Question 1

Define the term "nonresident alien" and discuss the special tax consequences of U.S. taxation on various types of income of a nonresident alien.

Accepted Answer

A nonresident alien is an alien who does

Question 2

Identify which of the following statements is true.

Accepted Answer

A)  The repeal of Sec. 351 would result in more existing businesses being incorporated. 
B)  The exchange of stock for services rendered is not a taxable transaction. 
C)  Section 351 was enacted to allow taxpayers to incorporate without incurring adverse tax consequences. 
D)  All of the above are false. 
A)  The repeal of Sec. 351 would result in more existing businesses being incorporated. 
B)  The exchange of stock for services rendered is not a taxable transaction. 
C)  Section 351 was enacted to allow taxpayers to incorporate without incurring adverse tax consequences. 
D)  All of the above are false.

Question 3

There are no tax consequences of a partnership converting to a C corporation.

Accepted Answer

A) True 
 B)False

Question 4

Jacque, a single nonresident alien, is in the United States for 80 days in the current year engaging in the conduct of a U.S. trade or business. Jacque has $30,000 of dividend income paid by a U.S. corporation on a stock investment portfolio unrelated to his trade or business. How will the dividend be taxed and how will the tax be collected?

Accepted Answer

The United States taxes the dividend inc

Question 5

Which of the following is an advantage of a sole proprietorship over other business forms?

Accepted Answer

A)  low tax rates on dividends 
B)  tax- exempt treatment of fringe benefits 
C)  the deduction for compensation paid to the owner 
D)  ease of formation 
A)  low tax rates on dividends 
B)  tax- exempt treatment of fringe benefits 
C)  the deduction for compensation paid to the owner 
D)  ease of formation

Question 6

Jeremy transfers Sec. 351 property acquired three years earlier having a $100,000 basis and a $160,000 FMV to Jeneva Corporation. Jeremy receives all 200 shares of Jeneva stock having a
$140,000 FMV, and a $20,000 90- day Jeneva note. What is Jeremy's recognized gain?

Accepted Answer

A)  $160,000 
B)  $0 
C)  $60,000 
D)  $20,000 
A)  $160,000 
B)  $0 
C)  $60,000 
D)  $20,000

Question 7

Three members form an LLC in the current year. Which of the following statements is incorrect?

Accepted Answer

A)  The LLC's default classification under the check- the- box rules is as a partnership. 
B)  The LLC can elect to be taxed as a C corporation with no special tax consequences. 
C)  If the LLC elects to use its default classification, it can elect to change its status to being taxed as a C corporation beginning with the third tax year after the initial classification. 
D)  The LLC can elect to have its default classification ignored. 
A)  The LLC's default classification under the check- the- box rules is as a partnership. 
B)  The LLC can elect to be taxed as a C corporation with no special tax consequences. 
C)  If the LLC elects to use its default classification, it can elect to change its status to being taxed as a C corporation beginning with the third tax year after the initial classification. 
D)  The LLC can elect to have its default classification ignored.

Question 8

What are the five major income categories that are taxed under the Subpart F rules? Explain the concept of Subpart F income.

Accepted Answer

1) Income from the insurance of U.S. and

Question 9

Which of the following statements is incorrect?

Accepted Answer

A)  In a limited partnership, all partners participate in managerial decision making. 
B)  Limited partners' liability for partnership debt is limited to their amount of investment. 
C)  In a general partnership, all partners have unlimited liability for partnership debts. 
D)  All of the above are correct. 
A)  In a limited partnership, all partners participate in managerial decision making. 
B)  Limited partners' liability for partnership debt is limited to their amount of investment. 
C)  In a general partnership, all partners have unlimited liability for partnership debts. 
D)  All of the above are correct.

Question 10

Silvia transfers to Leaf Corporation a machine she had purchased a year ago for $50,000. The machine has a $40,000 adjusted basis and a $55,000 FMV on the transfer date. $10,000 in depreciation was claimed by Silvia prior to the transfer. Silvia receives all 1,000 shares of Leaf Corporation stock worth $50,000 and a two- year note with a $5,000 FMV. What is the amount and character of the recognized gain or loss?

