A)True
B)False
Q3) A state sales/use tax is designed to be collected by the ________________ (seller/purchaser) of the product and then remitted to the state.
Q4) Sales/use tax in most states applies to a restaurant meal. A)True B)False
Q5) A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 26
Chapter 25: Taxation of International Transactions
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/7732
Sample Questions
Q1) USCo, a U.S. corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld. Its worldwide taxable income is $1,500,000 and its U.S. tax liability before the foreign tax credit is $315,000. What is USCo's allowed foreign tax credit?
A) $70,000
B) $147,000
C) $315,000
D) $385,000
Q2) USCo, a U.S. corporation, reports worldwide taxable income of $500,000, including a $100,000 dividend from ForCo, a wholly-owned foreign corporation. ForCo's undistributed earnings and profits are $1 million and it has paid $200,000 of foreign income taxes attributable to these earnings. What is USCo's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?
A) $500,000
B) $200,000
C) $100,000
D) $20,000
Q3) A CFC's profits from sales of goods and services.
Q4) Bilateral agreement between two countries related to tax issues.
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 26: Tax Practice and Ethics
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/7733
Sample Questions
Q1) The IRS pays interest on a refund to the taxpayer, unless the IRS's payment is made within________________ days of the date that a return is filed.
Q2) AICPA SSTS#1 requires that a client's tax return position:
A) Have a realistic possibility of being sustained if challenged by the Treasury of in the courts.
B) Be supported by substantial authority.
C) Agree with all pertinent IRS interpretations of the tax law.
D) Follow all interpretations of the tax law that were reflected on the immediately prior tax year's return.
Q3) The ________________ , a presidential appointee, is the "IRS's attorney."
Q4) Which of the following statements correctly reflects the rules governing interest to be paid on an individual's Federal tax deficiency or claim for refund?
A) The IRS has full discretion in determining the rate that will apply.
B) The simple interest method for calculating interest is used.
C) IRS interest compounds daily.
D) Congress sets the IRS interest rate twice each year.
Q5) In connection with the taxpayer penalty for substantial understatement of tax liability, what defenses (if any) are available?
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 27: The Federal Gift and Estate Taxes
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/7734
Sample Questions
Q1) At the time of her death, Megan was involved in the following.
? Owned an insurance policy on the life of her father with a replacement cost of $250,000 and maturity value of $800,000. The designated beneficiary of the policy is Megan's estate.
? Was an equal tenant in common with her brother in a tract of land worth $800,000. The land was inherited from their grandmother 10 years ago when it had a value of $200,000.
? Was a joint tenant with her two sisters in stock worth $1,500,000. The stock was inherited from their grandmother 10 years ago when it had a value of $500,000.
As to these transactions, Megan's gross estate must include:
A) $250,000.
B) $1,150,000.
C) $1,400,000.
D) $2,150,000.
E) None of the above.
Q2) Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Nadine predeceases Horace.
Q3) State income taxes accrued prior to death.
To view all questions and flashcards with answers, click on the resource link above. Page 29
Chapter 28: Income Taxation of Trusts and Estates
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/7735
Sample Questions
Q1) The person who transfers assets to a trust.
Q2) The Prakash Trust is required to pay its entire annual accounting income to beneficiaries Sam and Janet. The trust's personal exemption is:
A) $0.
B) $100.
C) $300.
D) $600.
Q3) A fiduciary's distribution deduction shifts the tax burden for the distributed amount of current-year income from the entity to the beneficiary.
A)True B)False
Q4) Like a corporation, the fiduciary reports and pays its own Federal income tax liability. A)True B)False
Q5) List at least three non-tax reasons that you might suggest to your client Connie that she should consider shifting some income and assets to a trust.
Q6) The fiduciary in charge of a trust.
To view all questions and flashcards with answers, click on the resource link above.
Page 30