Deck 37

Question 1

Capital expenditure for the improvement of a home is deductible to the extent that:

Answer 1

The expenditure exceeds the increase in the value of the home (Difference between improvement and cost)

Question 2

Accumulated earnings tax can be imposed regardless of:

Answer 2

The number of stockholders in a corporation

Question 3

An option held by an investor is considered what kind of asset:

Answer 3

Capital asset

Question 4

The cost of worthless stock or securities is treated as:

Answer 4

A capital loss as if they were sold on the last day of the taxable year

Question 5

A holder in due course is only subject to what kind of defenses:

Answer 5

Real defenses (fraud in the execution, insolvency, and infancy are real defenses). Breach of contract is not a real defense

Question 6

In filing a consolidated federal income tax return, a corporate group eliminates:

Answer 6

Dividends

Question 7

For a corporation, a net long-term capital loss is not deductible in the:

Answer 7

Current year (carry back 3 and forward 5 years)

Question 8

2015 maximum allowable 179 deduction

Answer 8

$25,000

Question 9

Goods sold for over $500 do not have to be in writing if the following take place:

Answer 9

SWAP (Specialty manufactured goods, written confirmation, admitted in court, and performed)

Question 10

American opportunity credit calculation =

Answer 10

First $2,000 + 25% of the next amount up to $2000

Question 11

Lifetime learning credit =

Answer 11

20% of qualified expenses up to $10,000

Question 12

What qualifies as a like-kind exchange?

Answer 12

Investment land for building to be used in a trade or business

Question 13

General advertising is prohibited in under what rules:

Answer 13

Regulation D 505 and 506

Question 14

How does a return of capital effect basis?

Answer 14

Reduces shareholders basis

Question 15

What kind of income is not considered personal holding company income?

Answer 15

Bonuses

Question 16

Non qualified stock is recognized as:

Answer 16

Ordinary income

Question 17

Complex trust

Answer 17

Distribute principal

Question 18

Building is subject to a mortgage that is assumed by the partnership, how is the partners interest affected?

Answer 18

The basis is reduced by the liabilities assumed by the other partners

Question 19

A seller is entitled to recover the full contract price from the buyer when the:

Answer 19

Goods are destroyed while the risk of loss is with the buyer

Question 20

A reorganization plan under Ch. 11 will not be approved unless the plan provides for:

Answer 20

The full payment of administration expenses

Question 21

Preferential payment is:

Answer 21

1) transfer made to or for the benefit of a creditor; 2) on account of an antecedent debt; 3) Made within 90 days prior to the filing of a petition; and 4) results in the creditor receiving more than the creditor would have received under the bankruptcy code

Question 22

Immediately upon filing of a petition in bankruptcy, creditors are:

Answer 22

Stopped from pursuing collection actions against the debtor (automatic stay)

Question 23

What kind of income is subject to self-employment tax?

Answer 23

Earned compensation (guaranteed payments, not ordinary income from an S Corp.)

Question 24

When a tax return has not been filed, any claim for refund must be made within:

Answer 24

2 years from the time the tax was paid

Question 25

A taxpayer can file a claim for refund by the later of:

Answer 25

3 years from the time the return was filed, 3 years from the original due date of the return, or two years from the time the tax was paid

Question 26

Corporations basis =

Answer 26

Carryover + any cash paid (doesn’t include mortgages)

Question 27

The value of a partnership interest acquired for services rendered is:

Answer 27

Ordinary income to the partner (at FMV)

Question 28

In a liquidating distribution, we have to:

Answer 28

Zero out to get out (Even if the items value is less than what it would be to zero out)