Deck 12

Question 1

What costs cannot be amortized for tax purposes?

Answer 1

stock issuance costs

Question 2

What is the maximum amount of capital losses in excess of capital gains that a C corporation may deduct in a year?

Answer 2

Corporations may not deduct any capital losses in excess of capital gains in a year

Question 3

A personal service corporation (PSC) is primarily involved in the performance of one of the following fields:

Answer 3

Accounting, law, consulting, engineering, architecture, healthy, and actuarial science

Question 4

A personal services corporation may only deduct payments to an employee-owner in the year it is:

Answer 4

Included in income by the recipient

Question 5

Taxes payable under the Federal Unemployment Tax Act (FUTA):

Answer 5

Credits for this tax are allowed to employers for certain state unemployment taxes paid by the employer.

Question 6

General rule for corporations:

Answer 6

No gain or loss recognized

Question 7

Basis of property that corporation receives is the greater of:

Answer 7

adjusted basis (net book value) or debt assume by corporation

Question 8

Basis in property is:

Answer 8

Net book value (nontaxable)

Question 9

Basis in services:

Answer 9

fair market value (taxable)

Question 10

What happens when liabilities exceed the basis:

Answer 10

Gain is recognized for the excess

Question 11

Stock basis =

Answer 11

NBV assets - liability

Question 12

Examples of miscellaneous itemized deductions:

Answer 12

unreimbursed business expenses, business gifts,

Question 13

Health insurance premiums paid by a self-employed individual are:

Answer 13

100% deductible as an adjustment from AGI

Question 14

Penalties on early withdrawals of savings are: adjustment for AGI or from AGI?

Answer 14

Adjustment for AGI

Question 15

Do qualifying medical expenses include drug treatments?

Answer 15

Yes; treatment, lodging, and meals are all covered

Question 16

Schedule A

Answer 16

Personal expenses

Question 17

Health insurance premiums that are deductible include:

Answer 17

premiums paid by a set-employed individual, insurance premiums paid by a taxpayer with after-tax dollars (Personal disability premiums are not deductible

Question 18

Interest expense that is not deductible includes:

Answer 18

Mortgage interest paid on commercial property, interest paid on personal credit cards, and interest paid to IRS for late filing of income tax return

Question 19

schedule M-1

Answer 19

Reconciles permanent and temporary differences between book income and taxable income

Question 20

Domestic Production Deduction:

Answer 20

9% of the lessor of: 1) qualified production activities income or 2) taxable income