ACC 565 Final Exam Guide

Question 1

Barbara sells a house with an FMV of $170,000 to her daughter for $120,000. From this transaction, Barbara is deemed to have made a gift (before the annual exclusion) of                        

Question 2

If a state has adopted the Revised Uniform Principal and Income Act, which of the following statements is correct?                         

Question 3

Jackson and Tanker Corporations are members of an affiliated group. The two corporations have been affiliated since they were formed last year. Both corporations have always used a calendar year as their tax year. Tanker, the subsidiary, has a separate return year NOL of $14,000 from last year. Jackson Corporation has a separate return year NOL of $16,000 from last year. Commencing this year, the two corporations filed a consolidated tax return. The NOLs can be carried over                              

Question 4

Virginia gave stock with an adjusted basis of $8,000 and an FMV of $10,000 to Carmen. No gift tax was paid on the transfer. Carmen then sold the stock for $9,000. The gain or loss Carmen will recognize on the sale is                          

Question 5

If a partnership chooses to form an LLC, under the check-the-box rules, and assuming no elections are made, the entity will be taxed as                         

Question 6

Revocable trusts means                            

Question 7

Identify which of the following statements is true.                                

Question 8

Identify which of the following statements is true.                                

Question 9

Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2009. Tex and Shirley each own 50% of the stock and have a basis in their stock of $50,000 on January 1, 2009. Cactus does not make any distributions during 2009, but had $200,000 of ordinary income. In 2010, ordinary income was $100,000 and distributions were $100,000. What is Tex’s basis at January 1, 2011?                          

Question 10

Tax return preparers can be penalized for the following activities except                                   

Question 11

An intervivos trust may be created by all of the following except                                  

Question 12

Identify which of the following statements is true.                                

Question 13

Michael died in 2013 with a taxable estate and estate tax base of $6,000,000. Michael’s estate owed no state death taxes. Michael’s estate includes $250,000 of income in respect of a decedent (IRD), none of which is received by his surviving spouse. His estate had no DRD. The estate collects $200,000 of the IRD during its current tax year. The Sec. 691(c) deduction for the estate in current year is                        

Question 14

Which of the following corporations is entitled to join in a consolidated tax return without making a special election?                           

Question 15

Susan contributed land with a basis of $6,000 and an FMV of $10,000 to the SH Partnership two years ago to acquire her partnership interest. This year, the land is distributed to Harry when its FMV is $11,000. No other distributions have been made since Susan became a partner. When the land is distributed, the partnership’s basis in the land immediately before distribution is increased by                   

Question 16

What is the penalty for a tax return preparer who willfully attempts to understate taxes, or intentionally disregards the tax rules and regulations?                         

Question 17

When computing the partnership’s ordinary income, a deduction is allowed for            

Question 18

Identify which of the following statements is true.                                

Question 19

A consolidated return’s tax liability is owed by                          

Question 20

Terry files his return on March 31. The return shows taxes of $6,000, and Terry pays this entire amount when he files his return. By what time must he file a claim of refund?              

Question 21

The IRS provides advice concerning an issue that arises during an audit by issuing                  

Question 22

In computing the ordinary income of a partnership, a deduction is allowed for                         

Question 23

Damitria transfers her rights in a $100,000 insurance policy on June 1 to Tremayne. The policy has a cash value of $9,000 and an interpolated terminal reserve of $8,500. The annual policy premium of $12,000 had been paid on January 1. Damitria’s gift (before the annual gift tax exclusion) to Tremayne is                          

Question 24

Diana Corporation owns stock of Tomika Corporation. For Diana and Tomika to qualify for the filing of consolidated returns, at least what percentage of Tomika’s total voting power and total value of stock must be directly owned by Diana?                                  

Question 25

The executor or administrator is responsible for all the following estate duties except


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