Filing Requirements and Status

Question 1

Early withdrawal penalty for investments in a CD is considered:
A. Deduction
B. Adjustment to Gross Income
C. Tax Credit

Answer 1

B. Adjustment to Gross Income

Question 2

Even if the stockholder has the option to receive cash instead of a stock dividend, the stock dividend remains non-taxable: TRUE or FALSE

Answer 2

FALSE.

If the stockholder has the option to receive cash instead of a stock dividend, the stock dividend is taxable at its FMV.

Question 3

Shareholders for this business entity must include on their personal ITR their distributive share of each separate “pass-through” items and are taxed on these whether these items have been distributed to them or not:
A. C Corporation
B. O Corporation
C. S Corporation

Answer 3

C. S Corporation

Question 4

Options that qualify as incentive stock options (ISO) can be recognized as income when received: TRUE or FALSE?

Answer 4

FALSE.

ISO cannot be recognized as income when received.