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Study Resources (Accounting)

1) U.S. citizens, resident aliens, and domestic corporations are taxed by the U.S. government on their worldwide income at regular U.S. tax rates. 2) If foreign taxes on foreign income exceed U.S. taxes on foreign income, the excess foreign taxes are credited against U.S. taxes in the current year. 3) Income derived.
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81) A trust document does not mention the treatment for depreciation. The state has adopted the Uniform Act.  The trust document states that depreciation is a charge against corpus. The trust results are the following: Business net profits$2,000 Rental income              1,000 Depreciation              100 Rent expense              100 Calculate net accounting income. 82) Ebony Trust was established two.
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98) The Tucker Trust was established six years ago. The trust is required to distribute all of the trust income at least annually to Betty for life. Capital gains are credited to principal. The current year results of the trust are as follows: Amounts Allocable To IncomePrincipal Dividends              $15,000 Rental income from land              2,500 Tax-exempt.
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71) The GSTT's (generation-skipping transfer tax) purpose is A) to impose a graduated transfer tax one time a generation. B) to impose some form of transfer tax one time a generation. C) to impose a graduated transfer tax every other generation. D) to impose some form of transfer tax every other generation. 72) Identify which.
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89) A simple trust has the following results: DNI              $60,000 Net tax-exempt interest              8,000 Net accounting income              62,000 Calculate the distribution deduction. 90) In the year of termination, a trust incurs a $20,000 NOL. In addition, it has a $30,000 NOL carryover from the two preceding tax years. The trust distributes 40% of its assets.
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11) Under the Subpart F rules, controlled foreign corporations (CFCs) are required to distribute a certain portion of their income as dividends to their U.S. shareholders. 12) A nonresident alien can elect to be considered a resident alien if the nonresident alien is married to a U.S. citizen or a resident.
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21) A U.S. citizen accrued $120,000 of creditable foreign taxes last year. The citizen's foreign tax credit limitation for last year is $90,000 (only a single limitation need be calculated). The excess foreign tax credit limitation for the year preceding the year in which the excess foreign taxes were incurred.
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74) Briefly discuss the reasons for establishing a trust. 75) Briefly discuss some of the reasons for using a revocable trust. 76) This year, the Huang Trust received $20,000 of dividends and $30,000 of tax-free interest. It distributes all of its receipts to its beneficiary. How should the beneficiary treat the distribution? 77).
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11) Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS. 12) Anyone who prepares a tax return is subject to the provisions of Circular 230. 13) The Internal Revenue Service is part of the A) Congress. B) Treasury Department. C) Federal Bureau of Investigation. D) U.S. Customs.
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51) Identify which of the following statements is true. A) When making a QTIP transfer, the donor does not control who will receive the property on the death of the donee-spouse. B) The marital deduction is limited to the amount of the gift that exceeds the annual exclusion. C) Claiming the marital deduction.
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51) Identify which of the following statements is true. A) An individual cannot be both a tier-1 and tier-2 beneficiary in the same year. B) Tier-2 beneficiaries potentially can receive more favorable tax treatment than tier-1 beneficiaries. C) Bequests of specific sums of money when distributed out of an estate result in the.
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31) The IRS will issue a ruling A) on prospective transactions only. B) only if regulations have been issued on the subject. C) on a completed transaction for which a return has been filed. D) to clarify the tax treatment of a transaction. 32) Identify which of the following statements is false. A) The IRS issues.
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51) Identify which of the following statements is true. A) Regardless of how large the gross estate is, the estate tax liability can be completely eliminated if the estate is willed to a charitable organization. B) There is a ceiling on the marital deduction. C) All transfers to the surviving spouse are eligible.
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21) Appraisal methods used to value real estate for estate tax purposes may include A) comparable sales. B) reproduction cost. C) capitalization of earnings. D) all of the above 22) Reversionary interests in publicly traded stocks included in a gross estate must be valued A) by an independent actuary. B) by an appraiser. C) by considering the fact.
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41) Identify which of the following statements is true. A) The personal exemption available to a trust is adjusted annually based on changes in the consumer price index. B) Income received by a trust beneficiary has the same character it had at the trust level. C) Distributable net income (DNI) excludes tax-exempt income. D).
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51) Identify which of the following statements is true. A) An individual taxpayer may be subject to a penalty for underpayment of estimated taxes if his balance of tax due when he files is $500. B) A penalty for substantial understatement will potentially be assessed on an individual if the underpayment of.
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96) For innocent spouse relief to apply, five conditions must be met. Explain them. 97) Jayne and Jon jointly file a tax return this year. Jayne fraudulently reports two expenses on Schedule C:  $2,000 and $2,500. The IRS audits the return, assesses a $1,050 deficiency, and begins collection efforts two years.
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61) Identify which of the following statements is false. A) Federal estate taxes related to income in respect of a decedent (IRD) is deductible by the estate in the year the IRD is includible in the estate's gross income. B) An example of deductions in respect of a decedent (DRD) are property.
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41) In 2001, Polly and Fred, brother and sister, purchased a condominium at a golf resort. Polly contributed 60% of the $200,000 cost; Fred contributed 40%. Polly dies in the current year when the condominium has a $300,000 value. How much is included in Polly's estate? A) $120,000 B) $180,000 C) $200,000 D) $300,000 42).
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11) Grantor trusts are taxed as complex trusts. 12) Trusts are required to make estimated tax payments. 13) A tax entity, often called a fiduciary, includes all of the following except A) estates. B) complex trusts. C) testamentary trusts. D) All of the above are fiduciaries. 14) Which of the following statements is incorrect? A) The income tax.
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61) Tax return preparers can be penalized for the following activities except A) failure to sign a return. B) failure to give a copy of the return to the taxpayer. C) failure to maintain IRS continuing education requirements. D) failure to provide the preparer's identification number on the return. 62) What is the penalty for.
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31) Charitable contributions made by a fiduciary A) are limited to 50% of fiduciary income. B) must be authorized in the trust instrument in order to be deductible. C) flows through to be deducted on the beneficiary's tax return. D) are subject to the 2% floor. 32) A trust distributes 30% of its income to.
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21) Identify which of the following statements is false. A) A conduit approach—that is, the income has the same character in the hands of the beneficiary as it has to the trust—governs for fiduciary income taxation. B) Essentially, an estate or trust is taxed on any income it earns, whether retained or.
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31) Identify which of the following statements is false. A) Earned income is excludable from gross income only if it is foreign-source income. B) Taxable pensions and annuities are excluded from the definition of earned income when computing the foreign-earned income exclusion. C) An individual meets the bona fide resident test by establishing.
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1) For purposes of trust administration, the term "sprinkling" relates to the mandatory distribution of income among various beneficiaries. 2) A trust receives no standard deduction when computing taxable income. 3) A complex trust permits accumulation of current income, provides for charitable contributions, or distributes principal during the taxable year. 4) The distribution.
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