Accepted Answer

A)  $5,000 capital gain 
B)  $15,000 capital gain 
C)  $15,000 ordinary income 
D)  $5,000 ordinary income 
A)  $5,000 capital gain 
B)  $15,000 capital gain 
C)  $15,000 ordinary income 
D)  $5,000 ordinary income

Question 11

Michael contributes equipment with a $25,000 adjusted basis and a $40,000 FMV to Miller Corporation for 25 of its 50 shares of stock. His son, Michael Jr., contributes $10,000 cash for the remaining 25 Miller shares. What tax issues should Michael and his son consider with respect to the stock acquisitions?

Accepted Answer

• Does the property transfer meet the Se

Question 12

On July 9, 2008, Tom purchased a computer (five- year property for MACRS purposes) for $6,000, which he used in his sole proprietorship. He claimed $1,200 (0.20 × $6,000) of depreciation for 2008. On February 9, 2009, he transfers the computer and other assets of his sole proprietorship to Brewer Corporation in exchange for Brewer stock in a transfer qualifying under Sec. 351. What is the amount of depreciation for 2008 claimed by Tom? What is the amount of depreciation for 2009 claimed by Brewer Corporation? What is Brewer's basis in the computer on the date of transfer?

Accepted Answer

Brewer Corporation must use the same MAC

Question 13

Domestic corporation B owns 200 of the 400 outstanding shares of foreign corporation K's stock. U.S. citizen R owns the remaining K stock. The domestic corporation held the stock for 40 days two years ago, 365 days last year, and 80 days this year. None of K's income is Subpart F income. The foreign corporation has E&P of $50,000 for each of the three years in question. None of the years is a leap year. On the 80th day of the current year, the stock is sold by B to R in a transaction in which a $100,000 gain is recognized by B. What part of B's gain is capital gain?

Accepted Answer

The answer of Domestic corporation B owns 200 of the...

Question 14

Azar, who owns 100% of Hat Corporation, transfers land having a $50,000 FMV and a $30,000 adjusted basis to Hat. In return, Azar receives additional shares of Hat common stock having a $40,000 FMV and Cap Corporation common stock having a $10,000 FMV. The Cap Corporation common stock, a capital asset, has a
$2,500 basis on Hat's books. What is Azar's realized and recognized gain? Does Hat Corporation recognize a gain on the stock transfer to Azar?

Accepted Answer

Azar realizes a $20,000 ($40,000 + $10,0

Question 15

Identify which of the following statements is true.

Accepted Answer

A)  One tax avoidance practice which Sec. 482 attempts to prevent is the transfer of tangible property to a foreign subsidiary at a price which is below the arm's- length price that would be used by unrelated parties. 
B)  Section 482 permits the IRS to restructure transactions between related parties as if the transactions were conducted at arm's length. 
C)  Foreign- based company sales income is earned when personal property is purchased by a Country X controlled foreign corporation (CF
C)  from its U.S. parent corporation and is sold to unrelated persons in Country Z. 
D)  All of the above are true. 
A)  One tax avoidance practice which Sec. 482 attempts to prevent is the transfer of tangible property to a foreign subsidiary at a price which is below the arm's- length price that would be used by unrelated parties. 
B)  Section 482 permits the IRS to restructure transactions between related parties as if the transactions were conducted at arm's length. 
C)  Foreign- based company sales income is earned when personal property is purchased by a Country X controlled foreign corporation (CF
C)  from its U.S. parent corporation and is sold to unrelated persons in Country Z. 
D)  All of the above are true.

Question 16

On May 1 of the current year, Kiara, Victor, Pam, and Joe form Newco Corporation with the following investme
Property Transferred   Kiara purchased the land and building several years ago for $12,000 and $50,000, respectively. Kiara has claimed straight- line depreciation on the building. Victor also received a Newco Corporation note for $10,000 due in thre The note bears interest at a rate acceptable to the IRS. Victor purchased the equipment three years ago for $50,00 also receives $5,000 cash. Pam purchased the van two years ago for $20,000.
a) Does the transaction satisfy the requirements of Sec. 351?
b) What are the amounts and character of the reorganized gains or losses to Kiara, Victor, Pam, Joe, and Newco Corporation?
c) What is each shareholder's basis for his or her Newco stock? When does the holding period for the stock beg
d) What is Newco Corporation's basis for its property and services? When does its holding period begin for eac property?

