REG mod 35e

Question 1

How is the gain calculated when a taxpayer reinvests all of the proceeds received from an involuntary transaction?

Answer 1

Assuming the taxpayer reinvests in a similar asset, there is no gain if all of the proceeds from the involuntary transaction are reinvested.

Question 2

How many years does a taxpayer have to file an amended return for a refund?

Answer 2

Three years from the date of filing the return or two years from the date the tax was actually paid.
The taxpayer is permitted to use the later of the two dates.

Question 3

How many years must a tax return preparer maintain the tax returns (or information about the returns)?

Answer 3

Three years

Question 4

Identify the significant ACE adjustments in the AMT calculation.

Answer 4

Municipal bond interest, life insurance proceeds, dividends received deduction (70%)

Question 5

If income is realized, but not recognized, should it be included in taxable income?

Answer 5

No. The income must be realized and recognized.

Question 6

In general what is the statute of limitations on a tax return?

Answer 6

Three years

Question 7

In general, are losses permitted to be deducted for a hobby?

Answer 7

Generally, no.

Question 8

In general, how is the gain / loss on the sale of property calculated?

Answer 8

Selling price less adjusted basis of the property equals the gain / loss

Question 9

In general, S Corporations do not pay corporate taxes. The income flows-through to the shareholders. True / False

Answer 9

TRUE

Question 10

Individuals are not permitted to appear on their own behalf before the IRS. True / False

Answer 10

False. Individuals may appear on their own behalf before the IRS.

Question 11

Is a taxpayer allowed to claim a full year’s exemption for a child born on December 31st?

Answer 11

Yes. A full exemption may be claimed for anyone who is born during the year.

Question 12

Is it more advantageous for a married couple to use the filing status married filing joint or married filing separately?

Answer 12

Married Filing Joint is more advantageous

Question 13

Is it possible for a trust to have a net operating loss?

Answer 13

Yes, and the unused portion flows through to the beneficiaries of the trust.

Question 14

Is the adoption credit a refundable credit?

Answer 14

No, the adoption credit is a non-refundable credit.

Question 15

Is the credit for adoption expense a refundable credit?

Answer 15

No, it is a non-refundable credit. Note: during 2010 and 2011 this was a refundable credit