Tax Accounting Exam Questions
Course Introduction
Tax Accounting is a specialized field of accounting focusing on the preparation, analysis, and presentation of tax payments and returns. This course examines the various aspects of tax legislation, compliance requirements, and planning strategies for individuals, corporations, and other business entities. Students will explore concepts such as taxable income, deductions, credits, and tax rates, while learning how to apply tax laws in practical scenarios. Emphasis is placed on understanding the differences between financial and tax accounting, ethical considerations, and the role of tax authorities. Through real-world case studies and exercises, students gain practical skills in preparing tax returns, performing tax research, and advising on tax planning to ensure compliance and optimize tax outcomes.
Recommended Textbook
Concepts in Federal Taxation 2014 21st Edition by Kevin E. Murphy
Available Study Resources on Quizplus
16 Chapters
2109 Verified Questions
2109 Flashcards
Source URL: https://quizplus.com/study-set/3612
Page 2
Chapter 1: Federal Income Taxation - an Overview
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/71703
Sample Questions
Q1) Sally is a single individual.In 2013,she receives $10,000 of tax-exempt income in addition to her salary and other investment income of $100,000.Sally's 2013 tax return showed the following information: \(\begin{array}{lr}
\text { Gross income } &\$\quad 100,000 \\
\text { Deductions for adjusted gross income } &\underline {(4,000)} \\
\text { Adjusted gross income } &\$ \quad 96,000 \\
\text { Itemized deductions } &(16,100) \\
\text {Personal exemption } &\underline {(3,900) }\\
\text { Taxable income } &\underline { \$ \quad 76,000} \\ \\
\text { Total tax } & \$ \quad14,929 \\
\text { Less: Income tax withheld from wages } &\underline {(14,900)} \\
\text {Balance of tax due } & \$ \quad 29 \end{array}\)
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Income Tax Concepts
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/71704
Sample Questions
Q1) The taxpayer will be able to benefit from capital recovery on business equipment over the life of the asset and any remaining capital will be recovered when the asset is sold.
A)True
B)False
Answer: True
Q2) It was stated in the text that realized gains from certain types of transactions (e.g.,like-kind exchanges)are deferred for recognition in a future period.The basis of this treatment is the
I.Annual Accounting Period Concept.
II.Legislative Grace Concept.
III.Wherewithal-to-Pay Concept.
IV.Capital Recovery Concept.
A)Only statement II is correct.
B)Only statement III is correct.
C)Statements I and II are correct.
D)Statements II and III are correct.
E)Statements I, II, III and IV are correct.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Income Sources
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/71705
Sample Questions
Q1) Which of the following constitutes a realization?
I.Oak Ridge Coal Company's coal mine reserves were recently appraised at $5,750,000 more than the previous year's appraisal.
II.Lea's employer gives her (and all other salaried employees)a weekend in Chicago in recognition of their efforts to make this a successful year.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Answer: B
Q2) Ron won a $25,000 award for his research in microbiology and he immediately transferred the prize to his brother who does similar research.The income is excluded from Ron's taxable income..
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Income Exclusions
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/71706
Sample Questions
Q1) David owes $120,000 to Second National Bank.David is having financial difficulties during the current year and Second National agrees to reduce David's debt to $80,000 to help him get his financial affairs in order and avoid bankruptcy.
I.If David's assets were $300,000 and his liabilities were $290,000 before the discharge,he is taxed on $10,000 of the $40,000 debt reduction.
II.If David's assets were $300,000 and his liabilities were $400,000 before the discharge,he is not taxed on any of the $40,000 debt reduction.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Jeane's employer pays his medical premiums each month ($130/month).
A)Fully excluded from gross income.
B)Fully included in gross income.
C)Partially excluded from gross income.
Q3) What are the differences between a cafeteria plan and a flexible benefits (salary reduction)plan?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Introduction to Business Expenses
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/71707
Sample Questions
Q1) Business expenses include
I.expenditures that have a business purpose
II.expenditures that are incurred for the production of income.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Which of the following is/are trade or business expenses?
I.Solly incurs legal expenses related to real estate he leases to Bucko Burger Hamburger Haven for a parking lot.Solly does little but negotiate the lease every year..
