Tax Research and Practice
Exam Answer Key
Course Introduction
Tax Research and Practice is a comprehensive course designed to equip students with the knowledge and skills required to conduct effective tax research and apply tax laws in practical settings. The course covers essential topics such as sourcing and interpreting primary tax authorities, utilizing secondary research resources, and understanding administrative and judicial processes related to taxation. Students will engage in real-world case studies and problem-solving exercises to develop their ability to analyze complex tax issues, formulate well-supported tax positions, and effectively communicate their findings through written memoranda and oral presentations. By the end of the course, students will be proficient in using tax research tools and methodologies, preparing them for successful careers in tax advisory, compliance, and policy roles.
Recommended Textbook
South western Federal Taxation 2017 Comprehensive Edition 40th Edition by William H. Hoffman
Available Study Resources on Quizplus
28 Chapters
3604 Verified Questions
3604 Flashcards
Source URL: https://quizplus.com/study-set/3572 Page 2
Chapter 1: An Introduction to Taxation and Understanding
the Federal Tax Law
Available Study Resources on Quizplus for this Chatper
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/70946
Sample Questions
Q1) The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.
A)True
B)False
Answer: True
Q2) A Federal excise tax is still imposed on admission to theaters.
A)True
B)False
Answer: False
Q3) The value added tax (VAT) has had wide acceptance in the international community.
A)True
B)False Answer: True
Q4) The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase.
A)True
B)False
Answer: False
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter 2: Working With the Tax Law
Available Study Resources on Quizplus for this Chatper
85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/70934
Sample Questions
Q1) The granting of a Writ of Certiorari indicates that at least four members of the Supreme Court believe that an issue is of sufficient importance to be heard by the full court.
A)True
B)False
Answer: True
Q2) Which of these is not a correct citation to the Internal Revenue Code?
A)Section 211.
B)Section 1222(1).
C)Section 2(a)(1)(A).
D)Section 280B.
E)All of above are correct cites.
Answer: E
Q3) The IRS is required to make a letter ruling public.
A)True
B)False
Answer: True
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
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/70925
Sample Questions
Q1) The major advantage of being classified as an abandoned spouse is that the taxpayer is treated for tax purposes as being single and not married.This means that an abandoned spouse can use the more favorable tax rates available to single persons than those available to married persons filing separately.Comment on the accuracy of this conclusion.
Answer: The conclusion is incorrect.The classification of abandoned spouse allows the taxpayer to the use of the rates for head of household filing status which are less progressive than married filing separately.
Q2) Tony, age 15, is claimed as a dependent by his grandmother.During 2012, Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $700.Tony's taxable income is:
A)$0.
B)$1,700 - $700 - $950 = $50.
C)$1,700 - $1,000 = $700.
D)$1,700 - $950 = $750.
E)None of the above.
Answer: C
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/70924
Sample Questions
Q1) In the case of a below-market gift loan for which there is no exception to the imputed interest rules, the lender is deemed to have received interest income even though no interest is charged and collected.
A)True
B)False
Q2) Linda delivers pizzas for a pizza shop.On Wednesday, December 31, 2012, Linda made several deliveries and collected $400 from customers.However, Linda forgot to turn in the proceeds for the day to her employer until the following Friday, January 2, 2013.The pizza shop owner recognizes the income of $400 when he receives it from Linda in 2013.
A)True
B)False
Q3) Norma's income for 2012 is $27,000 from part-time work and $9,000 of Social Security benefits.Norma is not married.A portion of her Social Security benefits must be included in her gross income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Gross Income: Exclusions
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/70923
Sample Questions
Q1) Ben was hospitalized for back problems.While he was away from the job, he collected his regular salary from an employer-sponsored income protection insurance policy.Ben's employer-sponsored hospitalization insurance policy also paid for 90% of his medical expenses.Ben also collected on an income protection policy that he purchased.Which of the above sources of income are taxable? Explain the basis for excluding any item or items.
Q2) Martha participated in a qualified tuition program for the benefit of her son.She invested $6,000 in the fund.Four years later her son withdrew $8,000, the entire balance in the program, to pay his college tuition.
A)Martha must include the $2,000 ($8,000 - $6,000) in her gross income when the funds are used to pay the tuition.
