Reg 6

Question 1

Stock surrender income recognition

Answer 1

Exchange for cash - adjusted basis in 2,000 shares

Question 2

Co-sureties: if one the surety is discharged

Answer 2

The other surety will be liable for 50%

Note: the surety disharged is not release from the debt

Question 3

Interest earned in tax-exempt obligations

Answer 3

Is included in gross income but not in personal holding company income

Question 4

Dividend received from an unrelated domestic corporation

Answer 4

Personal holding income

Question 5

Individuals may deduct a net capital loss of

Answer 5

$3,000

Question 6

fringe benefit own over 2% in s corporation

Answer 6

Are included in gross incomeof the shareholder/employee

Question 7

Plaintiff must show 4 elements to make a case for negligence cpa

Answer 7

1. Plaintiff must show the defendant owed a duty of care to the plaintiff
2. The defendant breached that duty bu failing at with due care
3. The breach caused the plaintiff injury, and damages.

Question 8

Action of cancelling a contract and restoring the parties to their original position before the contract

Answer 8

Rescission

Question 9

With respect to the penalty for aiding and abetting an understatement of tax liability and ok a tax return

Answer 9

The burden of proof shifts to the IRS from the taxpayer

Question 10

Tender of the good and use of seller truck to deliver goods

Answer 10

Doesn’t mean the risk is passed

Question 11

Preliminary prospectus

Answer 11

Red-herring

Question 12

Medical expense paid to decendant within 1 year of her death

Answer 12

Final income tax return

Question 13

Loss on involuntary conversion

Answer 13

Building carrying amount + removal and cleanup cost = basis of involuntary conversion - insurance proceeds = loss on involuntary conversion

Question 14

100% dividend received deduction for foreign sources dividends is available

Answer 14

Only to corporate shareholders who own at least 10% of the foreign corporation

Question 15

When partner sells his partnership interest

Answer 15

A capital gain or loss on the sale is recognized

Question 16

Net capital losses

Answer 16

Carried back 3 years and forward 5 years

Question 17

Child dependent care credit

Answer 17

Only apoly to children less than 13 years old. The credit is 20% of lowest salary

Question 18

Initial basis of partnership

Answer 18

Remember add any debt liability

Question 19

Agreement silent as to duration

Answer 19

Partner may dissociate from a partnership at any time

Question 20

Items that qualify for unlimited exclusion from gift tax

Answer 20

1. Payment made directly to an educational institution for a donee’s tuition
2. Payments made directly to a healt care provider for medical care
3. Charitable gifts
4. Marital transfer

Question 21

Code section 1244 loss

Answer 21

Ordinary loss (50,000 single taxpayer)