II.Susan owns several rental apartments.She negotiates new rental contracts,arranges for repairs and maintenance,and handles all leasing activities.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q3) List the criteria necessary for an expenditure to be deductible as a trade or business expense or an expense for the production of income.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Business Expenses
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/71708
Sample Questions
Q1) Sally is a corporate sales representative for Computer City.Sally receives a monthly travel allowance from Computer City to cover her travel costs (transportation,food,lodging,entertainment,etc.).If Sally is not required to account to Computer City for the use of the travel advance
I.Sally will not have to show any aspect of the travel reimbursement or expenses incurred if she spends all of the reimbursement on valid travel expenses.
II.Sally will only have gross income to the extent her travel allowance exceeds her actual costs.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Deductions for adjusted gross income include
I.Transportation of household goods for a qualified move.
II.Unreimbursed employee business expenses for a nonaccountable plan.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Losses: Deductions and Limitations
Available Study Resources on Quizplus for this Chatper
131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/71709
Sample Questions
Q1) Rosanna,a single taxpayer,owns 2,000 shares of qualifying small business stock that she purchased for $225,000.During the current year,she sells 800 of the shares for $30,000.If this is the only stock Rosanna sells during the year,what can she deduct as an ordinary and capital loss?
\(\begin{array}{ll}
\text {Ordinary loss } & \text { Capital loss } \\
a.\$ 58,000 & \$-0- \\
b.\$ 50,000 & \$ 3,000 \\
c.\$ 50,000 & \$ 10,000 \\
d.\$-0- & \$ 3,000 \\
e.\$-0- & \$ 60,000 \end{array}\)
Q2) Any corporate capital loss not used in the current year can be carried back 2 years and carried forward 20 years to offset capital gains in those years.
A)True
B)False
Q3) A transaction loss occurs when an asset is disposed of at less than its basis.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Taxation of Individuals
Available Study Resources on Quizplus for this Chatper
162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/71710
Sample Questions
Q1) To recognize such basic personal living costs as food and clothing,each individual taxpayer is allowed a personal exemption of $3,900 in 2013.
A)True
B)False
Q2) Gerald purchases a new home on June 30,2013.During January 2014,he receives his real estate tax statement for calendar year 2013 showing $1,800 payable.Gerald pays the $1,800 on March 1,2014.The seller of the residence had credited Gerald with $900 of the 2013 taxes on the closing statement.What is the amount of real estate taxes that Gerald may claim as an itemized deduction in 2014?
A)$ - 0 -
B)$ 450
C)$ 900
D)$1,800
E)$2,700
Q3) Explain the support test and the gross income test to be a qualifying relative.
Q4) Byron,54,is a single,self-employed,carpenter.During 2013,he earns gross revenues of $60,000 and incurs $6,000 of business expenses.His itemized deductions for the year are $8,000.Determine Byron's taxable income and his total tax liability.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Acquisitions of Property
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/71711
Sample Questions
Q1) Tillman is building a warehouse for use in his business.The construction costs include the following:
\[\begin{array} { l r }
\text { Direct labor } & \$ 35,000 \\
\text { Direct materials } & 20,000 \\
\text { Architect fees } & 5,000 \\
\text { Interest on construction loan } & 3,000 \\
\text { Depreciation of equipment used in construction } & 1,500 \\
\text { Indirect Administrative costs during construction } & 2,000 \end{array}\]
What is Tillman's basis in the warehouse?
A)$60,000
B)$61,500
C)$63,500
D)$64,500
E)$66,500
Q2) Taxpayers who construct property for their own use must capitalize both the direct and indirect construction costs.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Cost Recovery on Property: Depreciation, depletion,
and Amortization
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/71712
Sample Questions
Q1) MACRS applies to new and used depreciable personal property used for the production of income.
A)True
B)False
Q2) In 2013,Henry purchases $2,050,000 of equipment with a useful life of 7 years.The taxable income of the business is $100,000.What is Henry's maximum depreciation deduction in 2013? (Henry elects out of bonus depreciation.)
A)$335,000
B)$378,655
C)$500,000
D)$678,640
E)$721,495
Q3) Felix purchases the franchise rights to a new sports team and will be able to amortize the cost over the 15-year amortization period for intangibles.
A)True
B)False
Q4) The mid-year convention is used for personal property only.
A)True
B)False
12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Property Dispositions
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/71713
Sample Questions
Q1) Allie,a well-known artist,gave one of her paintings to her nephew Alfred.When Alfred sells the painting he will have a capital gain.