B)Martha must include the portion of the $2,000 accumulated each year in her gross income (i.e., interest).
C)Martha's son must include the $2,000 ($8,000 - $6,000) in his gross income when the funds are used to pay the tuition.
D)Neither Martha nor her son must include the $2,000 in gross income.
E)None of the above.
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
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/70922
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 must include the $2,500 in her gross income whereas Martha is not required to include the $3,000 in her gross income.
A)True
B)False
Q3) Briefly discuss the disallowance of deductions for capital expenditures.
Q4) During the year, Jim rented his vacation home for 200 days and lived in it for 19 days. During the remaining days, the vacation home was available for rental use. Is the vacation home subject to the limitation on the deductions of a personal/rental vacation home?
Q5) For a vacation home to be classified in the primarily rental use category, what attributes must be present?
Q6) Depending on the nature of the expenditure, expenses incurred in a trade or business may be deductible for or from AGI.
A)True
B)False
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/70921
Sample Questions
Q1) If an account receivable written off during the current year is subsequently collected during the current year, the write-off entry is reversed.
A)True
B)False
Q2) A loss is not allowed for a security that declines in value.
A)True
B)False
Q3) Alicia was involved in an automobile accident in 2012.Her car was used 60% for business and 40% for personal use.The car had originally cost $40,000.At the time of the accident, the car was worth $20,000 and Alicia had taken $8,000 of depreciation.The car was totally destroyed and Alicia had let her car insurance expire.If Alicia's AGI is $50,000 (before considering the loss), determine her itemized deduction for the casualty loss.
A)$4,500.
B)$6,100.
C)$8,000.
D)$24,000.
E)None of the above.
Q4) How is qualified production activities income (QPAI) calculated?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Depreciation, Cost Recovery, Amortization, and Depletion
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/70920
Sample Questions
Q1) The cost of a covenant not to complete for 20 years incurred in connection with the acquisition of a business is amortized over 20 years.
A)True
B)False
Q2) On July 10, 2012, Ariff places in service a new sports utility vehicle that cost $70,000 and weighed 6,300 pounds.The SUV is used 100% for business.Determine Ariff's maximum deduction for 2012, assuming Ariff's § 179 business income is $110,000. Ariff does not take additional first-year depreciation.
A)$2,960.
B)$25,000.
C)$34,000.
D)$70,000.
E)None of the above.
Q3) The basis of an asset on which $139,000 has been expensed under § 179 will be reduced by $139,000, even if $139,000 cannot be expensed in the current year because of the taxable income limitation.
A)True
B)False
Q4) Discuss the reason for the inclusion amount with respect to leased automobiles.
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/70919
Sample Questions
Q1) There is no cutback adjustment for meals and entertainment as to employees who are subject to regulation by the U.S.Department of Transportation.
A)True
B)False
Q2) If a taxpayer does not own a home but rents an apartment, the office in the home deduction is not available.
A)True
B)False
Q3) A worker may prefer to be treated as an independent contractor (rather than an employee) for which of the following reasons:
A)Avoids the cutback adjustment as to business meals.
B)All of the self-employment tax is deductible for income tax purposes.
C)Work-related expenses are not subject to the 2%-of-AGI floor.
D)A Schedule C does not have to be filed.
E)None of the above.
Q4) Jacob is a landscape architect who works out of his home.He wonders whether or not he will have nondeductible commuting expenses when he drives to the locations of his clients.Please comment.
Page 11
To view all questions and flashcards with answers, click on the resource link above.
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/70945
Sample Questions
Q1) In 2012, Brandon, age 72, paid $3,000 for long-term care insurance premiums. He may include the $3,000 in computing his medical expense deduction for the year.
A)True
B)False
Q2) For all of 2012, Aaron (a calendar year taxpayer) allowed the City Men's Shelter, a qualified charitable organization, to use a building he owns rent-free.The building normally rents for $12,000 a year.Aaron must report $12,000 of rent income and will be allowed a charitable contribution deduction for 2012 of $12,000.
A)True
B)False
Q3) Jack sold a personal residence to Steven and paid points of $3,500 on the loan to help Steven finance the purchase.Jack can deduct the points as interest.
