Taxation of Partnerships and S Corporations
Test Preparation
Course Introduction
This course provides an in-depth examination of the federal income tax laws governing partnerships and S corporations. Students will explore the formation, operation, and dissolution of these entities, focusing on issues such as partner/member contributions, allocations of income and loss, distributions, basis calculations, and the unique pass-through taxation mechanisms. The course also covers the eligibility criteria for S corporation status, the tax consequences of elections, and how tax rules impact entities and individual owners. Real-world examples and problem-solving exercises will help students apply complex tax laws to practical business scenarios.
Recommended Textbook
South Western Federal Taxation 2019 Comprehensive 42nd Edition by David M. Maloney
Available Study Resources on Quizplus
28 Chapters
4038 Verified Questions
4038 Flashcards
Source URL: https://quizplus.com/study-set/438 Page 2
Chapter 1: An Introduction to Taxation and Understanding
the Federal Tax Law
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/182054
Sample Questions
Q1) Jason's business warehouse is destroyed by fire. As the insurance proceeds exceed the basis of the property, a gain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of the wherewithal to pay concept.
A)True
B)False
Answer: True
Q2) Which of the following statements about a value added tax (VAT) is false?
A) Many countries use a VAT.
B) The U.S. has imposed a VAT since 1913.
C) A VAT has been proposed in the U.S. to replace part of the income tax.
D) A VAT operates similarly to a sales tax.
Answer: B
Q3) A use tax is imposed by:
A) The Federal government and all states.
B) The Federal government and a majority of the states.
C) All states and not the Federal government.
D) Most of the states and not the Federal government.
E) None of these.
Answer: D
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
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/7709
Sample Questions
Q1) The IRS is not required to make a letter ruling public.
A)True
B)False
Answer: False
Q2) Tax research involves which of the following procedures:
A) Identifying and refining the problem.
B) Locating the appropriate tax law sources.
C) Assessing the validity of the tax law sources.
D) Follow-up.
E) All of these.
Answer: E
Q3) Which of the following types of Regulations has the highest tax validity?
A) Temporary
B) Legislative
C) Interpretive
D) Procedural
E) None of these
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Computing the Tax
Available Study Resources on Quizplus for this Chatper
180 Verified Questions
180 Flashcards
Source URL: https://quizplus.com/quiz/182055
Sample Questions
Q1) A half-brother who lives with taxpayer.
Answer: c
Q2) Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions.
Explain and illustrate what this statement means.
Answer: By a ceiling what is meant is that the deduction cannot exceed a percentage of AGI.
Thus, the charitable contribution deduction cannot exceed 50% of a taxpayer's AGI (60% of AGI for cash contributions). By a floor what is meant is that a deduction is allowed only if it exceeds a percentage of AGI. Thus, the deduction for medical expenses is limited to the excess of these expenses over 7.5% of AGI in 2018 (10% in 2019).
Q3) Since an abandoned spouse is treated as not married and has one or more dependent children, he or she qualifies for the standard deduction available to head of household.
A)True
B)False
Answer: True
Q4) Surviving spouse
Answer: i
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Gross Income: Concepts and Inclusions
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/7711
Sample Questions
Q1) Betty purchased an annuity for $24,000 in 2018. Under the contract, Betty will receive $300 each month for the rest of her life. According to the actuarial estimates, Betty will live to receive 96 payments and will receive a 3% return on her original investment.
A) If Betty collects $3,000 in 2018, her gross income is $630 (.03 × $21,000).
B) Betty has no gross income until she has collected $24,000.
C) If Betty lives to collect more than 96 payments, all of the amounts collected after the 96th payment must be included in taxable income.
D) If Betty lives to collect only 60 payments before her death, she will report a $6,000 loss from the annuity [$24,000 - (60 × $300) = $6,000] on her final return.
E) None of these.
Q2) Linda delivers pizzas for a pizza shop. On Wednesday, December 31, 2018, 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, 2019. The pizza shop owner recognizes the income of $400 when he receives it from Linda in 2019.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Gross Income: Exclusions
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/7712
Sample Questions
Q1) Under the Swan Company's cafeteria plan, all full-time employees are allowed to select any combination of the benefits below, but the total received by the employee cannot exceed $8,000 a year. I. Group medical and hospitalization insurance for the employee, $3,600 a year.
II) Group medical and hospitalization insurance for the employee's spouse and children, $1,200 a year.
III) Child-care payments, actual cost but not more than $4,800 a year.
IV) Cash required to bring the total of benefits and cash to $8,000. Which of the following statements is true?
A) Sam, a full-time employee, selects choices II and III and $2,000 cash. His gross income must include the $2,000.
B) Paul, a full-time employee, elects to receive $8,000 cash because his wife's employer provided these same insurance benefits for him. Paul is not required to include the $8,000 in gross income.
C) Sue, a full-time employee, elects to receive choices I, II and $3,200 for III. Sue is required to include $3,200 in gross income.
D) All of these.
E) None of these.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Deductions and Losses: In General
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/7713
Sample Questions
Q1) Graham, a CPA, has submitted a proposal to do the annual audit for a municipality. Owen, the city treasurer, tells Graham that for a $1,000 fee, he will use his influence to have the audit awarded to Graham. What factors are relevant in determining if Graham can deduct the $1,000 payment assuming he pays the fee to Owen?
Q2) If a vacation home is classified as primarily personal use, part of the maintenance and utility expenses can be allocated and deducted as a rental expense.
A)True B)False
Q3) A taxpayer's note or promise to pay satisfies the "actually paid" requirement for the cash basis method of accounting.
A)True B)False
Q4) In distinguishing whether an activity is a hobby or a trade or business, discuss the presumptive rule.
Q5) Section 212 expenses that are related to rent and royalty income are deductions for AGI.
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
94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/7714
Sample Questions
Q1) On February 20, 2017, Bill purchased stock in Pink Corporation (the stock is not small business stock) for $1,000. On May 1, 2018, the stock became worthless. During 2018, 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 2018 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.
Q2) The amount of loss for partial destruction of business property is the decline in fair market value of the business property.
A)True
B)False
Q3) A theft of investment property can create or increase a net operating loss for an individual.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Depreciation, Cost Recovery, Amortization, and Depletion
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/7715
Sample Questions
Q1) A purchased trademark is a § 197 intangible.
A)True
B)False
Q2) Assets that do not decline in value on a predictable basis are not eligible for cost recovery under MACRS.
A)True
B)False
Q3) Pat purchased a used five-year class asset on March 15, 2018, for $60,000. He did not elect § 179 expensing. Determine the cost recovery deduction for 2018 for earnings and profits purposes.
A) $2,000
B) $3,000
C) $6,000
D) $12,000
E) None of the above
Q4) For personal property placed in service in 2018, the § 179 maximum deduction is limited to $1,000,000.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Q5) Discuss the reason for the inclusion amount with respect to leased automobiles.
Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/7716
Sample Questions
Q1) The services are performed at Sue's premises.
Q2) Lily (self-employed) went from her office in Portland to Lisbon, Portugal on business. While there, she spent part of the time on vacation. How much of the air fare of $5,000 can she deduct based on the following assumptions:
a. Lily was gone five days (i.e., three business and two personal).
b. Lily was gone five weeks (i.e., four business and one personal).
c. Lily was gone five weeks (i.e., three business and two personal).
Q3) James has a job that compels him to go to many different states during the year. It is possible that James was never away from his tax home during the year.
A)True
B)False
Q4) Jake performs services for Maude. If Maude provides a helper and tools, this is indicative of independent contractor (rather than employee) status.
A)True
B)False
Q5) Under the automatic mileage method, one rate does not cover every type of expense. For 2018, what are the rates for business use, charitable, and medical?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Deductions and Losses: Certain Itemized
Deductions
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/7717
Sample Questions
Q1) In 2019, Rhonda received an insurance reimbursement for medical expenses incurred in 2018. She is not required to include the reimbursement in gross income in 2019 if she claimed the standard deduction in 2018.
A)True
B)False
Q2) Shirley sold her personal residence to Mike for $400,000. Before the sale, Shirley paid the real estate taxes of $7,030 for the calendar year. For income tax purposes, the deduction is apportioned as follows: $4,000 to Shirley and $3,030 to Mike.
a. What is Mike's basis in the residence?
b. What is Shirley's amount realized from the sale of the residence?
c. What amount of real estate taxes can Mike deduct?
d. What amount of real estate taxes can Shirley deduct?
