Question 1

An employer's tax deduction for wages is not affected by the work opportunity tax credit.

Accepted Answer

A) True 
 B)False

Question 2

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Accepted Answer

A) True 
 B)False

Question 3

Allan has a tentative general business credit of $220,000 for the current year.His net regular tax liability before the general business credit is $250,000,and his tentative minimum tax is $200,000.Compute Allan's allowable general business credit for the year.

Accepted Answer

Allan's allowable general business credi

Question 4

Refundable tax credits include the:

Accepted Answer

A) Foreign tax credit. 
B) Tax credit for rehabilitation expenses. 
C) Credit for certain retirement plan contributions. 
D) Earned income credit. 
E) None of the above. 
A) Foreign tax credit. 
B) Tax credit for rehabilitation expenses. 
C) Credit for certain retirement plan contributions. 
D) Earned income credit. 
E) None of the above.

Question 5

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit,but also can be expensed in the year incurred.

Accepted Answer

A) True 
 B)False

Question 6

The components of the general business credit include all of the following except:

Accepted Answer

A) Credit for employer-provided child care. 
B) Disabled access credit. 
C) Research activities credit. 
D) Tax credit for rehabilitation expenditures. 
E) All of the above are components of the general business credit. 
A) Credit for employer-provided child care. 
B) Disabled access credit. 
C) Research activities credit. 
D) Tax credit for rehabilitation expenditures. 
E) All of the above are components of the general business credit.

Question 7

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Accepted Answer

A) Employees are not subject to the estimated tax payment provisions. 
B) Any penalty imposed for underpayment is deductible for income tax purposes. 
C) Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return. 
D) No quarterly payments are required if the taxpayer's estimated tax is under $1,000. 
E) None of the above. 
A) Employees are not subject to the estimated tax payment provisions. 
B) Any penalty imposed for underpayment is deductible for income tax purposes. 
C) Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return. 
D) No quarterly payments are required if the taxpayer's estimated tax is under $1,000. 
E) None of the above.

Question 8

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him.Ahmad,who normally itemizes his deductions,is in the 28% marginal tax bracket.If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment,what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?

Accepted Answer

A) $0,take neither the itemized deduction nor the tax credit. 
B) $2,500,take the tax credit. 
C) $2,800,take the itemized deduction. 
D) Both options produce the same benefit. 
E) None of the above. 
A) $0,take neither the itemized deduction nor the tax credit. 
B) $2,500,take the tax credit. 
C) $2,800,take the itemized deduction. 
D) Both options produce the same benefit. 
E) None of the above.

Question 9

Green Company,in the renovation of its building,incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

Accepted Answer

A) $8,750. 
B) $4,500. 
C) $4,375. 
D) $4,250. 
E) None of the above. 
A) $8,750. 
B) $4,500. 
C) $4,375. 
D) $4,250. 
E) None of the above.

Question 10

Which of the following statements regarding the adoption expenses credit is not true?

Accepted Answer

A) The adoption expenses credit is a nonrefundable credit. 
B) The adoption expenses credit starts to be phased out in 2010 beginning when a taxpayer's modified AGI exceeds $182,520. 
C) No adoption expenses credit is a available in 2010 if a taxpayer's modified AGI exceeds $222,520. 
D) The adoption expenses credit is limited to no more than $12,100 per eligible child in 2010. 
E) All of the above statements are true. 
A) The adoption expenses credit is a nonrefundable credit. 
B) The adoption expenses credit starts to be phased out in 2010 beginning when a taxpayer's modified AGI exceeds $182,520. 
C) No adoption expenses credit is a available in 2010 if a taxpayer's modified AGI exceeds $222,520. 
D) The adoption expenses credit is limited to no more than $12,100 per eligible child in 2010. 
E) All of the above statements are true.

Question 11

During the year,Green Corporation (a U.S.corporation)has U.S.-source income of $1,500,000 and foreign income of $1,000,000.The foreign-source income generates foreign income taxes of $480,000.The U.S.income tax before the foreign tax credit is $850,000.Green Corporation's foreign tax credit is:

Accepted Answer

A) $340,000. 
B) $480,000. 
C) $850,000. 
D) $1,000,000. 
E) None of the above. 
A) $340,000. 
B) $480,000. 
C) $850,000. 
D) $1,000,000. 
E) None of the above.

Question 12

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 13

A LIFO method is applied to general business credit carryovers,carrybacks,and utilization of credits earned during a particular year.

Accepted Answer

A) True 
 B)False

Question 14

BlueCo incurs $500,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.The credit for employer-provided child care available to BlueCo this year is $100,000.

Accepted Answer

A) True 
 B)False

Question 15

A small employer incurs $1,800 for consulting fees related to establishing a qualified retirement plan for its 85 employees.As a result,the employer may claim the credit for small employer pension plan startup costs for $900.

Accepted Answer

A) True 
 B)False

Question 16

During 2010,Eleanor earns $146,000 in wages as an employee of an accounting firm.She also earns $26,000 in gross income from an outside consulting service she operates.Deductible expenses paid in connection with the consulting service amount to $6,000.Eleanor also has a recognized long-term capital gain of $1,000 from the sale of a stock investment.She must pay a self-employment tax on:

Accepted Answer

A) $0. 
B) $20,000. 
C) $26,000. 
D) $27,000. 
E) None of the above. 
A) $0. 
B) $20,000. 
C) $26,000. 
D) $27,000. 
E) None of the above.

Question 17

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Accepted Answer

A) True 
 B)False

Question 18

Discuss the treatment of unused general business credits.

Accepted Answer

Unused general business credits are init

Question 19

The American Opportunity credit is available per eligible student,while the lifetime learning credit is calculated per taxpayer.

Accepted Answer

A) True 
 B)False

Question 20

The tax credit for rehabilitation expenditures for certified historic structures does not differ from that for qualifying structures that are not certified historic structures.

Accepted Answer

A) True 
 B)False

Exam 12: Tax Credits and Payments

An employer's tax deduction for wages is not affected by the work opportunity tax credit.

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Allan has a tentative general business credit of $220,000 for the current year.His net regular tax liability before the general business credit is $250,000,and his tentative minimum tax is $200,000.Compute Allan's allowable general business credit for the year.

Refundable tax credits include the:

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit,but also can be expensed in the year incurred.

The components of the general business credit include all of the following except:

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Green Company,in the renovation of its building,incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

Which of the following statements regarding the adoption expenses credit is not true?

During the year,Green Corporation (a U.S.corporation)has U.S.-source income of $1,500,000 and foreign income of $1,000,000.The foreign-source income generates foreign income taxes of $480,000.The U.S.income tax before the foreign tax credit is $850,000.Green Corporation's foreign tax credit is:

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

A LIFO method is applied to general business credit carryovers,carrybacks,and utilization of credits earned during a particular year.

BlueCo incurs $500,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.The credit for employer-provided child care available to BlueCo this year is $100,000.

A small employer incurs $1,800 for consulting fees related to establishing a qualified retirement plan for its 85 employees.As a result,the employer may claim the credit for small employer pension plan startup costs for $900.

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Discuss the treatment of unused general business credits.

The American Opportunity credit is available per eligible student,while the lifetime learning credit is calculated per taxpayer.

The tax credit for rehabilitation expenditures for certified historic structures does not differ from that for qualifying structures that are not certified historic structures.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation,cost Recovery,amortization,and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters