Tax Accounting Practice Exam
Course Introduction
Tax Accounting is a course designed to introduce students to the principles and applications of tax laws and regulations as they relate to individuals, businesses, and other entities. The curriculum covers the basics of federal income taxation, taxable income, deductions, credits, and the preparation of tax returns. Students will gain an understanding of the Internal Revenue Code, tax planning strategies, and compliance requirements. The course also emphasizes the ethical responsibilities of tax professionals, record-keeping, and the tax implications of business decisions, providing a strong foundation for those pursuing careers in accounting, taxation, or finance.
Recommended Textbook
McGraw Hills Taxation of Individuals and Business Entities 7th Edition by Spilker
Available Study Resources on Quizplus
25 Chapters
2779 Verified Questions
2779 Flashcards
Source URL: https://quizplus.com/study-set/3065 Page 2
Chapter 1: An Introduction to Tax
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/60832
Sample Questions
Q1) The concept of tax sufficiency:
A) Suggests the need for tax forecasting
B) Suggests that a government should estimate how taxpayers will respond to changes in the current tax structure
C) Suggests that a government should consider the income and substitution effects when changing tax rates
D) All of these
E) None of these
Answer: D
Q2) Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.
A)True
B)False Answer: False
Q3) The two components of the tax calculation are the tax rate and the taxpayer's status.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Tax Compliance, the Irs, and Tax Authorities
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/60831
Sample Questions
Q1) If a taxpayer is due a refund, she does not have to file a tax return.
A)True
B)False
Answer: False
Q2) For which of the following tax violations is a civil penalty not imposed on taxpayers?
A) failure to file a tax return.
B) failure to pay tax owed.
C) fraud.
D) failure to make estimated tax payments.
E) None of these.
Answer: E
Q3) If Paula requests an extension to file her tax return, the latest she could file her return without penalty is:
A) September 15th.
B) October 15th.
C) August 15th.
D) November 15th.
E) None of these.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Tax Planning Strategies and Related Limitations
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/60830
Sample Questions
Q1) Which of the following strategies is based on the present value of money?
A) timing
B) tax avoidance
C) income shifting
D) conversion
E) None of these
Answer: A
Q2) If Julius has a 20% tax rate and a 10% after-tax rate of return, $25,000 of income in three years will cost him how much tax in today's dollars (rounded)?
A) $3,755
B) $18,775
C) $5,000
D) $25,000
E) None of these
Answer: A
Q3) The income shifting strategy requires taxpayers with varying tax rates.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Individual Income Tax Overview, Exemptions, and Filing Status
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/60829
Sample Questions
Q1) Itemized deductions and the standard deduction are deductions from AGI but deductions for personal and dependency exemptions are deductions for AGI.
A)True
B)False
Q2) Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?
A) Single > Head of Household > Married Filing Jointly
B) Married Filing Jointly > Married Filing Separately > Head of Household
C) Married Filing Jointly > Head of Household > Single
D) Head of Household > Married Filing Separately > Married Filing Jointly
Q3) Kabuo and Melinda got married on December 15, year 1. Kabuo's salary for the year was $54,000, and Melinda's was $62,000. In addition, Kabuo received $250 of interest income, ($100 of which was from municipal bonds), and Melinda received $10,000 of alimony from a former spouse. If Kabuo and Melinda choose to file jointly, what is their year 1 gross income?
Q4) Inventory is a capital asset.
A)True
B)False
Q5) What is the couple's adjusted gross income?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Gross Income and Exclusions
Available Study Resources on Quizplus for this Chatper
131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/60828
Sample Questions
Q1) Jim received a $500 refund of state income taxes this year. Jim will not need to include the $500 in his gross income this year because he did not deduct state income taxes last year.
A)True
B)False
Q2) Recognized income may be in the form of cash or property received (but not services received).
A)True
B)False
Q3) Kevin provided services to several clients this year who paid with different types of property. Which of the following payments is not included in Kevin's gross income?
A) Cash
B) Shares of stock listed on the New York Stock Exchange
C) A used car
D) Gold coins
E) All of these are included in gross income
Q4) A portion of each payment from a purchased annuity represents income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Individual Deductions
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/60827
Sample Questions
Q1) Taxpayers are allowed to deduct all ordinary and necessary expenses incurred in connection with determining their tax obligations imposed by federal authorities.