Q3) Sadie mailed a check for $2,200 to a qualified charitable organization on December 31, 2018. The $2,200 contribution is deductible on Sadie's 2018 tax return if she itemizes her deductions.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Investor Losses
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/7718
Sample Questions
Q1) Jon owns an apartment building in which he is a material participant and also owns a computer consulting business. Of the 2,000 hours he spends on these activities during the year, 55% of the time is spent operating the apartment building and 45% of the time is spent in the computer consulting business.
A) The computer consulting business is a passive activity but the apartment building is not.
B) The apartment building is a passive activity but the computer consulting business is not.
C) Both the apartment building and the computer consulting business are passive activities.
D) Neither the apartment building nor the computer consulting business is a passive activity.
E) None of the above.
Q2) Treatment of an installment sale of a passive activity.
Q3) Material participation.
Q4) Describe the types of activities and taxpayers that are subject to the at-risk rules.
Q5) At-risk amount.
Q6) Treatment of a disposition of a passive activity by gift.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Tax Credits and Payments
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/7719
Sample Questions
Q1) Dabney and Nancy are married, both gainfully employed, and have two children who are 3 and 6 years old.
Dabney's salary is $35,000 while Nancy's salary is $40,000. During the year, they spend $7,000 for child care expenses that are required so both of them can work outside of the home. Calculate the credit for child and dependent care expenses.
Q2) Phil and Audrey, husband and wife, both are employed by Laurel Corporation. Phil earns $135,000 in salary in 2018, and Audrey earns $70,000. How much FICA tax must they pay for 2018?
Q3) The base amount for the Social Security portion (old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.
A)True
B)False
Q4) All taxpayers are eligible to take the basic research credit. A)True B)False
Q5) Explain the purpose of the disabled access credit and describe the general characteristics of its computation.
Q6) Describe the withholding requirements applicable to employers.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Property Transactions: Determination of Gain or
Loss, Basis Considerations, and Nontaxable Exchanges
Available Study Resources on Quizplus for this Chatper
285 Verified Questions
285 Flashcards
Source URL: https://quizplus.com/quiz/7720
Sample Questions
Q1) A factory building owned by Amber, Inc. is destroyed by a hurricane. The adjusted basis of the building was $400,000 and the appraised value was $425,000. Amber receives insurance proceeds of $390,000. A factory building is constructed during the nine-month period after the hurricane at a cost of $450,000. What is the recognized gain or loss and what is the basis of the new factory building?
A) $0 and $450,000.
B) $0 and $460,000.
C) ($10,000) and $440,000.
D) ($10,000) and $450,000.
E) None of the above.
Q2) Melissa, age 58, marries Arnold, age 50, on June 1, 2018. Melissa decides to sell her principal residence on August 1, 2018, which she has owned and occupied for the past 30 years. Arnold has never owned a house. However, while he was married to Kelly who died 6 months prior to his marriage to Melissa, Kelly used the § 121 election on the sale of her residence in January 2016 to reduce her realized gain from $123,000 to $0. Kelly used the sales proceeds to pay off Arnold's gambling debts. Can Melissa elect the § 121 exclusion on the sale of her residence? What is the maximum § 121 exclusion available to Melissa and Arnold if they file a joint return?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Property Transactions: Capital Gains and
Losses, Section 1231, and Recapture Provisions
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/7721
Sample Questions
Q1) Gold Company signs a 13-year franchise agreement with Silver. Silver retained significant powers, rights, and a continuing interest. Gold Company (the franchisee) makes noncontingent payments of $18,000 per year for the first four years of the franchise. Gold Company also pays a contingent fee of 2% of gross sales every month. Which of the following statements is correct?
A) Gold Company may deduct the $18,000 per year noncontingent payments in full as they are made.
B) Gold Company may deduct the monthly contingent fee as it is paid.
C) Gold Company may deduct both the noncontingent annual fee and the contingent monthly fees as they are paid.
D) Gold Company may not deduct either the noncontingent annual fee or the contingent monthly fees as they are paid.
E) None of the above.
Q2) The only things that the grantee of an option may do with the option are exercise it or let it expire.
