Tax Final
Jogg Inc. earns book net income before tax of $600,000. It puts into service a depreciable asset this year, and its first-year tax depreciation exceeds book depreciation by $120,000... What is Jogg's balance in its deferred tax liability accounts at year-end? $25,200 and $0 $0 and $25,000
$0 and $25,000
Inka's personal residence (adjsuted basis of $100,000) was condemned, and she received a condemnation award of $80,000. Inka used the condemnation proceeds to purchase a new residence for $90,000. What is Inka's recognized gain or loss and her basis in the new residence? $0; $70,000 $0; $90,000
$0; $90,000
Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year. During the year, the following items occur: Operating Income: 501,000 Interest income: 6,500 Dividend Income: 13,020 Municipal bond interest income: 6,000 Long-term capital loss from sale of investment land: 7,400 Section 179 depreciation deduction: 6,000 Charitable contributions: 19,000 Cash distributions: 57,000 Amit's ending AAA balance is: $1,045,120 $1,185,150
$1,045,120
Calendar yar ParentCo acquired all of teh stock of SubCo on January 1, year 1 for $1,000,000. The parties immediately elected to file consolidated income tax returns. SuCo generated taxable income of $250,000 for year 1 and paid a dividnd of $100,000 to ParentCo... As of the las day of year 3, what was ParentCo's basis in teh stock of SubCo? $1,650,000 $1,550,000
$1,550,000
South Inc. earns book net income before tax of $400,000 in year 1... Assuming that the applicable tax reate is 21%, what is South's total provision for income tax expense reproted on its GAAP financial statements for year 2? $105,000 $109,200
$105,000
JiangCo constructs the following table related to its filing position for a research activities credit. Its book-tax provision for the year, included $3 million for the credit, is $10 million... JiangCo's book income tax expense is: $11.6 million $11.4 million
$11.4 million
Nancy and Tonya exchanged assets. Nancy gave Tonya her personal residence with an adjusted basis of $280,000 and a fair market value of $560,000. The house has a mortgage of $200,000 which is assumed by Tonya. Tonya gave Nancy a yacht used in her business with an adjusted basis of $250,000 and a fair market value of $360,000. What is Tonya's realized and recognized gain? $310,000 realized land and $310,000 recognized gain $110,000 realized land and $110,000 recognized gain
$110,000 realized land and $110,000 recognized gain
Ryan is a 25% partner in the ROCC Partnership. At the beginning of the tax year, his basis in the partnership interest was $90,000, including his share of partnership liabilities. During the current year, ROCC reported net ordinary income of $100,000. In addition, ROCC distributed $10,000 to each of the partners ($40,000 total). At the end of the year, Ryan's share of partnership liabilities increased by $10,000. His basis in the partnership interest at the end of the year is: $100,000 $115,000
$115,000
Orange Company had machinery completely destroyed by a fire on December 23, 2023. The machinery had been acquired on April 1, 2021, for $49,000 and its adjusted basis was $14,200. Orange received $30,000 of insurance proceeds for the machinery and did not replace it. This was Orange's only caualty or theft event for the year. As a result, Orange has: $15,800 of section 1245 recapture gain $14,200 of section 1245 recapture gain
$15,800 of section 1245 recapture gain
T/F: A calendar year C corporation can receive an automatic 9-month extension to file its corporate return by timely filing a Form 7004 for the tax year
False
T/F: Amy owns 20% of the stock of Wren Corporation, which she acquired several years ago at a cost of $10,000. Amy is vice president of Wren and earns and salary of $80,000 annually. Last year, Wren Corporation was experiencing financial problems, and Amy loaned the corporation $25,000. In the current year, Wren becomes bankrupt, and both Amy's stock investment and the loan become worthless. Amy has a nonbusiness bad debt deduction this year of $25,000
False
T/F: CPA Liam discovers that last year's Form 1120 for his client PollCo claimed a $100,000 advertising deduction for a gift to candidates of the Green Party. AICPA tax ethics rules require that Liam file an amended return immediately because political expenditures are not deductible
False
T/F: Gains on the sale of U.S. real property held directly or indirectly through U.S. stock ownership by NRAs and reign corporations are subject to tax at capital gains rates under FIRPTA
False
T/F: Harry's basis in his partnership interest was $10,000 at the beginning of the tax year. For the yar, 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
False
T/F: Only married taxpayers with children can claim the earned income credit
False