A)True
B)False
Q2) Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because:
A) employers are allowed to deduct social security (FICA) taxes as a business expense.
B) self-employed taxpayers need an alternate mechanism for reducing the cost of health care.
C) this deduction provides a measure of equity between employees and the self-employed.
D) health insurance premiums cannot be deducted otherwise.
E) None of these
Q3) All business expense deductions are claimed above the line.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Individual Income Tax Computation and Tax Credits
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/60826
Sample Questions
Q1) All else equal, a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.
A)True
B)False
Q2) Jerusha is married and she files a separate tax return in 2014. She claims two exemptions (2 × 3,950 = $7,900). She claimed the standard deduction for regular tax purposes ($6,200). She had no other adjustments. Her regular taxable income was $67,800. What is Jerusha's AMTI?
Q3) Paul and Melissa plan on filing jointly in 2014. For the year, the couple reported taxable income of $130,000. What is their gross tax liability?
Q4) Carolyn has an AGI of $38,000 (all from earned income), two qualifying children, and is filing as a head of household. What amount of earned income credit is she entitled to?
A) $0
B) $1,212
C) $3,305
D) $4,248
E) $5,460
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Business Income, Deductions, and Accounting Methods
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/60825
Sample Questions
Q1) Which of the following is likely to be a fully deductible business expense?
A) Salaries in excess of the industry average paid to attract talented employees.
B) The cost of employee uniforms that can be adapted to ordinary personal wear.
C) A speeding fine paid by a trucker who was delivering a rush order.
D) The cost of a three-year subscription to a business publication.
E) None of these is likely to be deductible.
Q2) Judy is a self employed musician who performs for a variety of events. This year Judy was fined $250 by the city for violating the city's noise ordinance with a relatively loud performance. As a consequence Judy contributed $1,000 to a campaign committee formed to recall the city's mayor. Judy normally hires three part-time employees to help her schedule events and transport equipment. Judy paid a total of $33,000 to her employees through June of this year. In June Judy fired her part-time employees and hired her husband to replace them. However, Judy paid him $55,000 rather than $33,000. Judy is on the cash method and calendar year, and she wants to know what amount of these expenditures is deductible as business expenses.
Q3) All taxpayers must account for taxable income using a calendar year.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Property Acquisition and Cost Recovery
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/60824
Sample Questions
Q1) Which of the following would be considered an improvement rather than a routine maintenance?
A) Oil change
B) Engine overhaul
C) Wiper blade replacement
D) Air filter change
Q2) The §179 immediate expensing election phases out based upon a taxpayer's taxable income.
A)True
B)False
Q3) The 200 percent or double declining balance method is allowable for five and seven year property.
A)True
B)False
Q4) Which of the following is not usually included in an asset's tax basis?
A) Purchase price
B) Sales tax
C) Shipping
D) Installation costs
E) All of these are included in an asset's tax basis
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Property Dispositions
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/60823
Sample Questions
Q1) Which of the following is how gain or loss realized is calculated?
A) Cash less selling costs.
B) Cost basis less cost recovery.
C) Cash less cost recovery.
D) Amount realized less adjusted basis.
E) None of these.
Q2) §1250 recaptures the excess of accelerated depreciation over straight line depreciation on real property placed in service between 1981 and 1986 as ordinary income.
A)True
B)False
Q3) Which of the following is true regarding disallowed losses between related taxpayers?
A) The tax laws essentially treat related parties as the same taxpayer.
B) The holding period of the related person begins over.
C) The related person always receives a carryover basis.
D) The seller's realized loss is deferred until the buyer sells the assets.
E) None of these.
Q4) Explain whether the sale of a machine used in a trade or business that is sold at a loss generates an ordinary or capital loss?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Investments
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/60822
Sample Questions
Q1) Tom, from Nebraska, and Jill, from Missouri, recently got married. To earn a decent return on all their wedding gifts, they decide to invest in some municipal bonds issued by the state of Missouri. Assuming they both qualify as Missouri residents, the bond interest Tom and Jill earn will be subject to the following taxes:
A) federal income taxes only
B) federal and Missouri state income taxes
C) Missouri state income taxes only
D) Nebraska state income taxes only
E) None of these
Q2) High-marginal rate taxpayers generally prefer municipal bonds and low-marginal rate taxpayers generally prefer taxable corporate bonds.
