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Question;189 #1;The domestic production activities deduction is limited to manufacturers.;a.;True;b. False;190 #2;The DPAD is not available to estates and trusts.;a.;True;b. False;191 #3;In terms of the effect of DPAD, the maximum tax savings for a corporation with;$11 million of taxable income is $346,500 in 2011.;a.;True;b. False;192 #4;The domestic production activities deduction is intended to preserve U.S.;manufacturing jobs and discourage their outsourcing.;a.;True;b. False;193 #5;The overall effect of the domestic production activities deduction is similar;to a rate reduction.;a.;True;b. False;194 #6;In the case of an individual, modified AGI is substituted for QPAI in the DPAD;formula.;a.;True;b. False;195 #7;The DPAD is limited by 50% of the total W-2 wages paid by a taxpayer.;a.;True;b. False;196 #8;Modified AGI means AGI without any DPAD allowance.;a.;True;b. False;197 #9;DPAD for 2011 is 9% of the greater of QPAI or;TI, but not to exceed the W-2 wages limitation.;a.;True;b. False;198 #10;For purposes of the DPAD wage limitation, amounts paid to independent;contractors can be considered.;a.;True;b. False;199 #11;A company with a NOL carryforward for a tax year is ineligible for the DPAD if;the carryforward eliminates current income.;a.;True;b. False;200 #12;As taxable income is reduced by an NOL carryback, there is a corresponding;increase in the DPAD.;a.;True;b. False;201 #13;If QPAI cannot be used in any one year due to the TI limitation, it can be;carried over for 5 years.;a.;True;b. False;202 #14;DPGR ? Allowable Indirect Costs = QPAI. Is this formula correct?;a.;True;b. False;203 #15;Red Company, a U.S. corporation based in Mississippi, manufactures and sells a;product which includes some components made in Mexico. None of Red?s income;from sales constitute DPGR.;a.;True;b. False;204 #16;DPGR cannot include the cost of an embedded service that is part of in the sale;of a manufactured product.;a.;True;b. False;205 #17;One of the components of DPGR is qualified production property (QPP). The QPP;must be manufactured, produced, grown, or extracted entirely within the U.S.;a.;True;b. False;206 #18;In connection with the construction of a housing project, a contractor pays an;architect to design the homes being built. The architect?s fee is an embedded;service that qualifies as DPGR.;a.;True;b. False;207 #19;May Corporation, a Miami contractor, pays Crane Engineering a fee to design;bridges for a highway May will build in the Cayman Islands. The fee Crane;receives is DPGR.;a.;True;b. False;208 #20;Martin, a real estate developer, pays Alan, a general contractor, to construct;a housing project. Alan has no DPGR since he does not own the property.;a.;True;b. False;209 #21;Stacey, an advertising executive, pays a contractor to build a lodge on;property she owns in Colorado. If Stacey sells the lodge, the proceeds (less;the cost of the land) will be DPGR.;a.;True;b. False;210 #22;A taxpayer who prepares and sells Chinese food at several of its restaurant;locations can qualify for DPAD as to the receipts only from take-out orders and;home-delivery sales.;a.;True;b. False;211 #23;Some of the meals a food service company prepares for its chain of restaurants;is frozen and shipped to supermarkets for resale. The proceeds from such sales;will qualify as DPGR.;a.;True;b. False;212 #24;Under some circumstances, the sale of prepared food at a taxpayer?s retail;facility can qualify as DPGR.;a.;True;b. False;213 #25;The definition of an expanded affiliated group (EAG) for DPAD purposes is broader;than that applicable to the filing of consolidated tax returns.;a.;True;b. False;214 #26;In the case of corporations that are members of an expanded affiliated group;(EAG), the DPAD is determined by treating the group as a single taxpayer.;a.;True;b. False;215 #27;Junco Corporation is a member of an expanded affiliated group (EAG) and has;QPAI but no W-2 wages. Junco cannot claim a DPAD.;a.;True;b. False;216 #28;In working with the W-2 wage limitation on DPAD, a partner can count any;guaranteed payments he receives from the partnership.;a.;True;b. False;217 #29;The objective of the AMT is to force taxpayers that are more profitable than;their taxable income reflects to pay additional income taxes.;a.;True;b. False;218 #30;The DPAD is not allowed for AMT purposes.;a.;True;b. False;219 #31;The AMT rate for corporations is the same as for individuals.;a.;True;b. False;220 #32;Once a small corporation for AMT purposes, always a small corporation.;a.;True;b. False;221 #33;Grebe Corporation was formed in 2000. If in 2011, it has average gross receipts;of under $5 million, the company cannot be subject to the AMT.;a.;True;b. False;222 #34;Netting refers to the process of AMT adjustments reversing themselves and then;being deducted from taxable income to arrive at AMTI.;a.;True;b. False;223 #35;NOLs are negative adjustments.;a.;True;b. False;224 #36;Passive activity losses of certain closely held corporations and personal;service corporations are tax preferences.;a.;True;b. False;225 #37;If mining exploration and development costs are capitalized and written off;over 10 years, no adjustment is necessary for AMT purposes.;a.;True;b. False;226 #38;Tax-exempt interest on state and local private activity bonds (issued in 2010);is a tax preference item.;a.;True;b. False;227 #39;Intangible drilling costs are a tax preference item only for integrated oil;companies.;a.;True;b. False;228 #40;The ACE adjustment can be positive or negative.;a.;True;b. False;229 #41;A negative ACE adjustment is beneficial to a corporation.;a.;True;b. False;230 #42;AMTI may be defined as regular taxable income after AMT adjustments (other than;the NOL and ACE adjustments) and after tax preferences.;a.;True;b. False;231 #43;The regular foreign tax credit is available to reduce AMT liability.;a.;True;b. False;232 #44;The AMT exemption amount of $40,000 phases out entirely once a corporation?s;average gross receipts exceeds $5 million.;a.;True;b. False;233 #45;The AMT NOL deduction is limited to 90%.;a.;True;b. False;234 #46;The accumulated earnings credit for a personal service corporation is the;greater of $150,000 or the current E & P for the year needed to meet the;reasonable needs of the business.;a.;True;b. False;235 #47;ATI = Taxable Income ? Adjustments ? Dividends paid ? Accumulated earnings;credit.;a.;True;b. False;236 #48;Reasonable needs for purposes of the accumulated earnings tax include loans to;shareholders.;a.;True;b. False;237 #49;The penalty tax in 2011 for AET and PHC situations is the highest rate;applicable to individual taxpayers.;a.;True;b. False;238 #50;Long-term capital gains are taxed under the AET and PHC taxes.;a.;True;b. False


Paper#59210 | Written in 18-Jul-2015

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