T/F: Permanent differences include items that appear in the Federal income tax return as income or deduction and in the GAAP financial statements as revenue or expense but in different reporting periods
False
T/F: Relative to the election to engage in limited lobbying activities, grassroots expenditures are made to influence the opinions of voting legislators
False
T/F: Section 1231 lookback losses may convert some or all of 1245 gain into ordinary income
False
T/F: Similar to like-kind exchanges, the receipt of "boot" under 351 can cause loss to be recognized
False
T/F: The ability of the CPA to prepare a tax return in a timely manner is justification for the partnership's use of a particular tax year
False
With respect to typical sales/use tax laws: Fees paid for legal services are expempt Resturant meals are exempt
Fees paid for legal services are expempt
Section 482 is used by the U.S. Treasury to: Force taxpayers to use arms length transfer pricing on transaction between related parties All of these
Force taxpayers to use arms length transfer pricing on transaction between related parties
In which of the following independent situations has Trent made a gift? He established an irrecovable trust, income payable to himself for life and, upon his death, remainder to his children He dies owning a US savings bond with ownership listed as: "Trent, payable to Sure one Trent's death" Sue redeems the bond
He established an irrecovable trust, income payable to himself for life and, upon his death, remainder to his children
Lei, a farmer, has the follwoing events occur during the tax year. Which of the events qualifies for nonrecognition of gain from an involuntary conversion? She sells 10 acres of pasture land at a loss of $40,000 because she has reduced the size of her dairy herd in preparation for her retirement Her personal resience, adjusted basis of $100,000 is condemed to make way for an interstate highway. She recovers condemnation proceeds of $175,000
Her personal resience, adjusted basis of $100,000 is condemed to make way for an interstate highway. She recovers condemnation proceeds of $175,000
Jane transfers property with a $180,000 basis worth $500,000 to Green Corportaion for 80% of its stock and a long-term not payable to Jane worth $75,000 Jane recognizes no gain Jane recognizes a gain of $75,000
Jane recognizes a gain of $75,000
A strip along the boundary of Joy's land is condemned for a utility easement. She recieves a payment of $7,500 from the utility company. Her basis in the land is $80,000. Which of the following is correct. Joy must include the $7,500 in gross income Joy my reduce the basis of the land by $7,500
Joy my reduce the basis of the land by $7,500
Mona purchased a business from Judah for $1,000,000. Judah's records and an appraiser provided her with the following information regarding the assets purchased: Land Adjusted basis $195,000 FMV $270,000 Building Adjusted Basis $310,000 FMV $450,000 Equipment Adjusted Basis $95,000 FMV $180,000 What is Mona's adjusted basis for the land, building, and equipment? Land $270,000, buidling $450,000, equipment $180,000 Land $270,000, buidling $521,429, equipment $208,571
Land $270,000, buidling $450,000, equipment $180,000
Lily exchanges a building she uses in her rental business for a building owned by Kendall. She will use the building in her rental business. The adjusted basis of Lily's building is $120,000 and the fair market value is $170,000. Which of the following statements is correct? Lily's recognized gain is $0 and her basis for the building received is $120,000 Lily's recognized gain is $0 and her basis for the building received is $170,000
Lily's recognized gain is $0 and her basis for the building recieved is $120,000
In the broadcast application of the unitary theory, the U.S. unitary business files a combined tax return using factors and income amounts for all affiliates: Organized in the U.S, Canada, and Mexico Organized anywhere in the world
Organized anywhere in the world
At the time of his death, Jason was a participant in Silver Corporation's qualified pension plan and group term life insurance. That balance of the survivorship feature in his pension plan is that: Contributions by Silver $800,000 Accumulated plan earnings $300,000 The term insuruance has a maturity value of $100,000. All amounts are paid to Pam, Jason's daughter. One result of these transactions is: Pam must pay income tax on $1,100,000 Pam must pay income tax on $300,000
Pam must pay income tax on $1,100,000
A controlled foreign corporation realized Subpart F income from: Purchase of inventory from an unrelated US person and sale outside the CFC country Purchase of inventory from a related US person and sale outside the CFC country
Purchase of inventory from a related US person and sale outside the CFC country
Which of the following ptotentially is a disadvantage of electing to file a Federal consolidated coporate income tax return? Recognition of losses from certain intercompany transactions is deferred All of the above are disadvantages of a consolidation election