A)True
B)False
Q3) Given that losses from passive activities can only offset income from passive activities unless the passive activity is sold, what types of activities are not considered to be passive? Name at least three ways a taxpayer may be treated as an active participant in an activity.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Compensation
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/60821
Sample Questions
Q1) Cornhusker Bank reimburses employees for dues to the local bankers association. The reimbursement is includible in the employee's income.
A)True
B)False
Q2) Which of the following statements regarding compensation is false?
A) Wages are usually paid by the hour.
B) Salary is usually a form of fixed compensation.
C) Bonuses are a form of compensation obtained if certain criteria are met.
D) Bonuses paid within 2½ months of year end are included in employee's compensation in the year they were earned.
Q3) Kimberly's employer provides her with a personal travel allowance of $10,000 annually. Her marginal tax rate is 30 percent. Her employer has a marginal tax rate of 35 percent. What is Kimberly's after-tax benefit, ignoring payroll taxes?
Q4) Current compensation is usually comprised of salary, wages, and bonuses.
A)True
B)False
Q5) Big Bucks paid its CEO $1,500,000 of compensation for the year. What is the after-tax cost of paying the salary assuming a 30 percent marginal tax rate?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Retirement Savings and Deferred Compensation
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/60820
Sample Questions
Q1) Employees who are at least 50 years old at the end of the year are allowed to contribute more to their 401(k) accounts than employees who are not 50 years old by year end.
A)True
B)False
Q2) Qualified retirement plans include defined benefit plans but not defined contribution plans.
A)True
B)False
Q3) Lisa, age 45, needed some cash so she received a $50,000 distribution from her Roth IRA. At the time of the distribution, the balance in the Roth IRA was $200,000. Lisa established the Roth IRA 8 years ago. Through a rollover and annual contributions, she has contributed $80,000 to her account. What amount of the distribution is taxable and subject to early distribution penalty?
A) $0
B) $20,000
C) $30,000
D) $50,000
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Tax Consequences of Home Ownership
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/60819
Sample Questions
Q1) Harriet owns a second home that she rents to others. During the year, she used the second home for 10 personal days and for 200 rental days. Which of the following statements regarding the manner in which she should account for her income and/or expenses associated with the home is incorrect?
A) Harriet's deductible expenses are not limited to the amount of gross rental income from the property.
B) Harriet will be allowed to deduct all of the mortgage interest on the loan secured by the property.
C) Harriet is required to include all of the rental receipts in gross income.
D) Harriet is required to allocate all expenses associated with the home to rental use or personal use.
Q2) A taxpayer who otherwise meets the ownership and use tests may not be allowed to exclude all of her realized gain if the taxpayer has nonqualified use of the home before selling.
A)True
B)False
Q3) A tax loss from a rental home is a passive activity loss.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Entities Overview
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/60818
Sample Questions
Q1) What document must LLCs file with the state to organize their business?
A) Articles of incorporation
B) Certificate of LLC
C) Articles of organization
D) Partnership agreement
E) None of these. LLCs do not have to file with the state to organize their business.
Q2) Becca would like to organize BMI as either an LLC or as a C corporation generating a 4 percent annual before-tax rate of return on a $450,000 investment. Individual ordinary rates are 28 percent, corporate rates are 15 percent, and individual capital gains and dividends tax rates are 15 percent. BMI will distribute its earnings annually to either its members or shareholders.
a. Ignoring self-employment taxes, how much would Becca keep after taxes if BMI is organized as either a LLC or as a C corporation?
b. Ignoring self-employment taxes, what are the overall (combined owner and entity level) tax rates if BMI is organized as either an LLC or as a C corporation?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Corporate Operations
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/60817
Sample Questions
Q1) Corporations compute their dividends received deduction by multiplying the dividend amount by 10%, 50%, or 100% depending on their ownership in the distributing corporation's stock.
A)True
B)False
Q2) Z Corporation has AMTI of $250,000, which exceeds the AMT exemption phase-out threshold by $100,000. What is Z's tentative minimum tax?
A) $47,000
B) $45,000
C) $40,000
D) $30,000
Q3) A C corporation reports its taxable income or loss on Form 1065.
A)True B)False
Q4) Large corporations (corporations with over $1,000,000 in taxable income in any of the three years prior to the current year) can use their prior tax year liability to determine all required estimated quarterly payments for the current year.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Accounting for Income Taxes
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/60816
Sample Questions
Q1) Potter, Inc. reported pretax book income of $5,000,000. During the current year, the reserve for bad debts increased by $100,000. In addition, tax depreciation exceeded book depreciation by $300,000. Potter sold a fixed asset and reported book gain of $60,000 and tax gain of $80,000. Finally, the company received $50,000 of tax-exempt municipal bond interest. Using a tax rate of 34%, compute Potter's deferred income tax expense or benefit.
Q2) DeWitt Corporation reported pretax book income of $800,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received $100,000 of tax-exempt municipal bond interest. DeWitt used a net operating loss carryover of $200,000 to offset taxable income in the current year. Compute DeWitt's book equivalent of taxable income. Use this number to compute DeWitt's total income tax provision or benefit for the current year, assuming a tax rate of 34%.
Q3) Milton Corporation reported pretax book income of $2,500,000. Included in the computation were favorable temporary differences of $400,000, unfavorable temporary differences of $150,000, and favorable permanent differences of $100,000. Using a tax rate of 34%, compute Milton's deferred income tax expense or benefit.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Corporate Taxation: Nonliquidating
Distributions
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/60815
Sample Questions
Q1) Viking Corporation is owned equally by Sven and his wife Olga, each of whom hold 100 shares in the company. Viking redeemed 75 shares of Sven's stock for $2,000 per share on December 31, 20X3. Viking has total E&P of $500,000. What are the tax consequences to Viking because of the stock redemption?
A) No reduction in E&P because of the exchange.
B) A reduction of $150,000 in E&P because of the exchange.
C) A reduction of $187,500 in E&P because of the exchange.
D) A reduction of $375,000 in E&P because of the exchange.
Q2) Sam owns 70 percent of the stock of Club Corporation. Unrelated individuals own the remaining 30 percent. For a stock redemption of Sam's stock to be treated as an exchange under the "substantially disproportionate" test, what percentage of Club stock must Sam own after the redemption?
A) Any percentage less than 70 percent
B) Any percentage less than 56 percent
C) Any percentage less than 50 percent
D) All stock redemptions involving individuals are treated as exchanges
Q3) Stock dividends are always tax-free to the recipient.
A)True
B)False
Page 20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Corporate Formation, Reorganization, and Liquidation
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/60814
Sample Questions
Q1) Maria defers $100 of gain realized in a section 351 transaction. The stock she receives in the exchange has a fair market value of $500. Maria's tax basis in the stock will be $400.
A)True
B)False
Q2) What amount of gain or loss does Amelia recognize in the complete liquidation?
Q3) Jalen transferred his 10 percent interest to Wolverine Company as part of a complete liquidation of the company. In the exchange, he received land with a fair market value of $100,000. Jalen's basis in the Wolverine stock was $50,000. The land had a basis to Wolverine Company of $80,000. What amount of gain does Jalen recognize in the exchange and what is his basis in the land he receives?
A) $50,000 gain recognized and a basis in the land of $100,000
B) $50,000 gain recognized and a basis in the land of $80,000
C) No gain recognized and a basis in the land of $80,000
D) No gain recognized and a basis in the land of $50,000
Q4) What amount of gain or loss does Laura recognize in the complete liquidation and what is Laura's tax basis in the building and land after the complete liquidation?
Q5) What amount of gain or loss does Mike recognize in the complete liquidation?
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Forming and Operating Partnerships
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/60813
Sample Questions
Q1) A general partner's share of ordinary business income is similar to investment income; thus, a general partner only includes their guaranteed payments as self-employment income.
A)True
B)False
Q2) Gerald received a 33% capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with a FMV of $30,000. His adjusted basis in the building was $15,000. In addition, the building was encumbered with a $9,000 nonrecourse mortgage that XYZ, LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution?
A) $6,000
B) $9,000
C) $21,000
D) $24,000
Q3) What form does a partnership use when filing an annual informational return?
A) Form 1040
B) Form 1041
C) Form 1065
D) Form 1120
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Dispositions of Partnership Interests and Partnership Distributions
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/60812
Sample Questions
Q1) Tyson, a one-quarter partner in the TF Partnership, receives a proportionate distribution to liquidate his partnership interest on January 1. The distribution consists of $70,000 cash and inventory with a fair value of $40,000 (inside basis is $22,000). Tyson's outside basis is $90,000 including his $10,000 share of TF's liabilities. What is the amount and character of Tyson's recognized gain or loss? What is Tyson's basis in the distributed inventory?
