Tax Accounting Practice Test! Trivia Quiz

80 Questions | Total Attempts: 478

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Tax Accounting Practice Test! Trivia Quiz

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Questions and Answers
  • 1. 
    In computing MACRS depreciation, salvage value is ignored.
    • A. 

      True

    • B. 

      False

  • 2. 
    Deductions for business gifts are limited to what amount per individual each year?
    • A. 

      25

    • B. 

      250

    • C. 

      50

    • D. 

      None of the above

  • 3. 
    Amortization is 
    • A. 

      The systematic recovery (expensing) of an investment in a productive natural resource.

    • B. 

      The systematic recovery (expensing) of good or resources

    • C. 

      The systematic recovery (expensing) of an investment

    • D. 

      None of the above

  • 4. 
    The portion of an employee's salary deemed "unreasonable" may be considered a dividend distribution to an employee that is also a shareholder of the corporation.
    • A. 

      True

    • B. 

      False

  • 5. 
    Personal expenses are only deductible if the tax laws specifically state that they are.
    • A. 

      True

    • B. 

      False

  • 6. 
    A self-employed attorney uses a country club to entertain clients and spends the following amounts at the club:  Annual dues$1,000 Personal meals 1,500 Business meals 2,500
    • A. 

      0

    • B. 

      1750

    • C. 

      1250

    • D. 

      2500

  • 7. 
    If a taxpayer has two places of business in different areas, the IRS usually considers the following factors in determining the taxpayer's principal place of business: (Choose the wrong answer.)
    • A. 

      Amount of time spent at each location

    • B. 

      Taxpayer's preference for principal place of business

    • C. 

      Degree of business activity at each location

    • D. 

      Amount of income at each location

  • 8. 
    Prepaid interest payments can be deducted in the year of payment regardless of whether the taxpayer uses the cash method or accrual method of accounting.
    • A. 

      True

    • B. 

      False

  • 9. 
    Percentage depletion is computed without regard to the adjusted basis of the property being depleted.
    • A. 

      True

    • B. 

      False

  • 10. 
    Travel expenses must be incurred by a taxpayer while away from home. To the IRS, the term "away from home" means:
    • A. 

      Away from home overnight

    • B. 

      Away from home temporarily

    • C. 

      Away from home for a reasonable period of time

    • D. 

      Away from home for a 24-hour period

  • 11. 
    • A. 

      3590

    • B. 

      5641

    • C. 

      6909

    • D. 

      4872

  • 12. 
    Business depreciable property placed in service prior to what year is not eligible for ACRS depreciation?
    • A. 

      1980

    • B. 

      1981

    • C. 

      1979

    • D. 

      1982

  • 13. 
    During 2011, a corporation purchased machinery costing $450,000 and a warehouse costing $600,000. These are the only two acquisitions of depreciable property purchased by the corporation in 2011. The maximum deduction the corporation can claim under Code Sec. 179 in 2011 is:
    • A. 

      $100,000

    • B. 

      $450,000

    • C. 

      $250,000

    • D. 

      $134,000

  • 14. 
    Nonbusiness bad debts are deductible:
    • A. 

      In full against business gross income.

    • B. 

      Only when they become wholly or partially worthless.

    • C. 

      As short-term capital losses.

    • D. 

      B and c are both correct.

  • 15. 
    For tax purposes, the term "research and experimentation expenditures" includes which of the following:
    • A. 

      Efficiency surveys

    • B. 

      Management studies

    • C. 

      Development of a plant process

    • D. 

      Advertising

  • 16. 
    A calendar-year corporation incurs $63,000 of start-up costs. If the corporation began business on August 1 of the current year, what is the maximum amount of the start-up costs that it can deduct against business income in the current year?
    • A. 

      $4,167

    • B. 

      $10,000

    • C. 

      $11,472

    • D. 

      $8,556

  • 17. 
    A taxpayer can claim a transportation deduction equal to 50 cents per mile traveled in a passenger automobile for business purposes.
    • A. 

      True

    • B. 

      False

  • 18. 
    A taxpayer can claim a transportation deduction equal to 50 cents per mile traveled in a passenger automobile for business purposes.
    • A. 

      True

    • B. 

      False

  • 19. 
    Employment-related expenses of employees are:
    • A. 

      Not allowed as trade or business tax deductions

    • B. 

      Allowed as trade or business tax deductions

    • C. 

      Limited to two percent of AGI

    • D. 

      Always deductible for AGI

  • 20. 
    A 50 percent deduction is allowed for amounts paid or incurred for dues and fees paid to social, athletic, sporting, or country clubs.
    • A. 

      True

    • B. 

      False

  • 21. 
    If a taxpayer is married on the last day of the tax year, a joint return must be filed in order to claim a dependent care credit.
    • A. 

      True

    • B. 

      False

  • 22. 
    Which of the following is allowed when computing AMTI for individuals?
    • A. 

      Standard deduction

    • B. 

      Charitable contributions

    • C. 

      Personal exemptions

    • D. 

      None of the above

  • 23. 
    Although a work opportunity credit usually is available only for qualified first-year wages, qualified second-year wages paid to a long-term family recipient can qualify for the credit.
    • A. 

      True

    • B. 

      False

  • 24. 
    Unused general business credits can be:
    • A. 

      Carried back one year and carried forward ten years

    • B. 

      Carried back one year and carried forward 20 years

    • C. 

      Carried back two years and carried forward 20 years

    • D. 

      Carried back two years and carried forward ten years

  • 25. 
    During the current year a corporation pays $8,000 to install ramps to the entrance of the corporation's office building that will allow disabled individuals better access to the building. The corporation's disabled access credit equals:
    • A. 

      0

    • B. 

      2000

    • C. 

      3,750

    • D. 

      3,875