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double taxation questions

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Question;The "double taxation" of corporate income refers to the fact that corporate income is taxed at both the entity-level and the shareholder-level.Question 1 options:a) Trueb) FalseSaveQuestion 2 (6 points)A distribution from a corporation to a shareholder will always be treated as a dividend for tax purposes.Question 2 options:a) Trueb) FalseSaveQuestion 3 (6 points)A corporation's "earnings and profits" account is equal to the company's "retained earnings" account on its balance sheet.Question 3 options:a) Trueb) FalseSaveQuestion 4 (6 points)A distribution from a corporation to a shareholder will only be treated as a dividend for tax purposes if the distribution is paid out of current or accumulated earnings and profits.Question 4 options:a) Trueb) FalseSaveQuestion 5 (6 points)The term "earnings and profits" is well-defined in the Internal Revenue Code.Question 5 options:a) Trueb) FalseSaveQuestion 6 (6 points)Income earned by flow-through entities is usually taxed once at the entity level.Question 6 options:a) Trueb) FalseSaveQuestion 7 (6 points)Partnerships tax rules incorporate both the entity and aggregate approaches.Question 7 options:a) Trueb) FalseSaveQuestion 8 (6 points)The term "outside basis" refers to the partnership's basis in its assets, whereas, the term "inside basis" refers an individual partner's basis in her partnership interest.Question 8 options:a) Trueb) FalseSaveQuestion 9 (6 points)A partnership can elect to amortize organization and startup costs, however, syndication costs are not deductible.Question 9 options:a) Trueb) FalseSaveQuestion 10 (6 points)Nonrecourse debt is generally allocated according to the profit-sharing ratios of the partnership.Question 10 options:a) Trueb) FalseSaveQuestion 11 (6 points)A partner's debt relief from the sale of a partnership interest will decrease his outside basis.Question 11 options:a) Trueb) FalseSaveQuestion 12 (6 points)In the sale of a partnership interest, a selling partner will recognize ordinary income (rather than capital gain) when the partnership assets include cash and land held for 5 years as an investment.Question 12 options:a) Trueb) FalseSaveQuestion 13 (6 points)Hot assets include assets except cash, capital assets and ?1231 assets.Question 13 options:a) Trueb) FalseSaveQuestion 14 (6 points)Operating distributions terminate a partner's interest in the partnership.Question 14 options:a) Trueb) FalseSaveQuestion 15 (6 points)In an operating distribution, when a partnership distributes property other than money with a basis that exceeds the partner's outside basis, the partner assigns a carryover basis to the distributed assets and recognizes a gain.Question 15 options:a) Trueb) FalseSaveQuestion 16 (6 points)Jaime has a basis in her partnership interest of $50,000 when the partnership distributes (in an operating distribution) two parcels of land to Jaime, each valued at $30,000. The basis in parcel A is $40,000 and the basis in parcel B is $20,000. Jaime allocates $20,000 of basis to parcel A and $30,000 of basis to parcel B.Question 16 options:a) Trueb) FalseSaveQuestion 17 (6 points)A partner recognizes gain when he receives cash in excess of his outside basis in a liquidating distribution.Question 17 options:a) Trueb) FalseSaveQuestion 18 (6 points)S corporations offer the same legal protection to owners as C corporations.Question 18 options:a) Trueb) FalseSaveQuestion 19 (6 points)The S corporation rules are less complex for S corporations that have earnings and profits from prior C corporation years than for S corporations that do not have earnings and profits from prior C corporation years.Question 19 options:a) Trueb) FalseSaveQuestion 20 (6 points)The same exact requirements for forming and contributing property govern S corporations and partnerships.Question 20 options:a) Trueb) FalseSaveQuestion 21 (6 points)S corporations may have no more than 50 shareholders, but members of the same family only count as one shareholder.Question 21 options:a) Trueb) FalseSaveQuestion 22 (6 points)Differences in voting powers are permissible across shares of S corporation stock as long as the shares have identical distribution and liquidation rights.Question 22 options:a) Trueb) FalseSaveQuestion 23 (6 points)Publicly traded corporations cannot be treated as S corporations.Question 23 options:a) Trueb) FalseSaveQuestion 24 (6 points)To make an S election effective as of the beginning of the current year, an S corporation must file Form 2553 within 3 ? months after the beginning of the year.Question 24 options:a) Trueb) FalseSaveQuestion 25 (6 points)An S corporation may be voluntarily or involuntarily terminated.Question 25 options:a) Trueb) FalseSaveQuestion 26 (6 points)Inventory is substantially appreciated if the fair market value of all inventory items exceeds 100% of their basis to the partnership.Question 26 options:a) Trueb) FalseSaveQuestion 27 (6 points)Partners must generally treat the value of profits interests they receive in exchange for services as ordinary income.Question 27 options:a) Trueb) FalseSaveQuestion 28 (6 points)Tax elections are rarely made at the partnership level.Question 28 options:a) Trueb) FalseSaveQuestion 29 (6 points)Only income and deductions included on a corporation's income tax return are included in the computation of current earnings and profits.Question 29 options:a) Trueb) FalseSaveQuestion 30 (6 points)Stock dividends are always tax-free to the recipient.Question 30 options:a) Trueb) FalseSaveQuestion 31 (6 points)Gain or loss is always recognized when realized for tax purposes.Question 31 options:a) Trueb) FalseSaveQuestion 32 (6 points)A taxpayer's tax basis in property always begins with its cost to the taxpayer.Question 32 options:a) Trueb) FalseSaveQuestion 33 (6 points)Control as it relates to a section 351 transaction is strictly defined to be 80 percent or more of the voting power of the stock of the corporation to which property is transferred.Question 33 options:a) Trueb) FalseSaveQuestion 34 (6 points)The definition of property as it relates to a section 351 transaction includes money.Question 34 options:a) Trueb) FalseSaveQuestion 35 (6 points)A taxpayer must receive voting common stock to be eligible for deferral in a section 351 exchange.Question 35 options:a) Trueb) FalseSaveQuestion 36 (6 points)M Corporation assumes a $200 liability attached to property transferred to it by Jane in a section 351 transaction. The assumed liability will be treated as boot received by Jane.Question 36 options:a) Trueb) FalseSaveQuestion 37 (6 points)Tax considerations always are the primary reason for how an acquisition is structured.Question 37 options:a) Trueb) FalseSaveQuestion 38 (6 points)The tax basis of property received by a noncorporate shareholder in a complete liquidation will be the property's fair market value.Question 38 options:a) Trueb) FalseSaveQuestion 39 (6 points)Which of the following statements best describes the priority of the tax treatment of a distribution from a corporation to a shareholder?Question 39 options:a) The distribution is a dividend to the extent of the corporation's earnings and profits, then a return of capital, and finally gain from sale of stock.b) The distribution is a return of capital, then a dividend to the extent of the corporation's earnings and profits, and finally gain from sale of stock.c) The distribution is a return of capital, then gain from sale of stock, and finally a dividend to the extent of the corporation's earnings and profits.d) The shareholder can elect to treat the distribution as either a dividend to the extent of the corporation's earnings and profits or a return of capital, followed by gain from sale of stock.SaveQuestion 40 (6 points)A calendar-year corporation has negative current E&P of $500 and accumulated positive E&P of $1,000. The corporation makes a $600 distribution to its sole shareholder. Which of the following statements is true?Question 40 options:a) $500 of the distribution will be a dividend because total earnings and profits is $500.b) $0 of the distribution will be a dividend because current earnings and profits is negative.c) $600 of the distribution will be a dividend because accumulated earnings and profits is $1,000.d) Up to $600 of the distribution could be a dividend depending on the balance in accumulated earnings and profits on the date of the distribution.SaveQuestion 41 (6 points)Which of the following statements best describes the tax law approach to recognizing gain or loss realized in an exchange?Question 41 options:a) Gain and loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.b) Gain and loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code.c) Gain realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.d) Loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but gain realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.SaveQuestion 42 (6 points)Roberta transfers property with a tax basis of $400 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $350 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the amount realized by Roberta in the exchange?Question 42 options:a) $500b) $400c) $350d) $250SaveQuestion 43 (6 points)Which of these items is not an adjustment to taxable income or net loss to compute current E&P?Question 43 options:a) Dividends received deductionb) Tax-exempt incomec) Net capital loss carryforward from the prior year tax returnd) Refund of prior year taxes for an accrual method taxpayerSaveQuestion 44 (6 points)Gerald received a 33% capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with a FMV of $30,000. His adjusted basis in the building was $15,000. In addition, the building was encumbered with a $9,000 nonrecourse mortgage that XYZ, LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution?Question 44 options:a) $6,000b) $9,000c) $21,000d) $24,000SaveQuestion 45 (6 points)Under general circumstances, debt is allocated from the partnership to each partner in the following manner:Question 45 options:a) Recourse - profit sharing ratios, nonrecourse - profit sharing ratiosb) Recourse - capital ratios, nonrecourse - capital ratiosc) Recourse - to partners with the ultimate responsibility for paying the debt, nonrecourse - profit sharing ratiosd) Recourse - profit sharing ratios, nonrecourse - to partners with the ultimate responsibility for paying the debtSaveQuestion 46 (6 points)When must a partnership file its return?Question 46 options:a) By the 15th day of the 4th month after the partnerships tax year endb) By the six month after the original due date if an extension is filedc) By the 15th day of the 3rd month after the partnerships tax year endd) A and Be) B and CSaveQuestion 47 (6 points)Which of the following statements regarding the sale of a partnership interest is false?Question 47 options:a) The seller's primary tax concern in a partnership interest sale is calculating the amount and character of gain or loss on the sale.b) The selling partner determines the gain or loss as the difference between the amount realized and her outside basis in the partnership.c) Hot assets change the character of a gain on the sale from ordinary income to capital gain.d) Any debt relief increases the amount the partner realizes from the sale.SaveQuestion 48 (6 points)Which of the following assets would not be classified as hot assets?Question 48 options:a) Inventoryb) Depreciation recapturec) Cashd) Accounts receivable for a cash method taxpayer.SaveQuestion 49 (6 points)Which of the following is prohibited from being an S corporation shareholder?Question 49 options:a) Foreign citizens that are U.S. residents.b) U.S. citizens.c) Corporations.d) 51 unrelated individuals.e) None of the above.SaveQuestion 50 (6 points)If Annie and Andy (each a 30% shareholder) file a revocation on February 10, 2010 to terminate their S corporation's S election, what is the effective date of the S corporation termination (assuming they do not specify one)?Question 50 options:a) January 1, 2010.b) February 10, 2010.c) January 1, 2011.d) February 10, 2011.

 

Paper#44685 | Written in 18-Jul-2015

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