Recognition of losses from certain intercompany transactions is deferred
If the taxpayer qualifies under section 1033, makes the appropriate election, and reinvests less in the replacement property than the amount realized, the realized gain is: Recognized to the extent of the investment deficiency Recognized to the extent of realized gain
Recognized to the extent of the investment deficiency
A state sales tax usually falls upon: Sales of widgets made to out-of-state customers Sales of widgets made to an in-state final consumer of the product or service
Sales of widgets made to an in-state final consumer of the product or service
Maria owns depreciable residential rental real estate that has accumulated depreciation of $65,000. If Maria sold the property, she would have a $53,000 gain. The inital charaterization of the gain would be: Section 1245 gain Section 1231 gain
Section 1231 gain
Which of the following statements is true regarding the education tax credits? The American Opportunity credit permits a maximum credit of 20% of qualified expenses up to $10,000 The American Opportunity credit is calculated per eligible student and the lifetime learning credit is available per taxpayer
The American Opportunity credit is calculated per eligible student and the lifetime learning credit is available per taxpayer
The model law relating to the assignment of income among the statnes for corporaitons is: The Multistate Tax Commission The Uniform Division of Income for Tax Purposes Act
The Uniform Division of Income for Tax Purposes Act
This official does not report directly to the IRS Commissioner Treasury Secretary Chief Appeal Officer
Treasury Secretary
T/F: A distribution from the other adjustment account (OAA) is not taxable to an S shareholder
True
T/F: A one person LLC can be a shareholder of an S corporation
True
T/F: A timely issued disclaimer by an heir transfers the property to someone else without a Federal gift tax result
True
T/F: Alice Inc. is an S corporation that has been in business for 18 years. Itts annual gross receipts never have exceeded $29 million The corporation operates a retail store and also owns rental property. The sales from the retail store and the rental income may be reported using the cash method
True
T/F: In year 1 and with $100,000, Ronald established a joint savings account with his cousin, Allison. In year 2, Allison withdraws the $100,000 and leaves the country. Ronald made a gift to Allison in year 2
True
T/F: Realized losses from the sales or exchange of stock are disallowed if within 30 days before or 30 days after the sale or exchange, the taxpayer acquires substantially identical stock
True
T/F: Schedule M-3 is similar to Schedule M-1 in that the form is designed to reconcile net income per book with taxable income. However, an objective of Schedule M-3 is more transparency between financial statements and tax returns than that provided by Schedule M-1
True
T/F: The receipt of nonqualified preferred stock in exchange for the transfer of appreciated property to a controlled corporation results in recognition of gain to the transferor
True
T/F: When a patent is transferred, the most common forms of payment received by the transferor are a lump sum and/or a periodic payment
True
Public Law 86-272: Was written by the Multistate Tax Commission Was enacted by Congress
Was enacted by Congress
Albert purchased a tract of land for $140,000 in 2020 when he heard that a new highway was going to be constructed through the property and that th eland would soon be worht $200,000. Highway engineers surveyed the property and indicated that he would probabaly get $180,000.... What is the amount of loss Albert can claim in 2023? 0 $80,000
$0
ForCo a foreign corporation received interest income of $100,000 from USCo, an unrelated US corporation. USCO has historically earned 85% of its income from foreign sources. What amount of ForCo's interest income is US source? $0 $85,000
$0
During the current year, Jay Corporation, a calendar year personal residence C corporation, had operatin income of $300,000, operating expnese of $200,000, a short term captial gain of $5,000 and a long term captial loss of $35,000. How much is Jay's income tax liability for the year? $21,000 $35,000
$21,000
Georgio, a calendar year taxpayer subject to a 32% marginal Federal income tax rate, claimed a Form 1040 charitable contribution deduction of $300,000 for a sculpture that the IRS later valued at $120,000. The applicable overvaluation penalty is $10,000 (maximum penalty) $23,040
$23,040
Mark and Addison form a partnership. Mark recieved a 35% interest in partnership capital and profits in exchange for land with a basis of $40,000 and a fiar market value of $60,000. Addison receieved a 75% interest in partnership capital and profits in exchange for $180,000 of cash. Three years after the contribution date, the land contributed by Mark is sold by the partnership to a third party for $76,000. How much taxable gain will Mark recognize from the sale? $16,000 $24,000