A)True
B)False
Q4) Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2010, $0 in 2011, and $9,000 in 2012.The IRS disallowed the deduction. Can you offer any explanation for the disallowance?
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
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/70944
Sample Questions
Q1) Orange Corporation, a closely held (non-personal service) C corporation, earns active income of $300,000 in the current year.The corporation also receives $35,000 in dividends and incurs a loss of $50,000 from an investment in a passive activity.What is Orange's income for the year after considering the passive investment?
Q2) In the current year, Kenny has a $35,000 loss from a real estate rental activity.Kenny provides 1,000 hours of service to that activity, which is more than half of his working hours for the year.Kenny can deduct the $35,000 loss.
A)True
B)False
Q3) Sarah purchased for $100,000 a 10% interest in a business venture that is not subject to the passive activity rules.During the first year, her share of the entity's loss was $120,000.At the beginning of the second year, the entity obtained $800,000 of recourse financing.During the second year, Sarah withdrew cash of $20,000, and her share of the entity's loss was $25,000.Calculate the amount of loss that Sarah may claim in each of the two years and determine her at-risk amount at the end of each year.
Q4) What special passive loss treatment is available to real estate activities?
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
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/70943
Sample Questions
Q1) In describing FICA taxes, which (if any) of the following statements is incorrect?
A)The base amounts for 2013 probably will increase from the 2012 amounts.
B)The base amounts for the Social Security and Medicare portions are the same.
C)If both spouses work, excess FICA taxes need not result.
D)Excess FICA taxes can be claimed as an income tax credit.
E)None of the above.
Q2) Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.Assuming Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.
A)True
B)False
Q3) The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.
A)True
B)False
Q4) Discuss the treatment of unused general business credits.
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-Part 1
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/70942
Sample Questions
Q1) Gains and losses on nontaxable exchanges are deferred because the tax law recognizes that nontaxable exchanges result in a change in the substance but not the form of the taxpayer's relative economic position.
A)True
B)False
Q2) Melvin receives stock as a gift from his uncle.No gift tax is paid.The adjusted basis of the stock is $30,000 and the fair market value is $38,000.Melvin trades the stock for bonds with a fair market value of $35,000 and $3,000 cash.What is his recognized gain and the basis for the bonds?
A)$0, $30,000.
B)$5,000, $33,000.
C)$5,000, $30,000.
D)$8,000, $33,000.
E)None of the above.
Q3) If Wal-Mart stock increases in value during the tax year by $4,500, the amount realized is a positive $4,500.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 13: Property Transactions: Determination of Gain or
Loss, Basis Considerations, and Nontaxable
Exchanges-Part 2
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/70941
Sample Questions
Q1) Edward, age 52, leased a house for one year in Memphis with an option to buy as his personal residence.At the end of the lease, he purchased the house.He lived there for an additional 26 months before his employer transferred him to Tucson.Expecting to be in Tucson for 18 to 24 months, he rented the Memphis house for 18 months with an option to extend on a month to month basis for an additional 6 months.At the end of the 18-month period, Edward's employer offered him a permanent position in Tucson as branch manager.The tenant who had been occupying Edward's house in Memphis purchased it at the end of the 24-month extended lease period.Is Edward eligible to elect exclusion treatment under § 121?
Q2) Discuss the treatment of realized gains from involuntary conversions.
Q3) Hilary receives $10,000 for a 13-foot wide utility easement along one of the boundaries to her property.The easement provides that no structure can be built on that portion of the property.Her adjusted basis for the property is $200,000 and the easement covers 15% of the total acreage.Determine the effect of the $10,000 payment on Hilary's gross income and her basis for the property.
Q4) Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.
Q6) What is a deathbed gift and what tax consequences apply? Page 16
Q5) 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 17
Chapter 14: Property Transactions: Capital Gains and Losses,
1231, Recapture Provisions
Available Study Resources on Quizplus for this Chatper
144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/70940
Sample Questions
Q1) Rental use depreciable machinery held more than 12 months is an example of a § 1231 asset.
A)True
B)False
Q2) Seamus had $16,000 of net short-term capital loss in 2011. In 2012, Seamus has $17,000 of long-term capital loss and $26,000 of long-term capital gain. Which of the following statements is correct?
A)Seamus had a $13,000 short-term capital loss carryover to 2012.
