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Study Resources (Taxation)

55) Edith contributes land having $100,000 FMV and a $85,000 adjusted basis, which is subject to a $66,000 mortgage in exchange for a one-third interest in the EHK Partnership. The partnership owes no other liabilities. After the contribution, Kate, Edith, and Helen share profits and losses equally and each has.
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116) Why are some partnership items separately stated? 117) What are special allocations of partnership items and when are they permitted? 118) What is the primary purpose of Form 1065, Partnership Tax Return? 119) What is the effect of a change in a partner's interest in the partnership during the year? 120) Hildi and.
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29) The investment models discussed in the text include all of the following except for A) the Deferred Model. B) the Pension Model. C) the Exempt Model. D) the Non-Current Model. 30) In the Current Model, A) investment earnings are taxed currently. B) the initial investment is deductible or excludable from gross income, and the investment earnings.
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121) Discuss the concept of partnership guaranteed payments. 122) A business distributes land to one of its owners.  The business purchased the land a few years ago for $15,000, but it is now worth $35,000.  Compare the treatment of this distribution when made by a partnership as opposed to an S.
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89) Are letter rulings of precedential value to third parties? 90) What is the difference between a taxpayer-requested letter ruling and a technical advice memorandum issued as a letter ruling? 91) What is an information release? 92) What are some of the factors to consider when deciding in which court to file a.
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21) A partnership's liabilities have increased by year-end.  Partners' bases in their partnership interests will increase. 22) Ordinary losses and separately stated deduction and loss items that exceed a partner's basis carry over indefinitely until the partner has a positive partnership basis. 23) Losses are disallowed on sales or exchanges between a.
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102) Torrie and Laura form a partnership in which they are equal partners.  Torrie contributes $100,000 cash.  Laura contributes $40,000 cash and a painting worth $60,000.  Laura purchased the painting three years ago for $45,000.  In two years the partnership sells the painting for $80,000. a.What is the partnership's basis in.
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109) The AAA Partnership makes an election to be an Electing Large Partnership. The partnership reports the following activities: Ordinary income from active business operations$150,000 Sec. 1231 gain75,000 Tax-exempt income20,000 Net long-term capital loss65,000 Charitable contributions25,000 What are the amounts reported by AAA to the partners on Schedule K-1 for inclusion on their individual tax returns? 110).
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114) Slimtin Corporation has $400,000 of regular taxable income.  It has depreciation adjustments of $100,000 (MACRS depreciation in excess of 150% declining balance method), and its adjusted current earnings is $600,000. Part A—Calculate Slimtin's AMT liability. Part B—Slimtin has a $41,000 AMT credit carryover from last year.  How much, if any, can.
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11) The Deferred Model investment outperforms the Current Model investment if interest rates and tax rates are constant over time because the interest on the Deferred Model investment grows tax free until withdrawal. 12) One of the characteristics of the Exempt Model is that earnings on the investment are exempt from.
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108) Compare and contrast "interpretative" and "statutory" regulations. 109) Explain the legislative reenactment doctrine. 110) In which courts may litigation dealing with tax matters begin? Discuss the factors that might be considered in deciding where to begin litigation. 111) Describe the appeals process in tax litigation. 112) Discuss the differences and similarities between regular.
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95) Corkie Corporation distributes $80,000 cash along with land having a $60,000 adjusted basis and a $40,000 FMV to its shareholder Josh. What are the tax consequences to Corkie Corporation? A) $20,000 loss realized and recognized B) $20,000 loss realized but not recognized C) $20,000 gain realized but not recognized D) $20,000 gain realized.
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21) Flow-through entities include partnerships, limited liability companies, limited liability partnerships, and C corporations. 22) A flow-through entity's primary characteristic is that income escapes taxation at the entity level and flows-through to be taxed at the ownership level. 23) The Current Model most closely describes a flow-through entity while a variation of.
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75) Which of the statements is inaccurate regarding requirements for nonrecognition of gain or loss upon the transfer of assets to a corporation in exchange for stock? A) Depreciation recapture applies to a transfer which falls under Sec. 351. B) Property must be transferred to the corporation solely in exchange for stock.
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111) Bartlett Corporation, a U.S. manufacturer, reports the following results in its financial accounting records: Sales $1,900,000 Cost of goods sold 900,000 Tax exempt interest income 15,000 Dividend income 50,000 Loss on sale of marketable securities 4,000 Wages 500,000 Other operating expenses 200,000 Depreciation 40,000 Charitable contributions 30,000 Additional information: Depreciation under MACRS 80,000 Qualified production activity income 400,000 The dividend income is from very minor holdings in U.S. stocks.  Calculate Bartlett's taxable income,.
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104) Small Corporation had the following capital gains and losses during the current year: LTCG$30,000 LTCL$23,000 STCG$ 9,000 STCL$18,000 Taxable income, exclusive of the capital gains and losses above, is $68,000. a.How should the capital gains and losses be treated for the current year? b.What is the taxable income for the current year taking into consideration the.