$24,000
RainCo, a US corporation, owns a number of patents related to designing umbrellas. RainCo licenses theses patents to unrelated parties. TexCo, a US corporation, paid RainCo $100,000 in royalties related to these lecenses. TexCo uses the patent information in its manyfacturing process in its Candian plant. IrishCo, an Irish corporation, paid RainCo $25,000 in royalites related to the licenses... How much US source royalty income did RainCo earn from these lecenses? $25,000 $125,000
$25,000
Rebecca is a limited partner in the RST Partnership, which is not publicly traded. Her allocable share of RST's passive ordinary losses from a nonrealty activity for the current year is ($60,000). Rebecca has a $40,000 adjusted basis (outside basis) for her interest in RST (before deduction of any of the passive losses). Her amount "at risk" is $30,000 (before deduction of any of the passive losses). She also has $25,000 of passive income from other sources. She has no business losses for the year from other sources. How much of her ($60,000) allocable RST loss can Rebecca deduct on her current-year tax return? $25,000 $30,000
$25,000
Grackle Corporation, a personal service corporation, had $230,000 of net active income, $40,000 of portfolio income and a $250,000 passive activity loss during the current year. How much is Grackle's taxable income for the year $270,000 $520,000
$270,000
Ahmed is considering making a $10,000 investment in a venture whose promoter promises will generate immediate tax benefits for him. Ahmand, who normally itemizes his deductions, is subject to a 32% marginal tax bracket. If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of teh expenditure or an itemized decution for the amount of the investment, what treamtent is likely most beneficial to Ahmad, and by how much will Ahmad's tax liability decline becasye of the investment? $2,500, take the tax credit $3,200, take the itemized deduction
$3,200, take the itemized deduction
Simplex had incorrectly been using the cash method of accounting. For 2023, it voluntarily changed to teh accrual method. The adjustment due to teh change in method as calculated at the beginning of 2023 was $120,000 (positive). The adjustment as caclulated as the end of 2023 was $80,000 (positive). As a result of the change in method, Simplex increases its 2023 gross income by: $80,000 $30,000
$30,000
In the current year, Bianca has regular tax liability of $32,500 and tentative minimum tax (TMT) of $36,300. Additionally, Bianca has an adoption expense credit of $6,200. What is Bianca's total Federal income tax laibility? $30,100 $32,500
$30,100
Orange Corporation, a calendar year C corporation, owns stock in White Corporation and has net operating income of $400,000 for the current year. White Corpoartion pays Orange a dividend fo $60,000. What amoutn of dividends recieved deduction may Orange claim if it owns 45% of White stock? $30,000 $39,000
$39,000
In 2023, George and Martha are married and file a joint tax return claiming their two childrem ages 10 and 8 as dependents. Assuming their AGI is $119,650, George and Martha's child tax credit is: $3,000 $4,000
$4,000
In the renocation of its building, Green Company incurs $9,000 of expenditures that qualify for the disabled access credit. The dabled access credit is: $4,375 $4,250
$4,375
During 2023, Jan and LaTonya, a married couple, decided to sell their residence. The residence has a basis of $162,000 and has been owned and occupied by them for 11 years. The house was sold in May for $395,000 with broker's commissions and other selling expenses totaling $24,000. They prucased a new residence in June for $400,000. What is the adjusted basis of the new residence? $162,000 $400,000
$400,000
A factory building owned by Amber Inc. is destroyed by a hurricane. The adjusted basis of the building was $400,000 and the appraded value was $425,000. Amber receives insureance proceeds of $390,000. A factory building is constructed during the nine-month period after the hurrican at a cost of $450,000. What is teh recognized gain or loss, and what is teh basis of the new factory building? ($10,000) and $440,000 ($10,000) and $450,000
($10,000) and $450,000
Given the following transactions for the year, determine Comp Corporation's D payroll factor denominator. State D has adopted the principles of UDIPTA $700,000 $600,000
$600,000
During the year, Geen Corporation reports US source income of $750,000 and foreign income of $500,000. The foreign source income generates foreign income taxes of $240,000. The US income tax before the foreign tax credit is $157,500/ Green Corporation's overall limitation on the forgin tax credit is $63,000 $157,500
