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uop ACC455- Final Examination




Question;1.A tax case cannot be appealed when initiated in theU.S. Court of Federal ClaimsU.S. Tax CourtU.S. Tax Court using the small cases proceduresNone of thesea.b.c.d.2. Which of the following statements is true?a.Shareholders in a C corporation can use C corporation losses to offset shareholder incomefrom other sources.b.C corporation losses remain in the C corporation and can offset income from other years.c.C corporation shareholders are taxed based on their proportionate share of income.d.Distributions of C corporation income are not taxable.Objective: Explain the process of applying check-the-box regulations in determining the businessentity election.3.Identify which of the following statements is true.a.The check-the-box regulations permit an LLC to be taxed as a C corporation.b.Under the check-the-box regulations, an LLC that has only two members (owners) must betaxed as a partnership.c.Once an election is made to change its classification, an entity cannot change again for 60months.d.All of these.Objective: Determine the tax consequences of forming a corporation.4. Brad forms Vott Corporation by contributing equipment which has a basis of $50,000 and a FMV of$40,000 in exchange for Vott stock. Brad also contributes $5,000 in cash. If the transaction meets theSec. 351 control and ownership tests, what are the tax consequences to Brad?a.He recognizes a $5,000 loss.b.He recognizes a $5,000 gain and a $10,000 loss.c.He recognizes neither gain nor loss.d.He recognizes a $10,000 loss.5. If a corporation's charitable contributions exceed the deduction limitation in a particular year, not deductible in any future yearb.becomes a carryover to a maximum of 5 succeeding yearsc.may be carried back to the third preceding carried over indefinitely6. Garth Corporation donates inventory having an adjusted basis of $40,000 and a FMV of $150,000 toa qualified public charity. The inventory will be used by the charity for care of the ill. The maximumcharitable contribution deduction before consideration of the 10% limitation isa.$40,000b.$55,000c.$80,000d.$95,0007. Identify which of the following statements is false.a.Tax-exempt interest on certain private activity bonds may be taxed under the alternativeminimum tax.b.Tax preference items and adjustments may either increase or decrease taxable income toobtain AMTI.c.Depending on the date an asset is placed in service, depreciation may be an adjustment totaxable income or a tax preference item for alternative minimum tax purposes.d.Different depreciation rules are used when computing taxable income and alternative minimumtaxable income.8. Tomika Corporation has current and accumulated earnings and profits of $0. Tomika distributes$10,000 to its sole shareholder, Alana. What are Tomika's earnings and profits after the distribution?a.b.c.d.$0($10,000)$10,000None of these9Identify which of the following statements is true.a.The FMV of an obligation is used to determine the E&P reduction when a corporationdistributes the obligations to its shareholders.b.When appreciated property is distributed to shareholders, E&P must be increased by any gain(net of taxes) recognized due to the property distribution.c.d.When appreciated property is distributed in a nonliquidating distribution, the net effect on thedistributing corporation's E&P is that it is reduced by the net of the FMV of the property distributedminus the gain (net of federal income taxes) recognized due to the property distribution.B and C above are true.10. A corporation distributes land and the related liability in a nonliquidating distribution to a shareholder.The land (a capital asset) has an adjusted basis of $70,000 and a FMV of $100,000 and is subject toa mortgage of $120,000. The corporation must recognizea.$20,000 capital lossb.50,000 capital gainc.$70,000 capital gain or loss11. Identify which of the following statements is false.a.A stock redemption is treated as a sale or exchange only if the shareholder's ownership of oneparticular class of stock is terminated.b.An individual is not considered to own stock owned by a brother under the family attributionrules of Sec. 318.c.An individual is considered to own the stock owned by his parents, children, spouse, andgrandchildren under the family attribution rules of Sec. 318.d.A person who has an option to purchase stock is considered to own the stock.Week Four: Basics of Flow-Through Entities (S Corporations and Partnerships)12. Identify which of the following statements is false.a.The election form can be signed by a person authorized to sign the S corporation tax return.b.An S election is filed by the corporation by using Form 2553 on or before the due date (withoutregard for any extensions) for the corporate tax return for the tax year in question.c.An S corporation must file a tax return for any year in which the S corporation is in existence.d.The IRS can grant extensions of time of filing shareholder consents to the S election.\.13. Which one of the following special loss limitations apply to an S corporation?a.At-risk rulesb.Passive activity limitation rulesc.Hobby loss rulesd.All of these apply.14. An electing S corporation has a $30,000 ordinary loss for the nonleap year. On January 1, Beverlyand Sonya own equally all of the S corporation stock. On the 146th day of the year, Beverly gives herone-half of the S corporation stock to her daughter Becky. How much of the $30,000 ordinary loss isallocated to Sonya?a.$25,000b.$15,000c.$10,000d.$6,00015.Identify which of the following statements is true.a.When unrealized receivables are distributed in a liquidating distribution, the basis of thereceivables will be increased.b.The basis of unrealized receivables and inventory distributed by a partnership in liquidation ofa partnership interest are never increased above their bases in the hands of the partnership.c.The basis of the partnership interest is apportioned between all of the assets received in aliquidating distribution based on the relative FMVs of the assets.d.All are false.16. If an S corporation inadvertently terminates its election, the IRSa.may permit the corporation to report as an S corporation even for the period that includes thetermination date.b.will not permit the corporation to restore its S election until the completion of a 5-year waitingperiod.c.will permit restoration of the S election only if the event causing the termination was not withinthe control of the corporation.d.will permit restoration of the S election if a majority of the shareholders consent to thereinstatement.


Paper#42536 | Written in 18-Jul-2015

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