A)True
B)False
Q2) George regularly invests unneeded business cash in Eli Lilly common stock.He has bought 200 shares of stock on May 1 of each year from 1983 through 2009.Because of an urgent need for cash,he sells 100 shares of the stock at an $850 gain on March 28,2013.Because the stock is held in a brokerage account,he did not have any paper shares of stock to surrender.He merely told his broker to sell 100 shares.
A)Long-term capital
B)Short-term capital
C)Collectible gain
D)Section 1231
E)Section 1245
F)Section 1250
G)Ordinary income/loss
H)Nontaxable/nondeductible
Q3) Discuss the general differences between Section 1245 and Section 1250 property.
Q4) What incentive provisions or preferential treatments exist for capital gains?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Nonrecognition Transactions
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/71714
Sample Questions
Q1) Boot
A)Losses are never deferred.
B)Can be within the same NAICS Code.
C)Not considered like-kind property.
D)A taxpayer can have only one at a time.
E)The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.
G)The concept upon which the ability to defer gains on certain nontaxable transactions relies.
Q2) Inventory for inventory.
A)qualifies as a like-kind exchange
B)does not qualify as a like-kind exchange
Q3) Simon exchanged his Mustang for Michael's Econovan so that he could go hunting.The exchange does not qualify as a like-kind exchange since the assets are personal.
A)True
B)False
Q4) Discuss the type of property that is qualified replacement property for involuntary conversion provisions for gain deferrals.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Choice of Business Entity - General Tax and Nontax Factorsformation
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/71715
Sample Questions
Q1) During 2013,Mercedes incorporates her accounting practice.Mercedes is the sole shareholder.The following assets are transferred to the corporation:
\[\begin{array} { l r }
\text { Cash } & \$ 1,000 \\
\text { Computer equipment: } & \\
\text { Fair market value } & 10,000 \\
\text { Adjusted basis } & 6,000 \\
\text { Original cost } & 12,000
\end{array}\]
What is the corporation's total basis in all of the transferred assets?
A)$ 6,000
B)$ 7,000
C)$10,000
D)$11,000
E)$13,000
Q2) Corporations can use a 52- to 53-week fiscal year end,but the year must end on Saturday each year.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Choice of Business Entity - Operations and Distributions
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/71716
Sample Questions
Q1) Roy receives a nonliquidating distribution from Ageless Corporation.Which of the following statements concerning nonliquidating distributions from a corporation are correct?
I.A nonliquidating cash distribution is taxable if the distribution comes from the corporation's current or accumulated earnings and profits.
II.The amount of the dividend on a nonliquidating distribution of property is the basis of the property distributed.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Posey Corporation distributes land with a fair market value of $20,000 and a basis of $12,000 to Brock,a shareholder.Posey's earnings and profits are $125,000.What must Brock report as income from the property distribution?
A)$ - 0 -
B)$ 8,000
C)$12,000
D)$20,000
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Choice of Business Entity - Other
Considerations
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/71717
Sample Questions
Q1) To obtain the rehabilitation expenditures tax credit certain criteria must be satisfied.Which of the following are correct statements about the credit?
I.Rehabilitation of business-use,investment-use,and personal-use residential real estate that is certified as historic qualifies for the historic structures rehabilitation credit.
II.The rehabilitation work cannot remove more than 25% of the internal walls and framework.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Which of the following itemized deductions is not allowed for AMT purposes?
A)State income taxes.
B)Qualified housing interest.
C)Investment interest.
D)Interest on home equity loan where loan proceeds are used to improve the residence.
E)Charitable contributions.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Tax Research
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/71718
Sample Questions
Q1) Tax statute
A)Tax Court Reports
B)United States Tax Cases
C)Internal Revenue Code
D)Cumulative Bulletin
E)Not a primary source
Q2) The most important source of current federal income tax law is the A)Internal Revenue Code of 1986, as amended.
B)IRS.
C)U.S. Supreme Court.
D)U.S. Tax Court.
Q3) If the IRS loses a case in a court proceeding,they may issue an acquiescence that means they will not follow the decision in similar cases.
A)True
B)False
Q4) The final step in the tax research process is to reach a conclusion,make a recommendation and communicate the results to the client.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18