Question 1

In 2018, all corporations with at least $10 million in assets will be required to file Form 1120, Schedule UTP with their tax returns.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following would not be used to determine if an activity is a business or a hobby?

Accepted Answer

A)  The time spent by the taxpayer in the business 
B)  The number of relatives employed by the taxpayer 
C)  The actual profits of the business 
D)  The expertise of the taxpayer's consultants 
A)  The time spent by the taxpayer in the business 
B)  The number of relatives employed by the taxpayer 
C)  The actual profits of the business 
D)  The expertise of the taxpayer's consultants B

Question 3

Explain the difference between timing differences and permanent differences as related to tax and financial accounting?

Accepted Answer

The recognition of income and expense is not consistent between financial and tax accounting. Some revenues and expenses are recorded for financial purposes but may be excludible from the determination of taxable income (for example, the proceeds of a life insurance policy on an executive and the premiums on that policy if the business is the beneficiary). Any item that is recorded for financial accounting but is never recorded for tax purposes (or vice versa) gives rise to a permanent difference. If a revenue or expense item is recorded in one period for financial purposes but recorded in another period for tax purposes, a timing difference is the result. Over time, however, both the financial and tax records will record the same total revenue or expense.

Question 4

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-A taxpayer may deduct a fine for illegal parking if:

Accepted Answer

A)  No parking spaces are available 
B)  Persons making deliveries to this business regularly receive parking tickets 
C)  The fine does not exceed $50 
D)  Fines are not deductible 
A)  No parking spaces are available 
B)  Persons making deliveries to this business regularly receive parking tickets 
C)  The fine does not exceed $50 
D)  Fines are not deductible

Question 5

What are the basic requirements for a business expense to be deductible?

Accepted Answer

The basic requirements for a b

Question 6

Explain the all events test for expense recognition.

Accepted Answer

The all events test applies to accrual-b

Question 7

A taxpayer can elect to expense immediately or amortize all organization costs over a 15-year period.

Accepted Answer

A) True 
 B)False

Question 8

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Weekend meals and lodging paid for employees when out-of-town business meetings are held on Friday and Monday and these costs are less than the round-trip flight home.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 9

Expenses of a hobby are deductible to the extent of the gross profit from the hobby, but only as miscellaneous itemized deductions before 2018 and after 2025.

Accepted Answer

A) True 
 B)False

Question 10

All of the following would normally result in permanent differences between tax and financial accounting except:

Accepted Answer

A)  Business meal expenses 
B)  Depreciation expense 
C)  Interest income on municipal bonds 
D)  Government fines 
A)  Business meal expenses 
B)  Depreciation expense 
C)  Interest income on municipal bonds 
D)  Government fines

Question 11

Ashley runs a business out of her rental apartment. She uses part of her home exclusively and regularly for this business, her only office space. The office occupies 400 of the 1,600 square feet in her apartment. She earned $3,200 for the year from this business. Her expenses for the entire apartment were $12,000 for rent and $2,200 for utilities. How much is the maximum she can deduct this year for her home office expenses?

Accepted Answer

A)  $2,450 
B)  $3,000 
C)  $3,200 
D)  $3,550 
A)  $2,450 
B)  $3,000 
C)  $3,200 
D)  $3,550

Question 12

Expenses must be ordinary, necessary, and reasonable to be fully deductible.

Accepted Answer

A) True 
 B)False

Question 13

Tachibana Corporation has income per books before tax of $286,000. In computing income per books, Tachibana deducted $20,000 for meals and entertainment expenses, $3,000 for premiums on officers' life insurance policies (the corporation is the beneficiary for these policies), and $100 for fines. What is Tachibana Corporation's taxable income?

Accepted Answer

A)  $286,100 
B)  $289,000 
C)  $289,100 
D)  $299,100 
E)  $303,100 
A)  $286,100 
B)  $289,000 
C)  $289,100 
D)  $299,100 
E)  $303,100

Question 14

A deferred tax asset is the result of the taxes paid exceeding the tax expense on the financial statements.