A)True
B)False
Q3) May an individual that has purchased a patent be a holder of that patent?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Taxing Business Income
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/7722
Sample Questions
Q1) The QBI deduction will reduce both the income tax and self-employment taxes owed by a self-employed individual.
A)True
B)False
Q2) Which of the following taxpayers is eligible for a qualified business income deduction regarding the activity noted? (circle all that apply)
A) Tom's Burger Place, a sole proprietorship.
B) A driver for Uber or Lyft.
C) An employee working for Apple Computer.
D) Apple Computer.
E) A partner of a Big 4 firm.
Q3) Don, the sole shareholder of Pastel Corporation (a C corporation), has the corporation pay him a salary of $600,000 in the current year. The Tax Court has held that $200,000 represents unreasonable compensation. Don must report a salary of $400,000 and a dividend of $200,000 on his individual tax return.
A)True
B)False
Q4) What are some of the issues remaining unresolved with the QBI deduction?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Accounting Periods and Methods
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/7723
Sample Questions
Q1) Gold Corporation, Silver Corporation, and Copper Corporation are equal partners in the GSC Partnership. The partners' tax year-ends are as follows: Gold December 31 Silver April 30
Copper September 30
A) The partnership is free to elect any tax year.
B) The partnership may use any of the 3 year-end dates that its partners use.
C) The partnership must use a September 30 year-end.
D) The partnership must use a April 30 year-end.
E) None of the above.
Q2) John sold an apartment building for $600,000. His basis in the building was $360,000 and it was subject to $30,000 of depreciation recapture. John received $150,000 in the year of sale, the buyer assumed John's mortgage payable of $240,000, and the buyer gave John an 8% (the current Federal rate) note of $210,000 due in 5 years. The interest on the note was payable each June 30, beginning in the year following the year of the sale. John incurred $30,000 of selling expenses which he paid in the year of sale.
Compute John's installment sales gain that should be reported in the year of sale.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Corporations: Introduction and Operating Rules
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/7724
Sample Questions
Q1) What is the purpose of Schedule M-3? Which corporations are required to file Schedule M-3?
Q2) In the current year, Azul Corporation, a calendar year C corporation, received a dividend of $30,000 from Naranja Corporation. Azul owns 25% of the Naranja Corporation stock. Assuming it is not subject to the taxable income limitation, Azul's dividends received deduction is $19,500.
A)True
B)False
Q3) In the current year, Plum Corporation, a computer manufacturer, donated 100 laptop computers to a local university (a qualified educational organization). The computers were constructed by Plum earlier this year, and the university will use the computers for research and research training. Plum's basis in the computers is $35,000, and their fair market value is $120,000. What is Plum's deduction for the contribution of the computers (ignoring the taxable income limitation)?
A) $35,000
B) $70,000
C) $77,500
D) $85,000
E) $120,000
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Corporations: Organization and Capital Structure
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/7725
Sample Questions
Q1) Leah transfers equipment (basis of $400,000 and fair market value of $500,000) for additional stock in Crow Corporation. After the transfer, Leah owns 80% of Crow's stock. Associated with the equipment is § 1245 depreciation recapture potential of $70,000. As a result of the transfer:
A) Leah recognizes ordinary income of $70,000.
B) The § 1245 depreciation recapture potential carries over to Crow Corporation.
C) The § 1245 depreciation recapture potential disappears.
D) Leah recognizes ordinary income of $70,000 and § 1231 gain of $30,000.
E) None of the above.
Q2) The control requirement under § 351 requires that the person or persons transferring property to the corporation, immediately after the transfer, own stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all other classes of stock of the corporation.
A)True
B)False
Q3) For transfers falling under § 351, what are the holding period rules for stock received by the shareholder and for the assets transferred to the corporation?
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Corporations: Distributions Not in Complete Liquidation
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/7726
Sample Questions
Q1) Constructive dividends do not need to satisfy the legal requirements for a dividend as set forth by applicable state law.
A)True
B)False
Q2) Loss on sale between related parties in 2018.
Q3) Charitable contribution carryforward deducted in the current year.
Q4) In a property distribution, the amount of dividend income recognized by a shareholder is always reduced by the amount of liability assumed by a shareholder.