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21) The corporate AMT is similar to that applicable to individuals. 22) By calculating its depreciation using the most accelerated method available, a corporation increases the likelihood that it will be subject to the alternative minimum tax. 23) The purpose of the accumulated earnings tax is to discourage corporations from retaining excessive.
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11) The partnership's assumption of a liability from a partner is treated as a cash distribution to the partner whose liability is assumed, which decreases his basis in the partnership. 12) When capital or Sec. 1231 assets are transferred to a partnership in exchange for a partnership interest qualifying under Sec..
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123) Whaler Corporation makes a liquidating distribution of land with a $70,000 adjusted basis and a $100,000 FMV to shareholder Horton, who surrenders his Whaler stock (adjusted basis $60,000) to the corporation. Alice, another shareholder, receives $100,000 cash for her shares ($115,000 adjusted basis). What are the tax consequences to.
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1) In the Current Model, investment earnings are taxed currently. 2) In the Deferred Model, investment earnings are taxed at the end of the investment period. 3) In the Exempt Model, the earnings are exempt from tax until the end of the investment period. 4) In the Pension Model, the initial investment is.
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11) If a corporation owns less than 20% of the stock of the distributing corporation, the dividends-received deduction is not allowed for the recipient corporation. 12) If a corporation receives dividends from an 80% or more owned affiliated corporation, the dividends-received deduction is 100%. 13) In computing a corporation's NOL, the dividends-received.
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79) Explain the difference between a closed-fact and open-fact situation. 80) In all situations, tax considerations are of primary importance. Do you agree or disagree? Support your answer. 81) Describe the format of a client memo. 82) Explain how committee reports can be used in tax research. What do they indicate? 83) In 1998,.
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65) Baxter Corporation is a personal service corporation in the legal field. Baxter Corporation has taxable income of $10,000. Baxter Corporation's tax is A) $1,500. B) $3,400. C) $3,500. D) $3,900. 66) When computing a corporation's alternative minimum taxable income, its taxable income is A) increased by tax preference items.  No decreases are allowed for preferences. B).
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118) Chi transfers assets with a $150,000 FMV (basis $80,000) and $100,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $50,000. The corporation assumes the $100,000 mortgage. a.What is the amount of gain recognized by Chi? b.What is the adjusted basis if.
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1) Income of a C corporation is subject to an initial tax at the corporate level and the shareholders are subject to a second tax if the corporation pays dividends from its earnings and profits. 2) Partnerships, limited liability partnerships, limited liability companies, and C corporations are considered flow-through entities for.
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45) All of the following business forms offer limited liability except A) partnership. B) corporation. C) S corporation. D) limited liability company. 46) All of the following are accurate statements about corporations, except A) a corporation does not compute adjusted gross income. B) a corporation is not allowed a standard deduction. C) dividends received from a domestic corporation.
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99) Charlie Company is a partnership with two owners, Charlie and Robert. Each owner has a $20,000 original basis in the entity having contributed cash to the partnership at its formation. In the first year of operations, the partnership reported $50,000 of income which is allocated to each partner equally..
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45) All the following are types of pass-through entities except A) LLP. B) LLC. C) C corporations. D) S corporations. 46) Limited liability of partners or members is an advantage of all the following with the exception of A) LLP. B) LLC. C) limited partnerships. D) general partnerships. 47) All of the following could file partnership tax returns except A) general.
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84) Does Title 26 contain statutory provisions dealing only with income taxation? Explain. 85) What is the purpose of Treasury Regulations? 86) Why should tax researchers take note of the date on which a Treasury Regulation was adopted? 87) Discuss the purposes and scope of temporary regulations. 88) What are the purposes of citations.
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65) All of the following statements are true with regard to the formation of a partnership except: A) The partnership's basis in the transferred property carries over from the transferor partners. B) With regard to capital assets and 1231 assets, the partnership's holding period for the transferred property includes the contributing partner's.
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1) Pass-through entities are taxed at only one level—the ownership level. 2) In a limited partnership, the limited partners are liable for partnership debts only to the extent of their investment in the partnership plus any amount they commit to contribute to the partnership if called upon. 3) Because a partnership is.
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108) Concepts Corporation reported the following results for the current year: Taxable income from operations$500,000 Dividend income  120,000 Charitable contributions  100,000 Taxable income from operations does not include the dividend income or the contributions.  The dividend income is from minor investments in U.S. publicly-traded stocks.  Calculate Concept Corporation's taxable income and any carryovers that.
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104) According to the Statements on Standards for Tax Services, what belief should a CPA have before taking a pro-taxpayer position on a tax return? 105)  According to the AICPA's Statements on Standards for Tax Services, what duties does the tax practitioner owe the client? 106) Outline and discuss the tax research.
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31) Corporations that are members of a brother-sister affiliated group may file a consolidated return if the proper election is made. 32) If certain requirements are met, Sec. 351 permits deferral of recognition of gain or loss on the transfer of property to a corporation solely in exchange for stock of.
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55) With respect to charitable contributions by corporations, all of the following rules apply with the exception of A) unused contributions are carried forward 5 years. B) the amount of the contribution deduction is always adjusted basis of the property contributed. C) contributions are limited to 10% of taxable income, computed without regard.
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