B)Seamus has an $9,000 2012 net long-term capital gain.
C)Seamus has a $4,000 2012 net short-term capital loss.
D)a.and c.
E)None of the above.
Q3) Vanna owned an office building that had been held more than one year when it was sold for $567,000.The real estate had an adjusted basis of $45,000 for the land and $233,000 for the building.Straight-line depreciation of $162,000 had been taken on the building.What is the amount and initial character of the gain or loss from disposition of the real estate? Is any of the gain unrecaptured § 1250 (25%) gain?
Q4) What characteristics must the seller of a patent have in order to be classified as a holder?
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Alternative Minimum Tax
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/70939
Sample Questions
Q1) Tad and Audria, who are married filing a joint return, have AMTI of $256,000 for 2012. Calculate their AMT exemption.
Q2) The AMT exemption for a C corporation is $40,000 reduced by 35% of the amount by which AMTI exceeds $150,000.
A)True
B)False
Q3) If a taxpayer deducts the standard deduction in calculating regular taxable income, what effect does this have in calculating AMTI?
Q4) Julia's tentative AMT is $94,000. Her regular income tax liability is $72,000. Julia's AMT is $22,000.
A)True
B)False
Q5) The AMT does not apply to qualifying "small corporations."
A)True
B)False
Q6) Ashlyn is subject to the AMT in 2012.She calculates her AMT base to be $200,000.What are the AMT rates that apply for Ashlyn?
Q7) Will all AMT adjustments reverse? That is, do they relate to timing differences?
Page 19
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
87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/70938
Sample Questions
Q1) 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.
Q2) A doctor's incorporated medical practice may end the last day of any month of the year.
A)True
B)False
Q3) The installment method can be used for which of the following sales with payments being made in the year following the year of sale?
A)A department store's credit card sales.
B)An individual's sale of common stock in a family owned business.
C)An individual's sale of General Electric common.
D)Depreciable equipment sold for less than its original cost.
E)All of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 17: Corporations: Introduction and Operating Rules
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/70937
Sample Questions
Q1) During 2012, Sparrow Corporation, a calendar year C corporation, had operating income of $425,000, operating expenses of $280,000, a short-term capital loss of $10,000, and a long-term capital gain of $25,000.How much is Sparrow's tax liability for 2012?
A)$42,650.
B)$42,800.
C)$45,650.
D)$62,400.
E)None of the above.
Q2) Briefly describe the accounting methods available for adoption by a C corporation.
Q3) Peach Corporation had $210,000 of active income, $45,000 of portfolio income, and a $230,000 passive loss during the current year.If Peach is a closely held C corporation that is not a PSC, it can deduct $230,000 of the passive loss in the year.
A)True
B)False
Q4) What is the annual required estimated tax payment for a C corporation? What are the rules regarding payment of the estimated tax?
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 18: Corporations: Organization and Capital Structure
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/70936
Sample Questions
Q1) In order to encourage the development of an industrial park, a county donates land to Ecru Corporation.The donation does not result in gross income to Ecru.
A)True
B)False
Q2) To help avoid the thin capitalization problem, it is advisable to make the repayment of the debt contingent upon the corporation's earnings.
A)True
B)False
Q3) Carmen and Carlos form White Corporation. Carmen transfers cash of $100,000 for 100 shares in White. Carlos transfers property (basis of $20,000 and fair market value of $80,000) and agrees to serve as manager of White Corporation for one year; in return, Carlos receives 100 shares in White. The value of Carlos's services is $20,000. White Corporation can deduct $20,000 as compensation expense for the value of the services Carlos will render.
A)True
B)False
Q4) What is the rationale underlying the tax deferral treatment available under § 351?
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 19: Corporations: Distributions Not in Complete
Liquidation
Available Study Resources on Quizplus for this Chatper
145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/70935
Sample Questions
Q1) Ashley, the sole shareholder of Hawk Corporation, has a stock basis of $200,000 at the beginning of the year.On July 1, she sells all of her stock to Matt for $1 million.On January 1, Hawk has accumulated E & P of $90,000 and during the year, current E & P of $160,000.Hawk makes the following cash distributions: $270,000 to Ashley on March 31 and $90,000 to Matt on December 1.How are the distributions taxed to Ashley and Matt? What is Ashley's recognized gain on the sale to Matt?