Accepted Answer

a) Yes, the transaction meets the requir

Question 17

Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Wayne contributes services for 15% of the stock. The tax effect is

Accepted Answer

A)  Wayne must report the FMV of the stock received as capital gain. 
B)  Rose and Wayne are not required to recognize their realized gains. 
C)  Wayne must report the FMV of the stock received as ordinary income. 
D)  Rose and Wayne must recognize their realized gains, if any. 
A)  Wayne must report the FMV of the stock received as capital gain. 
B)  Rose and Wayne are not required to recognize their realized gains. 
C)  Wayne must report the FMV of the stock received as ordinary income. 
D)  Rose and Wayne must recognize their realized gains, if any.

Question 18

Karen, a U.S. citizen, earns $40,000 of taxable income from U.S. sources, $20,000 in taxable wages from Country A and $20,000 in taxable interest from Country B. The U.S. tax rate is 25%. The tax on Country A income is $8,000, and Country B charges no tax on the interest income. Assuming two baskets are needed for the two types of income because the interest is passive income, Karen's foreign tax credit that can be claimed is

Accepted Answer

A)  $10,000. 
B)  $20,000. 
C)  $5,000. 
D)  none of the above 
A)  $10,000. 
B)  $20,000. 
C)  $5,000. 
D)  none of the above

Question 19

Which of the following statements is incorrect?

Accepted Answer

A)  S corporation losses can offset shareholder income from other sources. 
B)  S corporation income is taxed to shareholders when earned. 
C)  S corporations must allocate income and expenses to their shareholders based on their proportionate ownership interest. 
D)  The number of S corporation shareholders is unlimited. 
A)  S corporation losses can offset shareholder income from other sources. 
B)  S corporation income is taxed to shareholders when earned. 
C)  S corporations must allocate income and expenses to their shareholders based on their proportionate ownership interest. 
D)  The number of S corporation shareholders is unlimited.

Question 20

Income derived from the sale of merchandise inventory (i.e., final goods purchased for resale) are sourced in the country where the sale occurs.

Accepted Answer

A) True 
 B)False

Define the term "nonresident alien" and discuss the special tax consequences of U.S. taxation on various types of income of a nonresident alien.

Identify which of the following statements is true.

There are no tax consequences of a partnership converting to a C corporation.

Which of the following is an advantage of a sole proprietorship over other business forms?

Jeremy transfers Sec. 351 property acquired three years earlier having a $100,000 basis and a $160,000 FMV to Jeneva Corporation. Jeremy receives all 200 shares of Jeneva stock having a $140,000 FMV, and a $20,000 90- day Jeneva note. What is Jeremy's recognized gain?

Three members form an LLC in the current year. Which of the following statements is incorrect?

What are the five major income categories that are taxed under the Subpart F rules? Explain the concept of Subpart F income.

Which of the following statements is incorrect?

Identify which of the following statements is true.

Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Wayne contributes services for 15% of the stock. The tax effect is

Which of the following statements is incorrect?

Income derived from the sale of merchandise inventory (i.e., final goods purchased for resale) are sourced in the country where the sale occurs.

Tax Research

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters

Exam 2: Corporate Formations and Capital Structure

Define the term "nonresident alien" and discuss the special tax consequences of U.S. taxation on various types of income of a nonresident alien.

Identify which of the following statements is true.

There are no tax consequences of a partnership converting to a C corporation.

Which of the following is an advantage of a sole proprietorship over other business forms?

Jeremy transfers Sec. 351 property acquired three years earlier having a $100,000 basis and a $160,000 FMV to Jeneva Corporation. Jeremy receives all 200 shares of Jeneva stock having a $140,000 FMV, and a $20,000 90- day Jeneva note. What is Jeremy's recognized gain?

Three members form an LLC in the current year. Which of the following statements is incorrect?

What are the five major income categories that are taxed under the Subpart F rules? Explain the concept of Subpart F income.

Which of the following statements is incorrect?

Identify which of the following statements is true.

Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Wayne contributes services for 15% of the stock. The tax effect is

Which of the following statements is incorrect?

Income derived from the sale of merchandise inventory (i.e., final goods purchased for resale) are sourced in the country where the sale occurs.

Tax Research

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters