Tax Accounting Exam Bank
Course Introduction
Tax Accounting explores the principles and practices related to accounting for income taxes, focusing on both individual and corporate taxpayers. The course covers fundamental tax concepts, regulations, and laws, emphasizing the preparation and analysis of tax returns, calculation of taxable income, deferred tax assets and liabilities, and compliance with federal and local tax rules. Students will learn to interpret tax codes, apply tax planning strategies, and understand the ethical and legal responsibilities of tax accountants. Through case studies and practical exercises, the course aims to develop proficiency in navigating the complexities of tax reporting and decision-making in professional accounting environments.
Recommended Textbook
South Western Federal Taxation 2018 Individual Income Taxes 41st Edition by William H. Hoffman
Available Study Resources on Quizplus
20 Chapters
2583 Verified Questions
2583 Flashcards
Source URL: https://quizplus.com/study-set/3507
Page 2
Chapter 1: An Introduction to Taxation and Understanding
Federal Tax Law
Available Study Resources on Quizplus for this Chatper
194 Verified Questions
194 Flashcards
Source URL: https://quizplus.com/quiz/69679
Sample Questions
Q1) The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?
Answer: Social and economic considerations. As to the latter, a better educated workforce carries a positive economic impact.
Q2) Taxes levied by all states include:
A)Tobacco excise tax.
B)Individual income tax.
C)Inheritance tax.
D)General sales tax.
E)None of these.
Answer: A
Q3) The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
A)True
B)False
Answer: False
Q4) Tax on transfers at death (inheritance type)
Answer: j
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
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/69680
Sample Questions
Q1) There are 11 geographic U.S. Circuit Court of Appeals.
A)True
B)False
Answer: True
Q2) The Index to Federal Tax Articles (published by Thomson Reuters) is available electronically.
A)True
B)False
Answer: False
Q3) Which publisher offers the Standard Federal Tax Reporter?
A)Research Institute of America
B)Commerce Clearing House
C)Thomson Reuters
D)LexisNexis
E)None of these
Answer: B
Q4) Technical Advice Memoranda deal with completed transactions.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Tax Formula and Tax Determination; an
Overview of Property Transactions
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/69678
Sample Questions
Q1) Frank sold his personal use automobile for a loss of $9,000. He also sold a personal coin collection for a gain of $10,000. As a result of these sales, $10,000 is subject to income tax.
A)True
B)False
Answer: True
Q2) Clara, age 68, claims head of household filing status. If she has itemized deductions of $10,500 for 2017, she should claim the standard deduction.
A)True
B)False
Answer: True
Q3) A child who has unearned income of $2,100 or less cannot be subject to the kiddie tax.
A)True
B)False
Answer: True
Q4) Multiple support agreement
Answer: e
Page 5
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Gross Income: Concepts and Inclusions
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/69677
Sample Questions
Q1) In the case of a zero interest below-market loan by a corporation to a shareholder-employee, what difference does it make to the corporation and the shareholder whether the loan is characterized as a corporation's loan to its shareholder or a corporation's loan to its employee?
Q2) The B & W Partnership earned taxable income of $140,000 for the year. Bryan is entitled to 50% of the profits, but Bryan withdrew only $60,000 during the year. Bryan's gross income from the partnership for the year is $60,000.
A)True
B)False
Q3) The taxable portion of Social Security benefits may be affected by:
A)The taxpayer's itemized deductions.
B)The individual's tax-exempt interest income.
C)The number of quarters the individual worked.
D)The individual's standard deduction.
E)None of these.
Q4) In some foreign countries, the tax law specifically designates the types of income items that are includible in gross income. How does this approach compare with the U.S. Internal Revenue Code (§ 61)? What is a major advantage to the approach used in the U.S. tax law?
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
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/69676
Sample Questions
Q1) Zork Corporation was very profitable and had accumulated excess cash. The company decided to repurchase some of its bonds that had been issued for $1,000,000. Because of an increase in market interest rates, Zork was able to retire the bonds for $900,000. The company is not required to recognize $100,000 of income from the discharge of its indebtedness but must reduce the basis in its assets.
A)True
B)False
Q2) Sam was unemployed for the first two months of 2017. During that time, he received $4,000 of state unemployment benefits. He worked for the next six months and earned $14,000. In September, he was injured on the job and collected $5,000 of workers' compensation benefits. Sam's Federal gross income from the above is $18,000 ($4,000 + $14,000).
A)True
B)False
Q3) For a person who is in the 35% marginal tax bracket, $1,000 of tax-exempt income is equivalent to $1,350 of income that is subject to tax.
A)True
B)False
Q4) 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
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/69675
Sample Questions
Q1) For a vacation home to be classified in the personal/rental use category, what attributes must be present?
Q2) Martha rents part of her personal residence in the summer for 3 weeks for $3,000. Anne rents all of her personal residence for one week in December for $2,500. Anne is not required to include the $2,500 in her gross income whereas Martha is required to include the $3,000 in her gross income.
A)True B)False
Q3) Only some employment related expenses are classified as deductions for AGI. A)True B)False
Q4) If part of a shareholder/employee's salary is classified as unreasonable, determine the effect on the:
a.Shareholder/employee's gross income.
b.Corporation's taxable income.
Q5) Expenses incurred for the production or collection of income generally are deductions from adjusted gross income.
A)True B)False
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
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/69674
Sample Questions
Q1) A cash basis taxpayer must include as income the proceeds from the sale of an account receivable to a collection agency.
A)True
B)False
Q2) On February 20, 2016, Bill purchased stock in Pink Corporation (the stock is not small business stock) for $1,000. On May 1, 2017, the stock became worthless. During 2017, Bill also had an $8,000 loss on § 1244 small business stock purchased two years ago, a $9,000 loss on a nonbusiness bad debt, and a $5,000 long-term capital gain. How should Bill treat these items on his 2017 tax return?
A)$4,000 long-term capital loss and $9,000 short-term capital loss.
B)$4,000 long-term capital loss and $3,000 short-term capital loss.
C)$8,000 ordinary loss and $3,000 short-term capital loss.
D)$8,000 ordinary loss and $5,000 short-term capital loss.
E)$8,000 long-term capital loss and $6,000 short-term capital loss.
Q3) Discuss the effect of alimony in computing a net operating loss.
Q4) Discuss the computation of NOL remaining to be carried forward after the NOL has been applied in a carryback year.
Q5) Why was the domestic production activities deduction (DPAD) enacted by Congress?
Q6) How is qualified production activities income (QPAI) calculated? Page 9
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 8: Depreciation, Cost Recovery, Amortization, and Depletion
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/69673
Sample Questions
Q1) Alice purchased office furniture on September 20, 2016, for $100,000. On October 10, 2016, she purchased business computers for $80,000. Alice placed all of the assets in service on January 15, 2017. Alice did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2017.
A)$6,426
B)$14,710
C)$25,722
D)$30,290
E)None of the above
Q2) A taxpayer may elect to use the alternative depreciation system (ADS) to compute depreciation for earnings and profits.
A)True
B)False
Q3) Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
Available Study Resources on Quizplus for this Chatper
178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/187066
Sample Questions
Q1) Sue does not work for other parties.
Q2) Travis holds rights to a skybox (containing 10 seats) at Memorial Stadium which he uses to entertain key clients. At one sporting event, he took only six clients since three were ill. Even so, Travis may still deduct the appropriate cost of all ten seats.
A)True
B)False
Q3) Mallard Corporation pays for a trip to Aruba for its two top salespersons. This expense is subject to the cutback adjustment.
A)True
B)False
Q4) Characteristic of a taxpayer who has the status of an employee
Q5) In November 2017, Katie incurs unreimbursed moving expenses to accept a new job. Katie cannot deduct any of these expenses when she timely files her 2017 income tax return since she has not yet satisfied the 39-week time test.
A)True
B)False
Q6) Keogh (H.R. 10) plans
Q7) Qualified tuition and related expenses (under § 222)
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 10: Deductions and Losses: Certain Itemized
Deductions
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/69671
Sample Questions
Q1) Quinn, who is single and lives alone, is physically handicapped as a result of a diving accident. In order to live independently, he modifies his personal residence at a cost of $30,000. The modifications included widening halls and doorways for a wheelchair, installing support bars in the bathroom and kitchen, installing a stairway lift, and rewiring so he could reach electrical outlets and appliances. Quinn pays $200 for an appraisal that places the value of the residence at $129,000 before the improvements and $140,000 after. As a result of the operation of the stairway lift, Quinn experienced an increase of $680 in his utility bills for the current year. Disregarding the 10%-of-AGI floor, how much of the above expenditures qualify as medical expense deductions?
A)$11,680
B)$30,680
C)$30,880
D)$34,880
E)None of the above
Q2) Sadie mailed a check for $2,200 to a qualified charitable organization on December 31, 2017. The $2,200 contribution is deductible on Sadie's 2017 tax return.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 11: Investor Losses
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/69670
Sample Questions
Q1) If an owner participates for more than 500 hours in a bicycle rental activity located at a beach resort, any loss from that activity is treated as an active loss that can offset active income.