$63,000
Lent Corporation converts to S corporation status in 2023. Lent had been using the lIFOR inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000). How much tax, if any, is added for these items for the final C corporation year? $7,350 $29,400
$7,350
You are given the following facts about a 40% owner of an S corporation. Calculate her ending stock basis. Owner's beginning stock basis $36,800 Increase in AAA 32,000 $74,120 $76,220
$74,120
In the current year, the POD Partnership received revenues of $200,000 and paid the following amounts: $50,000 in rent and utilities and $20,000 as a distribution to partner Olivia. In addition, the partnership earned $6,000 of long-term capital gains during the year. Partner Donald owns a 50% interest in the partnership. How much income must Donald report for the tax year? $65,000 ordinary income; $3,000 of long-term capital gains $75,000 ordinary income; $3,000 of long-term capital gains
$75,000 ordinary income; $3,000 of long-term capital gains
Jose Corporation realized $900,000 taxable income from teh sales of its products in States X and Z. Jose's activities in both states establish nexus for income tax purposes. Jose's sales, payroll, and property among the states include.... X utilizes an equally weighted three-factor apportionment formula. How much of Jose's taxable income is apportioned to X? $780,300 $900,000
$780,300
During the year, Green, Inc., incurs the following reseach expenditures: In-house wages and supplies $60,000 Paid to Blue Foundation for research $30,000 Green's qualifying research expenditures for the yera are: $75,000 $79,500
$79,500
Fred is the sole shareholder of an S corporation in For Depist Alabama. At a time when his stock basis is $20,000, the corporation distributes appreciated property worth $100,000 (basis of $20,000). Fred's taxable gain is: 0 $80,000
$80,000
Plum Corporation, a calendar year C corporation, reports net income of $2.3 billion on its 2023 finaicla statemtns, including financial statemtn deprection of $300 million. Also for 2023 Plum reports taxable income of 1.1 billioin, including tax depreciation of $500 million... What is Plum's corporate AMT? $0 $84 million
$84 million
You are given the following facts about a solely owned S corporation. What is the shareholders ending stock basis Increase in AAA $31,000 Increase in OAA 6,300 $99,100 $100,100
$99,100
Valdez Corporation, a calendar year taxpayer, owns proprty in states M and O. Both states require that the average value of assets be includedin the property factor. State M requires that the property be valued at its historical cost, and State O requires that the property be included in teh property factor at its net depreciated book value. Valdez's O property factor is: 37.2% 39.5%
37.2%
Bert Corporation, a calendar year taxpayer owns property in states M and O. Both states require that the average value of assets be included in the property factor. State M requires that the property be included in the property factor at its ned depreciated book value 64.9% 64.4%
64.4%
Which of the following real property could be subject to 1250 depreciation recapture? Property placed in service after 1986 on which straight-line depreciation was taken A building on which 168(k) depreciation was taken
A building on which 168(k) depreciation was taken
Art, an unmarried individual, transfers property (basis of $130,000 and fair market value of $120,000) to Condor Corporation in exchange for §1244 stock. The transfer qualifies as a nontaxable exchange under § 351. Because the property is loss property, Condor takes a basis of $120,000 in the property. Five years later, Art sells the Condor stock for $50,000. With respect to the sale, Art has: An ordinary loss of $70,000 and a captial loss of $10,000 A captial loss of $30,000 and an ordinary loss of $50,000
A captial loss of $30,000 and an ordinary loss of $50,000
Nontaxable stock dividends result in: A higher cost per share for all shares than before the stock dividend A lower cost per share for all shares than before the stock dividend
A lower cost per share for all shares than before the stock dividend
A use tax applies when a State A resident purchases: A new automobile from a State B dealership and then uses the car back at home in State A A new automobile that is purchased from an online seller
A new automobile from a State B dealership and then uses the car back at home in State A
Which of the following statements regarding the sourcing of dividend income is true? Dividends from non-US corporations are always foreign income A percentage of dividends from non-US corporations are US source to teh extent that 25% or more of the non-US corporation's gross income for te three years preceeding the year of the dividend payment was effectively connected with teh conduct of a US trade or business
A percentage of dividends from non-US corporations are US source to the extent that 25% or more of the non-US corporation's gross income for te three years preceeding the year of the dividend payment was effectively connected with teh conduct of a US trade or business
The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to: Financial accounting tax accrual workpapers A tax research memo used to support a tax planning idea
A tax research memo used to support a tax planning idea
Adam transfers cash of $300,000 and land worth $200,000 to Camel Corporation for 100% of the stock in Camel. In the first year of operation, Camel has net taxable income of $70,000. If Camel distributes $50,000 to Adam: Adam has a taxable dividend of $50,000 Camel Corporation has a tax deduction of $50,000
Adam has a taxable dividend of $50,000
An S corporation must possess which of the following characteristics Only one class of stock All of these
All of these
Martha has both long-term and short-term 2023 captial gains and losses. The result of netting these gains and losses is a net long-term capital loss. Martha has no qualified dividend income. Also, her 2023 taxable income puts her in teh 24% tax bracket. Whcih of the following is correct? Martha will use Parts I, II, and III of 2023 Form 1040 Schedule D All of these
All of these
Which of the following statements is correct? The receipt of boot in a like-kind exchange can result in the recognition of gain All of these
All of these
In conducting multistate tax planning, teh taxpayer should: Exploit incosistencies among the taxing statutes and formulas of the states All of these are true
All of these are true
The penalty for substantial understatement of tax liability does not apply if: The IRS failed to meet its burden of proof in showing the taxpayer's error All of these statements are correct
All of these statements are correct
Which statemt is incorrect with respect to an S shareholder's consent? An S election requires a consent from all of the S corporation's shareholders All of these statments are correct
All of these statments are correct
In computing asset basis, capital recoveries include: Ordinary repair and maitenence expenditures Amortization of bond premium
Amortization of bond premium
US income tax treaties can be described as Balanced Bilateral
Bilateral
Which of the following items is not included in teh income tax footnote for a publicly traded company? Breakdown of income tax between foreign and domestic Breakdown of income tax among US states
Breakdown of income tax among US states
Weston sells his residence to Joanne on October 15, 2021. Indicate which of the following statements is correctly associated with § 121 (exclusion of gain on sale of principal residence). Capital expenditures made by the seller prior to the sale increase the seller's adjusted basis and have no effect on the buyer's adjusted basis. Only choices a and c
Capital expenditures made by the seller prior to the sale increase the seller's adjusted basis and have no effect on the buyer's adjusted basis.
The tax law requires that capital gains and losses be separated from other types of gains and losses. Among reasons for this treatment are: Long-term capital gains may be taxed at a lower rate than ordinary gains Choices a and c
Choices a and c
Which of the following statements is correct? A private foundation is, in general, expemt from Federal income tax Choices a, b, and c are correct
Choices a, b, and c are correct
Which of the following assets held by a cash basis accounting firm is a 1231 asset An account receivable from a client Choices b and c
Choices b and c
Michaela is in the business of creating posters for the movie industry. She creates a poster and sells it for a lump sum. She has: An ordinary gain Choices b and c are correct
Choices b and c are correct
Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000, for 50 shares in Crow Corporation. Mary transfers property, basis of $80,000 and value of $1,480,000, and agrees to serve as manager of Crow for one year; in return Mary receives 50 shares of Crow. The value of Mary's services is $120,000. With respect to the transfers: Crow Corporation has a basis of $1,480,000 in the property it received from Mary Crow will have a business deduction of $120,000 for the value of the services Mary will render
Crow will have a business deduction of $120,000 for the value of the services Mary will render
Which of the following is not a specific adjsutment to the partner's basis in teh partnerhsip interest Increased by contributions the partner made to the partnership Decreased by the amount of guaranteed payments shown on teh partner's K-1
Decreased by the amount of guaranteed payments shown on teh partner's K-1
The Federal gift tax does not include a: Deduction for state gift taxes paid Charitable deduction
Deduction for state gift taxes paid
