ACCT 324 Week 5 Quiz

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ACCT 324 Week 5 Quiz

 1.Question :(TCO 4) Several years ago, Floyd purchased a structure for $150,000 that was originally placed in service in 1929. In the current year, he incurred qualifying rehabilitation expenditures of $200,000. The amount of the tax credit for rehabilitation expenditures, and the amount by which the building’s basis for cost recovery would increase as a result of the rehabilitation expenditures, are the following amounts:
Student Answer: $20,000 credit, $180,000 basis.
 $20,000 credit, $200,000 basis.
 $20,000 credit, $350,000 basis.
 $40,000 credit, $160,000 basis.
 None of the above


 2.Question :(TCO 4) Which, if any, of the following correctly describes the research activities credit?
Student Answer: The research activities credit is the greater of the incremental research credit or the basic research credit.
 If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures.
 The credit is not available for research conducted outside of the United States.
 All corporations qualify for the basic research credit.
 None of the above

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 3.Question :(TCO 4) During the year, Purple Corporation (a U.S. corporation) has U.S.-source income of $900,000 and foreign income of $300,000. The foreign-source income generates foreign income taxes of $100,000. The U.S. income tax before the foreign tax credit is $408,000. Purple Corporation’s foreign tax credit is:
Student Answer: $75,000.
 None of the above


 4.Question :(TCO 4) Which of the following issues does not need resolution in an employer’s effort to comply with employment tax payment requirements?
Student Answer: Ascertaining which employees and wages are covered by employment taxes and are subject to withholding for income taxes
 Arriving at the amount to be paid and/or withheld
 Reporting and paying employment taxes and income taxes withheld to the IRS on a timely basis through the use of proper forms
 Each of the above issues needs to be resolved.
 None of the above are relevant to the employer.


 5.Question :(TCO 4) Which of the following correctly reflects current rules regarding estimated tax payments for individuals?
Student Answer: Employees are not subject to the estimated tax payment provisions.
 Any penalty imposed for underpayment is deductible for income tax purposes.
 Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return.
 No quarterly payments are required if the taxpayer’s estimated tax is under $1,000.
 None of the above


 6.Question :(TCO 5) Prior to the effect of tax credits, Eunice’s regular income tax liability is $200,000 and her tentative AMT is $190,000. Eunice has general business credits available of $12,500. Calculate Eunice’s tax liability after tax credits.
Student Answer: $200,000
 None of the above


 7.Question :(TCO 5) A factor(s) that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes includes the following:
Student Answer: A different amount of depreciation (cost recovery) has been deducted for AMT purposes and regular income tax purposes.
 The spread on an incentive stock option (ISO) is recognized for AMT purposes, but is not recognized for regular income tax purposes.
 Realized gain is deferred on § 1031 like-kind exchanges for regular income tax purposes, but is recognized for AMT purposes.
 Only A and B
 A, B, and C


 8.Question :(TCO 5) Which of the following are permitted deductions for purposes of the AMT for an individual taxpayer?
Student Answer: Medical expenses to the extent that they exceed 7.5% of AGI
 Home mortgage interest on a principal residence and two other residences
 Charitable contributions to the extent that they exceed 10% of AGI
 Miscellaneous itemized deductions to the extent that they exceed 2% of AGI
 None of the above


 9.Question :(TCO 4) Refundable tax credits include:
Student Answer: taxes withheld on wages.
 earned income credit.
 first-time homebuyer credit.
 All of the above
 None of the above


 10.Question :(TCO 4) The maximum amount of the disabled access credit is:
Student Answer: $2,000.
 There is no maximum amount.



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