A)True
B)False
Q2) Wolf Corporation has active income of $55,000 and a passive activity loss of $33,000 in the current year. Wolf cannot deduct the $33,000 loss if it is a closely held C corporation that is not a personal service corporation.
A)True
B)False
Q3) Wes's at-risk amount in a passive activity is $25,000 at the beginning of the current year. His current loss from the activity is $35,000 and he has no passive activity income. At the end of the current year, which of the following statements is incorrect?
A)Wes has a loss of $25,000 suspended under the passive activity loss rules.
B)Wes has an at-risk amount in the activity of $0.
C)Wes has a loss of $10,000 suspended under the at-risk rules.
D)Wes has a loss of $35,000 suspended under the passive activity loss rules.
E)None of the above is incorrect.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 12: Alternative Minimum Tax
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/69669
Sample Questions
Q1) Identify an AMT adjustment that applies for the individual taxpayer that does not apply for the corporate taxpayer and identify an AMT adjustment that applies for the corporate taxpayer that does not apply for the individual taxpayer.
Q2) Which of the following statements describing the alternative minimum tax (AMT) is most correct?
A) Generally, those taxpayers most concerned about being in AMT are low income taxpayers who elect the standard deduction.
B) The AMT was enacted in an attempt to limit the ability of taxpayers to engage in questionable tax planning activities.
The goal of the AMT
C) The goal of the AMT is to try and ensure that all taxpayers with economic income pay at least some income tax.
D) Exemption amounts are higher for regular tax purposes than for AMT purposes.
E) a. and d. are correct
Q3) AMT adjustments can be positive or negative, whereas AMT preferences are always positive.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 13: Tax Credits and Payment Procedures
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/69668
Sample Questions
Q1) Nonrefundable credits are those that reduce the taxpayer's tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer's tax liability.
A)True
B)False
Q2) Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program can also qualify for the credit for child and dependent care expenses.
A)True
B)False
Q3) Only self-employed individuals are required to make estimated tax payments.
A)True
B)False
Q4) For purposes of computing the credit for child and dependent care expenses, the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.
A)True
B)False
Q5) Discuss the treatment of unused general business credits.
Q6) Describe the withholding requirements applicable to employers.
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Property Transactions: Determination of Gain or
Loss and Basis Considerations
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/69667
Sample Questions
Q1) When a property transaction occurs, what four questions should be considered with respect to the sale or other disposition?
Q2) Sam and Cheryl, husband and wife, own property jointly. The property has an adjusted basis of $400,000 and a fair market value of $500,000.
a.Discuss the rules for the calculation of the adjusted basis of the property to Sam if he inherits his wife's share of the property and Sam and Cheryl live in a community property state.
b.If they live in a common law state?
Q3) Jason owns Blue Corporation bonds (face value of $10,000), purchased on January 1, 2017, for $11,000. The bonds have an annual interest rate of 6% and a maturity date of December 31, 2026. If Jason elects to amortize the bond premium, what is his taxable interest income for 2017 and the adjusted basis for the bonds at the end of 2017 (assuming straight-line amortization is appropriate)?
A)$600 and $11,000
B)$600 and $10,900
C)$500 and $11,000
D)$500 and $10,900
E)None of the above
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 15: Property Transactions: Nontaxable Exchanges
Available Study Resources on Quizplus for this Chatper
138 Verified Questions
138 Flashcards
Source URL: https://quizplus.com/quiz/69666
Sample Questions
Q1) Under what circumstances may a partial § 121 exclusion be available even though the taxpayer has used the § 121 exclusion within the two-year period preceding the sale of the current residence?
Q2) An involuntary conversion results from the destruction (complete or partial), theft, seizure, requisition or condemnation, or the sale or exchange under threat or imminence of requisition or condemnation of the taxpayer's property.
A)True
B)False
Q3) Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.
Q4) Discuss the relationship between the postponement of realized gain under § 1031 (like-kind exchanges) and the adjusted basis and holding period for the replacement property.
Q5) When boot in the form of cash is given in a like-kind exchange, recognized gain is the greater of the boot or the realized gain.
A)True
B)False
Q6) What kinds of property do not qualify under the like-kind provisions?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 16: Property Transactions: Capital Gains and Losses
Available Study Resources on Quizplus for this Chatper
78 Verified Questions
78 Flashcards
Source URL: https://quizplus.com/quiz/69665
Sample Questions
Q1) In 2017, an individual taxpayer has $863,000 of taxable income that includes $48,000 of 0%/15%/20% long-term capital gain. Which of the following statements is correct?