Q2) Which of the following statements is true regarding partnership operating distributions?
A) Partners will never recognize a gain on an operating distribution.
B) Partners receiving a distribution of property other than money will take a basis in the property equal to its fair market value.
C) Partners will never recognize a loss on an operating distribution.
D) None of these statements is true.
Q3) Inventory is substantially appreciated if the fair market value of all inventory items exceeds 100% of their basis to the partnership.
A)True
B)False
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
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/60811
Sample Questions
Q1) SEC Corporation has been operating as a C corporation since 2011. It elected to become an S corporation, effective January 1, 2014. On December 31, 2013, SEC reported a net unrealized built in gain of $10,000. In addition to other transactions in 2014, SEC sold inventory it owned at the beginning of 2014 (it did not sell any other assets it owned at the beginning of 2013). At the beginning of the year, the inventory it sold had a fair market value of $40,000 and a FIFO tax basis of $15,000. SEC sold the inventory for $28,000. If SEC had been a C corporation in 2013, its taxable income would have been $40,000. How much built-in gains tax must SEC pay in 2014?
Q2) The estimated tax rules for S corporations generally follow the rules for C corporations.
A)True
B)False
Q3) Maria resides in San Antonio, Texas. She formed MZE Corporation under the state laws of Texas. Maria anticipates that she will conduct her business activities in both Mexico and the United States. Is MZE eligible to elect S corporation status? Explain.
Q4) An S corporation may be voluntarily or involuntarily terminated.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 24
Chapter 23: State and Local Taxes
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/60810
Sample Questions
Q1) Which of the following is true regarding state and local taxes?
A) All states impose a state income tax.
B) Every jurisdiction imposes a sales or use tax.
C) The primary purpose is to raise revenue.
D) Property taxes are primarily used to finance a State's general revenue fund.
Q2) Business income includes all income earned in the ordinary course of business.
A)True
B)False
Q3) Which of the following is not a nonincome based tax?
A) Ohio Commercial Activity Tax.
B) Texas Margin Tax.
C) Washington Business & Occupation Tax.
D) Wisconsin Separate Corporate Tax.
Q4) Businesses engaged in interstate commerce are subject to tax in every state where they operate.
A)True
B)False
Q5) Physical presence does not always create sales and use tax nexus.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: The Us Taxation of Multinational Transactions
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/60809
Sample Questions
Q1) Hanover Corporation, a U.S. corporation, incurred $300,000 of interest expense during 2014. Hanover manufactures inventory that is sold within the United States and abroad. The total tax book value and fair market value of its production assets is $20,000,000 and $60,000,000, respectively. The total tax book value and fair market value of its foreign production assets is $5,000,000 and $20,000,000, respectively. What is the minimum amount of interest expense that can be apportioned to the company's foreign source income for foreign tax credit purposes, assuming this is the first year the company makes this computation?
A) $300,000
B) $100,000
C) $75,000
D) $60,000
Q2) Before subpart F applies, a foreign corporation must be a CFC for how many consecutive days?
A) 1
B) 30
C) 183
D) 365
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Transfer Taxes and Wealth Planning of the Cfa Institute
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/60808
Sample Questions
Q1) At his death Tyrone's life insurance policy paid his estate $85,000. What amount, if any, is included in Tyrone's gross estate?
A) $85,000
B) $85,000 if Tyrone had an incident of ownership of the policy at the time of his death.
C) zero if Tyrone did not transfer any ownership of the policy within three years of his date of death.
D) zero - life insurance proceeds due to the death of the decedent are not included in the gross estate.
E) zero if Tyrone's estate uses the insurance proceeds to pay Tyrone's estate tax.
Q2) At her death Tricia had an adjusted gross estate consisting of $8 million of property. Which of the following is a true statement about Tricia's estate or estate tax?
A) Tricia must have a taxable estate over $8 million.
B) Tricia's taxable estate will not exceed $8 million.
C) Tricia must have a probate estate tax of zero.
D) Tricia must have a gross estate tax of zero.
E) None of these is necessarily true.
To view all questions and flashcards with answers, click on the resource link above. Page 27