A)True
B)False
Q5) All cash distributions received from a corporation with a positive balance in accumulated E & P at the beginning of the year will be taxed as dividend income.
A)True
B)False
Q6) All distributions that are not dividends are a return of capital and decrease the shareholder's basis.
A)True
B)False
Page 21
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
71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/7727
Sample Questions
Q1) Ruby Corporation has announced plans to liquidate. Bronze Corporation owns 85% of Ruby's stock. If Bronze wants to avoid the nontaxable treatment associated with a § 332 liquidation (e.g., nonrecognition of loss), it could reduce its stock ownership in Ruby to below 80%.
A)True
B)False
Q2) Pursuant to a liquidation, Coral Corporation distributes to Lucinda, a shareholder, land (basis of $90,000, fair market value of $200,000). The land is subject to a $75,000 liability. Lucinda will have a basis of $125,000 in the land.
A)True
B)False
Q3) In corporate reorganizations, if an acquiring corporation is using property other than stock as consideration, it may recognize gains but not losses on the transaction.
A)True
B)False
Q4) Explain why the antistuffing rules were enacted to limit the deductibility of losses realized by a corporation upon liquidation.
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Partnerships
Available Study Resources on Quizplus for this Chatper
248 Verified Questions
248 Flashcards
Source URL: https://quizplus.com/quiz/7728
Sample Questions
Q1) Carli contributes land to the newly formed CD Partnership in exchange for a 30% interest. The land has an adjusted basis and fair market value of $300,000 and is subject to a liability of $100,000, which the partnership assumes. None of this liability is repaid at year-end. At the end of the year, the partnership has trade accounts payable of $20,000. Assume all liabilities are allocated proportionately to the partners. Total partnership income for the year is $400,000. What is Carli's basis in her partnership interest at the end of the year?
Q2) Limited partnership
Q3) Anna and Brad are equal partners in the AB LLC. If AB distributes $10,000 of cash to Anna and a capital asset valued at $10,000 to Brad, and if both Anna and Brad continue to be members of the LLC, the distribution is classified as a proportionate current distribution.
A)True
B)False
Q4) General partnership
Q5) Limited liability company
Q6) Economic effect test
Q7) Organizational costs
Q8) What are "syndication costs" and how are they treated for tax purposes?
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: S Corporations
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/7729
Sample Questions
Q1) An S corporation must possess which of the following characteristics?
A) Not more than one hundred shareholders.
B) Corporation organized in the U.S.
C) Only one class of stock.
D) All of the above are required of an S corporation.
E) None of the above are required of an S corporation.
Q2) An item that appears in the "Other Adjustments Account" affects stock basis, but not AAA, such as tax-exempt interest.
A)True
B)False
Q3) This year, Jiang, the sole shareholder of a calendar year S corporation, received a distribution of $17,000. On December 31 of the prior year, his stock basis was $3,000. The corporation earned $12,000 ordinary income during the year. It has no accumulated E&P. Which statement is correct? Ignore the 20% QBI deduction.
A) Jiang recognizes a $2,000 LTCG.
B) Jiang's stock basis will be $2,000.
C) Jiang's ordinary income is $15,000.
D) Jiang's return of capital is $11,000.
Q4) Discuss two ways that an S election may be terminated.
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Exempt Entities
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/7730
Sample Questions
Q1) The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to an exempt organization that is a public charity.
A)True
B)False
Q2) An exempt entity is not subject to any Federal income tax.
A)True
B)False
Q3) Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.
Q4) By default, an exempt entity is a:
A) Public charity.
B) Private foundation.
C) Private charity.
D) Feeder organization.
Q5) What are intermediate sanctions and to what types of exempt organizations do they apply?
Q6) Bingo games
Q7) Form 1023
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 24: Multistate Corporate Taxation
Available Study Resources on Quizplus for this Chatper
204 Verified Questions
204 Flashcards
Source URL: https://quizplus.com/quiz/7731
Sample Questions
Q1) Under P.L. 86-272, which of the following transactions by itself would create nexus with a state?
A) Inspection by a sales employee of the customer's inventory for specific product lines.
B) Using a manufacturer's representative for the taxpayer through a sales office in the state.
C) Executing a sales campaign, using an advertising agency acting as an independent contractor for the taxpayer.
D) Maintenance of inventory in the state by an independent contractor under a consignment plan.