Q2) On January 1, Gold Corporation (a calendar year taxpayer) has E & P of $30,000 and generates no additional E & P during the year.On March 31, the corporation distributes $40,000 to its sole shareholder, Wyatt (basis in stock of $8,000).Determine the effect of the distribution on Wyatt's taxable income and stock basis.
Q3) When computing current E & P, taxable income is not adjusted for the deferred gain in a § 1031 like-kind exchange.
A)True
B)False
Q4) Federal income tax paid in the current year must be subtracted from taxable income to determine E & P.
A)True
B)False
Page 23
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Corporations: Distributions in Complete
Liquidation and an Overview of Reorganizations
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/70933
Sample Questions
Q1) Explain whether shareholders are exempted from gain/loss recognition in nontaxable corporate reorganization or the gain/loss recognition is merely postponed.If postponed, what is the vehicle for ensuring the postponed gain/loss will be recognized in the future?
Q2) If a parent corporation makes a § 338 election, the subsidiary corporation must be liquidated.
A)True
B)False
Q3) Indigo has a basis of $1 million in the stock of Owl Corporation, a subsidiary in which it owns 100% of all classes of stock. Indigo purchased the stock in Owl 10 years ago. In the current year, Indigo liquidates Owl and acquires assets worth $1.2 million. At the time of its liquidation, Owl Corporation had a basis of $800,000 in the assets and E & P of $500,000.Which of the following statements is correct with respect to the liquidation?
A)Owl recognizes a gain of $400,000.
B)Indigo has an $800,000 basis in the assets.
C)Owl's E & P of $500,000 is eliminated.
D)Indigo recognizes a gain of $200,000.
E)None of the above.
Q4) Discuss the role of letter rulings in corporate reorganizations.
Page 24
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
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/70932
Sample Questions
Q1) Sharon and Sue are equal partners in the S&S Partnership.On January 1 of the current year, each partner's adjusted basis in S&S was $80,000 (including each partner's $20,000 share of the partnership's $40,000 of liabilities).During the current year, S&S repaid $30,000 of the debt and borrowed $20,000 for which Sharon and Sue are equally liable.In the current year ended December 31, S&S also sustained a net operating loss of $40,000 and earned $10,000 of interest income from investments.If liabilities are shared equally by the partners, on January 1 of the next year how much is each partner's basis in her interest in S&S?
Q2) Harry's basis in his partnership interest was $10,000 at the beginning of the tax year.For the year, his share of the partnership's loss was $8,000, and he also received a distribution of $4,000.Harry can deduct an $8,000 loss, and he recognizes a gain of $2,000 on the distribution of cash in excess of his remaining basis.
A)True
B)False
Q3) On Form 1065, partners' capital accounts should be determined using the same method on Schedule L, Schedule M-2, and the Schedules K-1 prepared for the partners. A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 22: S: Corporations
Available Study Resources on Quizplus for this Chatper
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/70931
Sample Questions
Q1) An S corporation recognizes a ____________________ on any distribution of appreciated property.
Q2) Which statement is incorrect?
A)S corporation status allows shareholders to realize tax benefits from corporate losses immediately.
B)Shareholder-level tax on corporate profits can be eliminated by a step-up in the basis of the stock upon a shareholder's death.
C)Fewer than 50% of all U.S.corporations make the S election.
D)An S corporation resembles an LLC for Federal income tax purposes.
E)None of the above.
Q3) A new S corporation shareholder can revoke the S election unilaterally, if he/she owns how much of the existing S corporation's stock?
A)More than 50%.
B)50% or more.
C)The election can be revoked only if all of the shareholders consent.
D)The election cannot be revoked during the first year of the new shareholder's ownership.
Q4) List some of the separately stated items listed on Schedule K of the Form 1120S.
Q5) How may an S corporation manage its liability for the built-in gains tax?
To view all questions and flashcards with answers, click on the resource link above. Page 26
Chapter 23: Exempt Entities
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/70930
Sample Questions
Q1) Under what circumstances are bingo games not treated as an unrelated trade or business?
Q2) If personal property is leased with real property and more than 45% of the rent income under the lease is from personal property, all of the rent income is subject to the unrelated business income tax.