Which of the following statemtns regarding the sourcing of dividend income is true? Dividends are sourced based on the residence of the recipient Dividends from a US corporation are US source without regard to where the US corporation generated teh E & P
Dividends from a US corporation are US source without regard to where the US corporation generated teh E & P
Parent and minor form a non-unitary group of corporations. Parent is located in a state with an effective tax rate of 3% and Minor's effective tax rate is 9%. Acting in concert to reduce overall tax liabilities, the group should: Execute an intercompany loan such that Minor pays deductible interest to Parent Do all of these
Do all of these
Parent and Junior form a unitary group of corporations. Parent is located in a state with an effective tax rate of 3% and Junior's effective tax rate is 9%. Acting in concert to reduce overall tax liabilities, the group should: Have parent charge Junior an annual management fee Do none of these
Do none of these
AmCo and BamCo for the AB General Partnership at the start of the current year with a land contribution by BamCo and a cash contribution by AmCo... Which of the following statements is correct? Immediately after formation, AmCo's basis in the partnership equals the cash that it contributed Immediately after formation, AmCo's basis in the partnerhsip equals teh cash that it contributed plys AmCo's share of recourse debt contributed by BamCo
Immediately after formation, AmCo's basis in the partnerhsip equals teh cash that it contributed plys AmCo's share of recourse debt contributed by BamCo
Which of the following statements is correct? In a tax-free transaction in which gain is realized, teh transaction results in the permanent recovery of more than the taxpayer's cost or other basis for tax purposes All of these
In a tax-free transaction in which gain is realized, teh transaction results in the permanent recovery of more than the taxpayer's cost or other basis for tax purposes
The following persons own Schlect Corporation, a non-US entity. None of teh shareholders are related. Subpart F income for the tax year is $300,000. No distributions are made. Which of the following statements is correct. Chee includes $90,000 in gross income Marina is not a US shareholder for purposes of determining whether Schlecht is a CFC
Marina is not a US shareholder for purposes of determining whether Schlecht is a CFC
Hunter and Warren form Tan Corporation. Hunter transfers equipment (basis of $210,000 and fair market value of $180,000) while Warren transfers land (basis of $15,000 and fair market value of $150,000) and $30,000 of cash. Each receives 50% of Tan's stock. As a result of these transfers: Neither Hunter nor Warren has any recognized gain or loss Tan corporation will have a basis in the land of $45,000
Neither Hunter nor Warren has any recognized gain or loss
An investment analyst would prefer to see that an entity's effective tax rate is affected by a: Both a and b Neither a and b
Neither a and b
Typically, a local property tax: Applies to an individual's stock portfolio Neither a nor b
Neither a nor b
A foreign currency gain or loss might occur in a year when: A sales contract is signed in year 1 and teh transaction is completed in year 2 Neither a or b
Neither a or b
Which of the follwoing statements regarding the taxation of US real property gains recognized by non-US persons no engaged in a US trade or business is false? Not taxed to non-US persons because real property gains are specifically exempt from US taxation Taxed in the US because such gains are treated as if they are effectively connected to a US trade or business
Not taxed to non-US persons because real property gains are specifically exempt from US taxation
Which of the following excise taxes are imposed on private foundations Tax on failure to distribute income Only a and b
Only a and b
Lemon Corporation incurs the following transactions Net income from operations $110,000 Interest income form saving account $5,000 As a result, which of the ofllong must nina recognize? Ordinary income of $115,000, and long-term captial gain of $5,000 Ordinary income of $115,000, and long-term captial gain of $9,000, and $4,000 short-term captial loss
Ordinary income of $115,000, and long-term captial gain of $9,000, and $4,000 short-term captial loss
Copper Corporation sold machinery for $47,000 on December 31,2023. Tha machinery ahd been purchased on January 2, 2020, for $60,000 and had an adjusted basis of $41,000 at the date of the sale. For 2023, what should copper report? Ordinary income of $6,000 A 1231 gain of $3,000 and $3,000 of ordinary income
Ordinary income of $6,000
Which of the following statements is correct? The AMT exemption amount decreases as AMTI increases The hihghes AMT rate for individuals si 26%
The AMT exemption amount decreases as AMTI increases
