Deck 38

Question 1

A holder in due course will take free from of which kind of defenses

Answer 1

Personal defenses

Question 2

For a corporation to dissolve voluntarily, what must happen?

Answer 2

Board of directors must adopt a resolution recommending program

Question 3

Excess tax amortization over book impairment of goodwill is:

Answer 3

Subtracted from book income

Question 4

Paying common stock dividends increases:

Answer 4

The number of shares by multiplying the number of shares times the percentage

Question 5

Partner’s deductible loss is limited to:

Answer 5

His basis plus any amounts that he is personally liable for

Question 6

Endorsing a negotiable instrument “without recourse” negates what kind of liability?

Answer 6

Contract liability (not warranty liability)

Question 7

Short-term capital gain property (less than a year) is deducted at its:

Answer 7

Basis

Question 8

Property acquired as a gift generally retains what amount?

Answer 8

The rollover cost basis

Question 9

A payment can only be set aside as a preferential transfer if the creditor being paid is:

Answer 9

An unsecured creditor or not fully secured

Question 10

Worthless stock vs. section 1244 stock

Answer 10

Worthless stock can be deducted against long-term capital gains…1244 stock is ordinary income

Question 11

A distribution is tax free to the extent of the:

Answer 11

Accumulated adjustments account balance

Question 12

Expenses recorded on the books not deducted on the return (add or subtract)

Answer 12

Add them back to taxable income

Question 13

Tax-exempt interest must be __________ to taxable income?

Answer 13

Added back because it is not taxable on the tax return

Question 14

What actions will result in the discharge of a party to a contract?

Answer 14

Prevention of performance and Accord and satisfaction

Question 15

What is an example of something not included in self-employment income?

Answer 15

Salaries (Wages are included)

Question 16

When is a traditional IRA not deductible?

Answer 16

When the individual is rich and is covered by a pension plan

Question 17

Partnership income is taxable to a partner whether or not it is:

Answer 17

Distributed

Question 18

The preferential period is extended to one year when the individual is an:

Answer 18

Insider

Question 19

Three requirements must be met to be successfully petitioned involuntarily into bankruptcy:

Answer 19

1) Debtor must owe at least $15, 325 in unsecured debt; 2) If there are 12 or more creditors, at least 3 with unsecured claims aggregating at least $15,325 must join in the petition; otherwise one or more creditors with at least $15,325 in unsecured claims may file; 3) The debtor is unable pay debts as they become due

Question 20

A court appointed trustee may serve as both a:

Answer 20

Trustee and its tax return preparer if authorized by the court

Question 21

A payment cannot be preferential if it:

Answer 21

Was made within the ordinary course of business