A)True
B)False
Q3) The general objective of the tax on unrelated business income is to tax such income as if the entity were a taxable corporation.
A)True
B)False
Q4) Which of the following is a requirement for exempt status?
A)The organization does not exert political influence.
B)The organization has not been subject to intermediate sanctions for the past 3 taxable years.
C)The organization serves some type of common good.
D)Only a.and c.
E)a., b., and c.
Q5) What are the common characteristics of organizations that receive exempt status?
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 24: Multistate Corporate Taxation
Available Study Resources on Quizplus for this Chatper
145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/70929
Sample Questions
Q1) The starting point in computing state taxable income generally is ____________________.
Q2) In most states, medical services are exempt from the sales/use tax base.
A)True
B)False
Q3) Bulky Company sold an asset on the first day of the tax year for $500,000.Bulky's Federal tax basis for the asset was $300,000.Because of differences in cost recovery schedules, the state regular-tax basis in the asset was $375,000.What adjustment, if any, should be made to Bulky's Federal taxable income in determining the correct taxable income for the typical state?
A)$75,000.
B)$25,000.
C)($75,000).
D)$0.
Q4) Most states' consumer sales taxes apply directly to the final purchaser of the taxable asset, who then remits the tax to the state treasury.
A)True
B)False
Q5) An ad valorem property tax is based on the asset's current
28
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Taxation of International Transactions
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/70928
Sample Questions
Q1) Which of the following statements regarding income sourcing is correct?
A)Everything else being equal, a larger foreign-source income decreases the foreign tax credit limitation for U.S.persons.
B)Everything else being equal, a larger foreign-source income increases the foreign tax credit limitation for U.S.persons.
C)Everything else being equal, a larger U.S.-source income increases the foreign tax credit limitation for U.S.persons.
D)Everything else being equal, changing foreign-source income does not change the foreign tax credit limitation for U.S.persons.
Q2) The IRS can use § 482 reallocations to assure that transactions between related parties are properly reflected in a tax return.
A)True
B)False
Q3) Nico lives in California. She was born in Peru but holds a green card. Nico is a nonresident alien (NRA).
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 26: Tax Practice and Ethics
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/70927
Sample Questions
Q1) If the auditor comes to the taxpayer's office to review a tax return, the review is called a(n) ____________________ audit.
Q2) The taxpayer or a tax advisor may be subject to penalties if there is a misstatement of the valuation of an item reported on the tax return. Describe how these penalties work.
Q3) The usual three-year statute of limitations on additional tax assessments applies in the following situation(s).
A)No return at all is filed.
B)An investment in a marketable security is worthless.
C)Taxpayer inadvertently omits an amount of gross income equal to 30% of the gross income stated on the return.
D)Taxpayer discovers an inadvertent overstatement of deductions equal to 30% of gross income.
Q4) CPA Jennifer has heard about the AICPA's Statements on Standards for Tax Services. Although Jennifer is a licensed CPA in her state, she is not a member of the AICPA. How do the Statements affect Jennifer's tax practice?
Q5) The IRS is one of the largest Federal agencies, employing about ____________________ people throughout the year.
To view all questions and flashcards with answers, click on the resource link above.
Page 30
Chapter 28: Income Taxation of Trusts and Estates
Available Study Resources on Quizplus for this Chatper
145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/70926
Sample Questions
Q1) The Whitmer Trust operates a manufacturing business and distributes the profits to its income beneficiaries. Whitmer passes through to the income beneficiaries the data needed to compute their domestic production activities deduction.
A)True
B)False
Q2) The deduction for the Goodman Trust's $100,000 gift to charity is ____________________ when one-fourth of Goodman's accounting income for the tax year is exempt interest income.
Q3) Which of the following taxpayers can be subject to an entity-level Federal income tax?
A)Complex trust.
B)Partnership.
C)Limited liability company.
D)All of the above taxpayers are passthrough entities, and they never are subject to an entity-level Federal income tax.
Q4) Tax professionals use the terms simple trust and complex trust when dealing with fiduciary arrangements. How does one know whether a trust is "simple" or "complex?" When is this determination made?
To view all questions and flashcards with answers, click on the resource link above. Page 31