Exam 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

The definition of medical care includes preventive measures such as routine physical examinations.

If a company acquires goodwill in connection with the acquisition of a business, the goodwill is amortizable over a 60- month period.

Super Development Company purchased land in the current year from Riverside Chemicals, Inc. The land was contaminated with harmful pollutants, so Super Development paid $1,000,000 to remove the contaminants. What tax issue(s) should be considered before Super files its current year tax return?

Generally, if inventories are an income- producing factor to a small business, the accrual method must be used for sales and cost of goods sold.

For each of the following independent cases below, indicate whether the entity will be taxed as an S corporation corporation for the respective period. a. Richards Corporation, uses the calendar year as its tax year. It files an S election on March 31, 2018. If no reas cause is shown, how will Richards Corporation be treated for tax purposes in 2018? b. Shareholders owning more than 50% of the stock of Harper Corporation, a qualifying calendar- year S corporation, consent to a voluntary revocation statement filed by the corporation on March 12, 2018. How will H Corporation be treated for tax purposes in 2018? c. Shareholders owning more than 50% of the stock of Hazelwood Corporation, a qualifying calendar- year S corporation, consent to a voluntary revocation statement filed by the corporation on March 12, 2018. The prospec termination date is July 1, 2018. How will Hazelwood Corporation be treated for tax purposes in 2018? d. One of the shareholders of Omni Corporation, a calendar- year S corporation, sells his stock to a Canadian individual on July 8, 2018.

List the steps in the legislative process for major tax reform.

All the following are types of pass- through entities except

For corporations, both NLTCLs and NSTCLs are eligible for a 3- year carryback and a 5- year carryforward as an offset against capital gains for those years.

Pierce has a $16,000 Sec. 1231 loss, a $12,000 Sec. 1231 gain, and a salary of $50,000. What is the treatment of these items in Pierce's AGI?

When are home- office expenses deductible?

In September of 2018, Michelle sold shares of qualified small business stock for $1,000,000 that had a basis of $200,000. She had held the stock for 17 months. Forty- five days after the sale she purchased other qualified small business stock for $1,100,000. What is the basis in the new stock she purchased?

Pass- through entities include all of the following types of entities except

Grace has AGI of $60,000 in 2018 and 2019. She makes cash contributions to public charities of $40,000 in 2018 and $37,000 in 2019. Grace's charitable contribution carryover to 2020 is

A corporation has the following capital gains and losses during the current year: The tax result to the corporation is

A taxpayer who uses the LIFO method of inventory valuation may use the lower of cost or market method.

A taxpayer's tentative minimum tax exceeds his net income tax so he will be paying the alternative minimum tax this year. The taxpayer has a sole proprietorship through which he has earned general business credits. The taxpayer can reduce his AMT to the extent of his general business credits.

If an individual is liable for self- employment tax, a portion of the self- employment tax is

Employers must report the value of nontaxable meals and lodging provided to employees on the employees' W- 2s at year- end.

A corporation has revenue of $350,000 and deductible business expenses of $240,000. What is the federal income tax, before credits?

Corporate charitable deductions are limited to 10% of the corporation's taxable income for the year.