08/30/2022 Business Taxation

Question 1

Start-up Cost - what is?

Answer 1

It is the cost you would deduct if you paid or incurred it to operate an existing business

It is a cost you pay or incur before the day your active trade or business begins

Question 2

Investment Credit - Structure rehabilitation
% Buildings place in serv before?
% Certified Historic Structures?

Answer 2

1- 10% for buildings placed in service before 1936
2-20% for certified historic structures

Question 3

Research credit amount %

Answer 3

20% of the increase in research activities

Question 4

Start-up Cost - include:
AS PM
AFO
SW
TAO
SF

Answer 4

1-Analysis or survey of potential market, products, labor supply, transportation facilities etc
2-Advertisements for the opening of the business
3-Salaries and wages for employees who are being trained and their instructiors
4-Travel and other necessary cost for securing prospective distributors, suppliers or customers
5-Salaries and fees for executives and consultants

Question 5

bad debt expense can NOT be claimed if:

Answer 5

cash basis taxpayer

Question 6

Organizational Cost - what is?

Answer 6

Amount paid to organize a corporation are the direct cost of creating corporation

Question 7

Organizational Cost - Examples
Cost of:
TD
OM
SIF
LF

Answer 7

1-Temporary Directors
2-Ortanizational meetings
3-State incorporation fees
4-Legal fees related to set up

Question 8

Organizational cost - to qualify it must be: CHIFA

Answer 8

1-CHargeable to a capital account
2-Incurred before the end of the first tax year of corp being in business
3-For the creation of the corporation
4-Amortized over the life of the corporation if the corp had a fixed life

Question 9

General Business Credits - Qualified childcare facility
% facility expense & resource and referral

Answer 9

25% of facility expenditure
10% of resource and referral expenditure

Question 10

General Business Credits - SEP, SIMPLE IRA, or qualified plan (like a 401(k) plan).
- starting up credit amount

Answer 10

up to 5,000 for the first three years
50% of the cost for set-up and admin of the plan

Question 11

Credits - disable acces credit
% and Limit

Answer 11

50% of the first 10,000

Question 12

The Work Opportunity Credit limit
Max Amount?

Answer 12

$6,000 for an individual year

Question 13

Non-deductible business expenses include:
AL
BK
CC
LE
PC
PF
DE
CD

Answer 13

1-anticipated liabilities
2-bribes and kickbacks
3-charitable contributions (except for C corporation, all
others claim on personal return)
4-lobbying expenses
5-political contributions
6-penalties or fines for violation of law
7-demolition expenses
8-club dues or membership fees

Question 14

general business credit examples:

BF
IC
SEHI
QP
QCF

Answer 14

1- biofuel producer credit
2-investment credit
3-small employer health insurance premiums
4-qualified plan (like a 401(k) plan)
5-Qualified childcare facility

Question 15

The Work Opportunity Credit limit
% betwen how many hours

Answer 15

25% first-year wages of employees working more than 120 but less than 400 hours in the year

40% first-year wages for employees working more than 400 hours in the year

50% second-year wages of employees certified as long-term family assistance recipients

Question 16

General Business Credits - Qualified childcare facility

Credit Limit

Answer 16

credit limit of 150,000 / year

Question 17

Start-up Cost - Amortization time

Answer 17

the standard amortization period for start-up cost paid is 180 month