Accepted Answer

A) True 
 B)False

Question 15

A deferred tax liability

Accepted Answer

A)  causes a business's effective tax rate to differ from the statutory rate. 
B)  can result from financial accounting revenues exceeding those recognized for tax purposes. 
C)  is effectively an interest-free loan from the government. 
D)  All of the above 
E)  (a) and (b) only 
A)  causes a business's effective tax rate to differ from the statutory rate. 
B)  can result from financial accounting revenues exceeding those recognized for tax purposes. 
C)  is effectively an interest-free loan from the government. 
D)  All of the above 
E)  (a) and (b) only

Question 16

Jensen Corporation plans to take a deduction on its tax return that it believes it is more likely than not that it will be sustained. It is not sure, however, of the exact amount that will be realized. It has established the following amounts and probabilities:
   What deduction should Jensen record on its financial statement?

Accepted Answer

$30,000 is the largest amount

Question 17

What is a tax home?

Accepted Answer

The taxpayer's tax home is the

Question 18

George and Jeannie want to open a restaurant. They contribute $3,000 each for a survey to locate an appropriate area for their restaurant and $2,000 each for a real estate agent to locate a suitable building for them to buy. Shortly after this, Jeannie and George have a disagreement and Jeannie walks away from the plan. Although she asks George to reimburse her, he refuses. George then continues the project by himself. He spends $4,000 for legal and accounting fees to set the business up and $8,000 for staff training. What are the tax consequences to George and Jeannie for these expenditures when the restaurant opens in July?

Accepted Answer

Jeannie can do nothing with the money sh

Question 19

A cash basis taxpayer recognizes an expense when the cash is paid or the expense is charged to a credit card.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not included as part of ASC 740?

Accepted Answer

A)  UNICAP Rules 
B)  ABP 23 
C)  FIN 48 
D)  FAS 109 
A)  UNICAP Rules 
B)  ABP 23 
C)  FIN 48 
D)  FAS 109

In 2018, all corporations with at least $10 million in assets will be required to file Form 1120, Schedule UTP with their tax returns.

Which of the following would not be used to determine if an activity is a business or a hobby?

Explain the difference between timing differences and permanent differences as related to tax and financial accounting?

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -A taxpayer may deduct a fine for illegal parking if:

What are the basic requirements for a business expense to be deductible?

Explain the all events test for expense recognition.

A taxpayer can elect to expense immediately or amortize all organization costs over a 15-year period.

Expenses of a hobby are deductible to the extent of the gross profit from the hobby, but only as miscellaneous itemized deductions before 2018 and after 2025.

All of the following would normally result in permanent differences between tax and financial accounting except:

Expenses must be ordinary, necessary, and reasonable to be fully deductible.

A deferred tax asset is the result of the taxes paid exceeding the tax expense on the financial statements.

A deferred tax liability

What is a tax home?

A cash basis taxpayer recognizes an expense when the cash is paid or the expense is charged to a credit card.

Which of the following is not included as part of ASC 740?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 6: Business Expenses

In 2018, all corporations with at least $10 million in assets will be required to file Form 1120, Schedule UTP with their tax returns.

Which of the following would not be used to determine if an activity is a business or a hobby?

Explain the difference between timing differences and permanent differences as related to tax and financial accounting?

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -A taxpayer may deduct a fine for illegal parking if:

What are the basic requirements for a business expense to be deductible?

Explain the all events test for expense recognition.

A taxpayer can elect to expense immediately or amortize all organization costs over a 15-year period.

Expenses of a hobby are deductible to the extent of the gross profit from the hobby, but only as miscellaneous itemized deductions before 2018 and after 2025.

All of the following would normally result in permanent differences between tax and financial accounting except:

Expenses must be ordinary, necessary, and reasonable to be fully deductible.

A deferred tax asset is the result of the taxes paid exceeding the tax expense on the financial statements.

A deferred tax liability

What is a tax home?

A cash basis taxpayer recognizes an expense when the cash is paid or the expense is charged to a credit card.

Which of the following is not included as part of ASC 740?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters