ACC565 Midterm Exam - 2015: Taxation and Corporate Law Strayer University - Solved Assignments | Accounting

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ACC565 Midterm Exam-2015: Taxationand Corporate LawStrayer UniversityStrayer ACC565 midterm exam 2015Question 1When a taxpayer contacts a tax advisor requesting advice as to the most advantageous way todispose of a stock, the tax advisor isfaced withAnswera restricted-fact situation.a closed-fact situation.an open-fact situation.a recognized-fact situation.Question 2During the course of an audit, a CPA discovers an error in a prior return. According to theStatements on Standards for Tax Services, the CPA shouldAnswerask the client for permission to disclose the error to the IRS.withdraw from the engagement.inform the IRS of the error, regardless of whether the client grants permission.correct the error in the current year's tax return.Question 3A Technical Advice Memorandum is usuallyAnsweran internal IRS document describing alternative legislative proposals.part of a Tax Court decision.requested by the taxpayer before entering into a taxable transaction.issued by the national office in response to an audit request.Question 4Regulations areAnswerequal in authority to legislation.equal inauthority to legislation if statutory.presumed to be valid and to have almost the same weight as the IRC.equal in authority to legislation if interpretative.Question 5In accordance with the rules that apply to corporate formation, which one of the followingfeatures doesnotmake an issue of preferred stock "nonqualified"?

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AnswerThe shareholder can require the corporation to redeem the stock.The dividend rate on the stock may not vary with interest rates, commodity prices, or othersimilar indices.The corporation is either required to redeem the stock or is likely to exercise a right to redeemthe stock.The stock is limited and preferred as to dividends.Question 6The transferor's holding period for any boot property received in a Sec. 351 stock exchangeAnswerincludes the holding period for the boot transferred.begins on the day after the exchange.begins on the day of the exchange.is the same as the holding period of the stock received in the exchange.Question 7Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Waynecontributes services for 15% of the stock. The tax effect isAnswerRose and Wayne must recognize their realized gains, if any.Wayne must report the FMV of the stock received as capital gain.Rose and Wayne are not required to recognize their realized gains.Wayne must report the FMV of the stock received as ordinary income.Question 8Which of the following is an advantage of a sole proprietorship over other business forms?Answertax-exempt treatment of fringe benefitsthe deduction for compensation paid to the ownerlow tax rates on dividendsease of formationQuestion 9Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $180,000. Inaddition, Trail has a net capital gain of $60,000. Trail's taxable income isAnswera $20,000 loss.a $40,000 loss.$60,000.$20,000.Question 10Which of the following results in a deferred tax asset?AnswerRevenue or gains are recognized earlier for book purposes than for tax purposes.Operating loss or tax credit carryforwards exist.Tax basis of an asset is less than its book.Expenses are deductible earlier for tax purposes than for book purposes.Question 11

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ACC565 Midterm Exam - 2015: Taxation and Corporate Law Strayer University

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