Q2) An assembly worker earns a $50,000 salary and receives a fringe benefit package worth $15,000. The payroll factor assigns $65,000 for this employee.
A)True
B)False
Q3) S corporations flow-through income amounts to its shareholders, and most states require a withholding of shareholder taxes on the allocated amounts.
A)True
B)False
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
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/7732
Sample Questions
Q1) Waltz, Inc., a U.S. taxpayer, pays foreign taxes of $50,000 on foreign-source general basket income of $90,000.
Waltz's worldwide taxable income is $450,000, on which it owes U.S. taxes of $94,500 before FTC. Waltz's FTC is $50,000.
A)True
B)False
Q2) RainCo, a U.S. corporation, owns a number of patents related to designing umbrellas. RainCo licenses these patents to unrelated parties. TexCo, a domestic corporation, paid RainCo $100,000 in royalties related to these licenses. TexCo uses the patent information in its manufacturing process in its Canadian plant. IrishCo, an Irish corporation, paid RainCo $25,000 in royalties related to the licenses. IrishCo uses the patent information in its manufacturing process in its Michigan manufacturing plant. How much U.S.-source royalty income did RainCo earn from these licenses?
A) $0
B) $25,000
C) $100,000
D) $125,000
Q3) Bilateral agreement between two countries related to tax issues.
To view all questions and flashcards with answers, click on the resource link above.
27
Chapter 26: Tax Practice and Ethics
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/7733
Sample Questions
Q1) Lisa, a calendar year taxpayer subject to a 32% marginal Federal income tax rate, claimed a Form 1040 charitable contribution deduction of $250,000 for a sculpture that the IRS later valued at $160,000. The applicable overvaluation penalty is:
A) $0.
B) $5,760.
C) $10,000 (maximum penalty).
D) $11,520.
Q2) Maria's AGI last year was $95,000. To avoid a penalty, her estimated tax payments and withholdings for this year must equal the lesser of ____________________ percent of last year's taxes or ____________________ percent of this year's taxes.
Q3) A letter ruling should be requested when the taxpayer wants to know the IRS interpretation of how the tax law will be applied to a ________________ (proposed, completed) transaction.
Q4) In a letter ruling, the IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction.
A)True
B)False
Q5) Willful and reckless conduct.
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 27: The Federal Gift and Estate Taxes
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/7734
Sample Questions
Q1) Under certain circumstances, the gift-splitting election can be made even though the electing spouses no longer are married to each other.
A)True
B)False
Q2) The Federal gift-splitting election:
A) Allows the annual exclusion of both spouses to reduce the gift tax due.
B) Allows the exemption equivalent of both spouses to reduce the gift tax due.
C) Is made on both spouses' Forms 709.
D) All of the above.
Q3) Which, if any, of the following is a characteristic of the Federal estate tax?
A) A foreign tax credit is available.
B) A credit for tax on prior transfers may be available.
C) A charitable deduction is available.
D) All of the above.
Q4) Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary. Four years later Jim dies, and Susan collects the insurance proceeds.
Q5) In full settlement of her marital rights, Henry transfers property to his wife, Nancy. Three months later, Henry and Nancy are divorced.
To view all questions and flashcards with answers, click on the resource link above. Page 29
Chapter 28: Income Taxation of Trusts and Estates
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/7735
Sample Questions
Q1) The entity must file an income tax return if its gross income for the year is $600 or more.
Q2) Undistributed income is subject to the additional tax on net investment income.
Q3) If provided for in the controlling agreement, a trust might terminate when the income beneficiary reaches age 35.
A)True
B)False
Q4) List and discuss the three major functions of distributable net income (DNI) as that amount is used under Federal income tax law.
Q5) One-fourth of the Cruger Estate's distributable net income consists of net long-term capital gains. Thus, when income beneficiary Susie receives a $40,000 income distribution from the estate, $10,000 of it qualifies for the favorable Federal income tax rate.
A)True
B)False
Q6) Generally, an estate's taxable income is computed in a manner similar to that used for a(n)____________________.
Q7) The fiduciary in charge of a trust.
Q8) A trust whose remainder beneficiary is its grantor.
To view all questions and flashcards with answers, click on the resource link above. Page 30