A)All of the LTCG will be taxed at 0%.
B)All of the LTCG will be taxed at 15%.
C)All of the LTCG will be taxed at 20%.
D)Some of the LTCG will be taxed at 15% and some at 20%.
E)None of the above.
Q2) Stanley operates a restaurant as a sole proprietorship. Which of the following items are capital assets in the hands of Stanley?
A)The restaurant's tables and chairs.
B)A portable sound system used to play "theme music" for the restaurant.
C)The restaurant building that is an asset of the sole proprietorship.
D)An interest-bearing savings account used to keep the restaurant's excess cash.
E)None of the above.
Q3) Short-term capital losses are netted against long-term capital gains and long-term capital losses are netted against short-term capital gains.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 17: Property Transactions: 1231 and Recapture
Provisions
Available Study Resources on Quizplus for this Chatper
74 Verified Questions
74 Flashcards
Source URL: https://quizplus.com/quiz/69664
Sample Questions
Q1) The Code contains two major depreciation recapture provisions: § 1245 and § 1250.
A)True
B)False
Q2) An individual business taxpayer owns land on which he grows trees for logging. The land has been held more than 10 years and the trees growing on the land were planted eight years ago. Normally, the timber would be inventory for this taxpayer, but the tax law allows the taxpayer to elect to treat cutting the timber as the disposition of a § 1231 asset.
A)True
B)False
Q3) Section 1231 applies to the sale or exchange of business properties, but not to personal use activity casualties.
A)True
B)False
Q4) Section 1250 depreciation recapture will apply when accelerated depreciation was used on property used outside the United States and the property is sold at a gain.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 18: Accounting Periods and Methods
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/69663
Sample Questions
Q1) If an installment sale contract does not charge interest on the sale of a capital asset, only capital gain will be recognized over the life of the contract.
A)True
B)False
Q2) Ivory Fast Delivery Company, an accrual basis taxpayer, frequently has claims for damages to property the company delivered. Often the claim is not filed until a month after the delivery. In the past, approximately 80% of the claims are paid by Ivory. In 2017, claims for $80,000 were filed. The company refused to pay $20,000 of the claims (because they were not valid), and paid $50,000. The remaining $10,000 in claims were processed and paid in January 2018. Also, in January 2018, claims for $8,000 were filed for deliveries made in 2017, and $6,000 was paid on these claims by March 15, 2018. Ivory has not elected to use the recurring item exception to economic performance. Under the all-events and economic performance tests, Ivory can accrue as an expense for 2017:
A)$68,000.
B)$66,000.
C)$60,000.
D)$50,000.
E)None of the above.
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 19: Deferred Compensation
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/69662
Sample Questions
Q1) A defined benefit plan must reduce the $215,000 (in 2017) maximum benefits payable by one-tenth for each year of participation under 10 years that an employee has performed.
A)True
B)False
Q2) If the special election under § 83(b) is made as a result of a restricted property transaction, which statement is false?
A)A factor supporting making the § 83(b) election is the expectation the property will appreciate substantially.
B)Ordinary income is recognized on the excess of the FMV over the amount paid for the property on the date received.
C)Any appreciation on the property after receipt is treated as capital gain.
D)A deduction is allowed to the employee for any taxes paid on the original amount included in gross income if the property is subsequently forfeited.
E)None of the above is false.
Q3) Under what circumstances is it advantageous for an employee to elect to be taxed immediately as ordinary income on the FMV in excess of the amount paid for restricted property?
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 20: Corporations and Partnerships
Available Study Resources on Quizplus for this Chatper
198 Verified Questions
198 Flashcards
Source URL: https://quizplus.com/quiz/69661
Sample Questions
Q1) Corporate taxpayers lose the benefits of lower tax brackets and the rates cease to be progressive once taxable income reaches a certain level. Explain this statement.
Q2) In contrasting the tax treatment of excess capital losses of corporations with individual taxpayers:
a.What advantages do corporate taxpayers enjoy?
b.Disadvantages?
Q3) Which of the following, if any, correctly describe the status or nature of limited liability companies?
A)Can elect partnership tax status even if incorporated under state law.
B)One of the main reasons why the check-the-box Regulations were issued.
C)Cannot elect to be taxed as a corporation.
D)Statutes creating these entities have been adopted by only a minority of the states.
E)None of the above.
Q4) As a separately stated item, the long-term capital losses of an S corporation will pass through to its shareholders as short-term capital losses.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 23