If the taxpayer qualifies under section 1033 (nonrecognition of gain from an involuntary conversion) and the amount reinvested in replacement property exceeds the amount realized, the basis of the replacement. The cost of the replacement property The fair market value of the involuntary converted property minus the postponed gain
The cost of the replacement property
On June 10, 2023, Ebon Inc. acquired an office building as a result of a like-kind exchange. Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange. Which of the ofllowing statements is correct: The holding period of the office building starts on June 10, 2023 The holding period of the office building includes the holding period of the factory building
The holding period of the office building includes the holding period of the factory building
Fern, Inc., Ivy, Inc., and Jeremy formed a general partnership. Fern owns a 50% interest, and Ivy and Jeremy both own 25% interests. Fern, Inc. files its tax return on an October 31 year-end; Ivy, Inc., files with a May 31 year-end, and Jeremy is a calendar year taxpayer. Which of the following statements is true regarding the taxable year the partnership can choose? The partnership must shoose the calendar year because it has not principal partners The partnership must use the least aggregate deferral method to determine its required taxable year
The partnership must use the least aggregate deferral method to determine its required taxable year
Which of the following statments does not reflect the rules governing the accuracy-related penalty for negligence? The penalty rate is 20% The penalty applies whenever the taxpayer takes a return position that is contrary to a court decision
The penalty applies whenever the taxpayer takes a return position that is contrary to a court decision
Which of the following statements regarding foreign persons not engaged in US trade of business is true? They are subject to potential withholding taxes on the gross amount of US source investment income If they have any US source income, they are taxed on net investment income
They are subject to potential withholding taxes on the gross amount of US source investment income
SQRLY LLC has about 25 LLC members. SwanCo (30% owner) and QuinnCo (16% owner)... The taxable year is determined under the principal partner rule because the 5% owners (Swan and Quinn) have th same taxable year The taxable year ends on December 31 becasue more LLC members use a calendar year than any other year
The taxable year is determined under the principal partner rule because the 5% owners (Swan and Quinn) have th same taxable year
Assume that a building is subject to 1250 depreciation recapture becasye bonus depreciated was used. The building is destroyed in a hurrican, which is the taxpayer's only caualty or theft for the year. In which of the following situations could there be a 1250 depreciation recapture gain? There is a loss because the insurance recovery is less than the adjusted basis There is a gain because the insurance recovery exceeds the adjusted basis
There is a gain because the insurance recovery exceeds the adjusted basis
Mikel prepared a Federal income tax return for Mona for compnsation. Her return included an aggressive interpretation of the rules concerning the home office deduction of a sole proprietor. Mikel is not liable for a preparer penalty for taking an unreasonable tax return position if: The IRS found that the disputed deduction was frivolous, but Mona had siclosed the postion in an attachment to the return There was a reasonable basis for Mona's interpretation of the home office deduction reules, and she had disclosed the position in an attachment to the return
There was a reasonable basis for Mona's interpretation of the home office deduction reules, and she had disclosed the position in an attachment to the return
White Company acquires a new machine for $75,000 and uses it in White's manufacturing operations. A few months after White places the machine in service, it discovers that the machine is not suitable for White's business. White had fully expensed the machine in the year of acquisition using § 179. White sells the machine for $60,000 in the tax year after it was acquired, but held the machine only for a total of 10 months. What was the tax status of the machine when it was disposed of and the amount of the gain or loss? a. A capital asset and $60,000 gain. b. An ordinary asset and $60,000 gain.
b. An ordinary asset and $60,000 gain.
Molly is a 30% partner in the MAP Partnership. During the current tax year, the partnership reported ordinary income of $200,000 before any permitted deduction for guaranteed payments and distributions to partners. The partnership made an ordinary cash distribution of $20,000 to Molly and made guaranteed payments to partners Molly, Amber, and Pat of $20,000 each ($60,000 total guaranteed payments). How much will Molly's adjusted gross income increase as a result of these items? a.$42,000 b.$62,000
b.$62,000
