29 Jun Question FEDERAL INCOME TAX I – AC 214 TAKE-HOME QUIZ #1
Question
FEDERAL INCOME TAX I – AC 214
TAKE-HOME QUIZ #1
Spring 2014
Circle the single best answer for each true/false and
multiple-choice question on the separate answer sheet provided. Answers to the long problem should be submitted on separate paper.
True (T) / False (F) (16%)
1. T F Final regulations have almost the same legislative weight as the Internal Revenue Code.
2. T F Appeals from the U.S. Tax Court are to the Court of Appeals for the Federal Circuit.
3. T F A revenue ruling is issued by the Internal Revenue Service only in response to a verbal inquiry by a taxpayer.
4. T F A sole proprietor is required to use the same reporting period for both business and individual tax information.
5. T F The check-the-box regulations permit an LLC to be taxed as a C corporation.
6. T F The transferor’s basis for any noncash boot property received in a Section 351 transaction is the boot’s FMV reduced by any unrecognized gain.
7. T F A corporation must recognize a loss when transferring noncash boot property that has declined in value and its stock to a transferor as part of a Section 351 exchange.
8. T F If a corporation’s total adjusted bases for all properties transferred exceed the total FMV of the properties, the corporation’s bases in the property is limited to FMV if no election is made.
Multiple-Choice (72%)
9. Investigation of a tax problem that involves a closed-fact situation means that:
A. The client’s transactions have already occurred and the tax questions must now be resolved.
B. The client’s tax return has yet to be filed.
C. Future events may be planned and controlled.
D. Research is primarily concerned with applying the law to the facts as they exist.
10. A tax bill introduced in the House of Representatives is then:
A. Referred to the House Ways and Means Committee for hearings and approval.
B. Referred to the entire House for hearings.
C. Voted upon by the entire House.
D. Forwarded to the Senate Finance Committee for consideration.
11. When the House and Senate versions of a tax bill are not in agreement, the disagreements are resolved by the:
A. Ways and Means Committee.
B. Mediation Committee.
C. Revenue Committee.
D. Conference Committee.
12. When Congress passes a statute with language such as, “The Secretary shall prescribe such regulations as he may deem necessary,” the regulations ultimately issued for that statute are:
A. Congressional regulations.
B. Statutory regulations.
C. Interpretative regulations.
D. Legislative regulations.
13. Which regulation deals with the gift tax?
A. Reg. Sec. 1.165-5
B. Reg. Sec. 20.2014-5
C. Reg. Sec. 25.2518-5
D. Reg. Sec. 301.7002-5
14. Which of the following best describes the weight of a revenue ruling?
A. Revenue rulings carry more weight than regulations.
B. Revenue rulings carry more weight than federal court decisions.
C. Regulations carry more weight than revenue rulings.
D. Revenue rulings should never be used as authority since
they only apply to the taxpayer requesting the ruling.
15. Which of the following statements is true?
A. Shareholders in a C corporation can use C corporation losses to offset shareholder income from other sources.
B. C corporation losses remain in the C corporation and can offset capital gain income from other years.
C. C corporation shareholders are taxed based on their proportionate share of income.
D. Distributions of C corporation income are not taxable.
16. Which of the following statements is true?
A. A transferor’s gain or loss that goes unrecognized when Section 351 applies is permanently exempt from taxation.
B. If a taxpayer transfers property and services as part of a transaction meeting the Section 351 requirements, all of the stock received is counted in determining whether the property transferors have acquired control.
C. If a taxpayer transfers property and services as part of a transaction meeting the Section 351 requirements, the nonrecognition of gain or loss will apply to the services.
D. All of the above are false.
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