Questions and Answers of Canadian Business And The Law

Both spouses are responsible, jointly and individually, for paying the full amount of any tax, interest, or penalties due on a joint return. Which of the following is correct in reference to the
A taxpayer’s rights are explained in:a. Publication 5b. Publication 17c. Publication 556d. Publication 1e. None of the above
Taxpayers have the right to have an IRS examination take place at:a. The IRS officeb. Any city of the taxpayer’s choosingc. A neutral sited. A reasonable time and placee. None of the above
If a U.S. Tax Court agrees with the taxpayer on appeal that the IRS position was largely unjustified, which of the following is correct?a. The taxpayer must still pay administrative and litigation
Glen’s taxable income is $50,000 and he pays income tax of $6,617. If his income were $60,000, he would pay taxes of $8,817. What is Glen’s marginal tax rate?a. 18.23%b. 22.00%c. 12.00%d.
Melodie’s taxable income is $39,000 and she pays income tax of $4,475. If Melodie’s taxable income increases to $43,000, she would pay income taxes of $5,077. What is Melodie’s marginal tax
Jim has a house payment of $2,000 per month of which $1,700 is deductible interest and real estate taxes with the remaining $300 representing a repayment of the principal balance of the note. Jim’s
On September 22, 2022, Jerry purchases a corporate bond. The bond pays interest each sixth months on June 30 and December 31 of each year. On December 31, 2022, Jerry receives an interest payment of
During the 2022 tax year, Irma incurred the following expenses:If Irma’s adjusted gross income is $23,000, calculate her miscellaneous deductions. Union dues Tax return preparation fee Brokerage
A bond is issued in 2020 at its face value of $10,000 with an interest rate of 5 percent. In 2022, the bond is sold when prevailing interest rates have increased. When recognizing gross income from
Daniel just became a selfemployed consultant. Prior to this year he was always an employee. He comes to discuss his new business with you. As his tax accountant, you should:a. Discuss setting up a
Under the highlow method, the federal per diem amount isa. The same in every city in the U.S.b. Different for every city in the U.S.c. The same for most cities but higher in certain locationsd. An
Kerry’s car is totaled in tornado that is declared a federal disaster. The car originally cost $18,000, but is worth $7,500 at the time of the accident. Kerry’s insurance company gives her a
Which of the following would typically be deductible as a casualty loss in 2022?a. Long-term damage to a home from termitesb. An automobile accident during the daily commutec. A theft of a big screen
Which of the following is not a possible limitation on the deduction of a personal casualty loss?a. The lesser of the fair market value of the property or the adjusted basis at the time of the lossb.
Which of the following is deductible as a miscellaneous itemized deduction in 2022?a. Tax preparation feesb. Gambling losses in excess of gambling winningsc. Losses from Ponzi-type schemesd.
Which of the following items is deductible as a miscellaneous deduction on Schedule A?a. Investment expensesb. Gambling losses to the extent of gambling winningsc. Unreimbursed business expensesd.
E Corporation is a subchapter S corporation owned by three individuals with calendar year-ends. The corporation sells a sports drink as its principal product and has similar sales each month. What
Income and loss from which of the following entities is passed through and taxed on the individual’s personal tax returns?a. S corporationb. Partnershipc. Sole proprietord. All of the above
Which of the following entities is likely to have the greatest flexibility in choosing a year-end other than a calendar year-end?a. Sole proprietorb. General partnershipc. Corporationd. S corporation
Which of the following is an acceptable method of accounting under the tax law?a. The accrual methodb. The hybrid methodc. The cash methodd. All of the above are acceptablee. None of the above
A cash-basis taxpayer will recognize gross income when:a. Earnedb. Actually or constructively receivedc. When reasonably estimabled. When shipped for goods and when provided for services
In addition to the liability existing in an estimable amount, an accrual-based taxpayer cannot deduct an expense without this also occurring.a. The expense is paidb. An invoice has been received for
Rachel and Ross file jointly in 2022 and have alternative minimum taxable income of $1.3 million prior to the AMT exemption. Compute their exemption and AMTI after the exemption.
Which of the following is an option for a minor with unearned income of $3,500?a. Pay tax at trust and estate ratesb. Pay tax at the parent’s ratec. Pay $0 tax since the income is unearnedd. Pay at
An individual taxpayer will be liable for alternative minimum tax when:a. The regular tax liability exceeds the tentative minimum taxb. The tentative minimum tax exceeds the regular tax liabilityc.
Which of the following is an adjustment for AMT purposes?a. Itemized deduction for home mortgage interestb. Itemized deduction for charitable contributionsc. State income tax refundsd. Itemized
The alternative minimum tax exemption:a. Is a direct reduction of the tentative minimum taxb. Is a reduction of alternative minimum taxable income for certain taxpayersc. Permits certain taxpayers to
Alternative minimum tax rates in individuals:a. Are the same as regular tax rates but on adjusted minimum taxable incomeb. Higher than the highest marginal tax rate for individuals depending on
Bob employs a maid to clean his house. He pays her $1,040 during the current year. What is the proper tax treatment of the Social Security and Medicare tax for the maid?a. Bob is not required to pay
Which of the following employees would not be exempt from Social Security and Medicare taxes on wages paid for household work?a. The taxpayer’s 16-year-old daughterb. The taxpayer’s wifec. The
Individual taxpayers may pay withholding taxes due with their individual income tax returns using Schedule H for each of the following workers except:a. A nanny hired to watch their childrenb. A maid
Describe the steps a taxpayer should go through if they do not receive a Form W-2?
The 3.8 percent Medicare tax on net investment income applies to:a. Tax-exempt interest incomeb. Interest and dividendsc. IRA distributionsd. Wages
Define income in respect of a decedent and provide an example of IRD.
Skylar is single and earns $410,000 in salary during 2022. What is the amount of 0.9 percent Medicare tax for high-income taxpayers that his employer must withhold from his wages?a. $1,890b. $1,800c.
Christine and Doug are married. In 2022, Christine earns a salary of $250,000 and Doug earns a salary of $50,000. They have no other income and work for the same employers for all of 2022. How much
If a taxpayer did not receive a copy of their Form W-2:a. They should request a copy from the Social Security Administration.b. They should file a tax return and not include the income.c. They should
If a taxpayer discovers a math error on their tax return in which two lines were added incorrectly:a. Conventional wisdom is that they simply wait for the IRS to send them a notice addressing the
Ben and Jennifer get divorced in 2022. Which of the following statements is true regarding the tax consequences of the divorce?a. Ben will be able to deduct any alimony paid to Jennifer in future
Which of the following is not a form of relief from tax liability available to a spouse or ex-spouse?a. Protective custody reliefb. Innocent spouse reliefc. Separation of liability reliefd. Equitable
Helen was a retired 77-year-old teacher who died in 2022. In 2022, Helen’s pension paid her $45,000 up to her date of death and $13,000 afterward. Which of the following statements best describes
If an estate is being terminated but has an NOL carryforward on the final income tax return, which of the following best describes the tax options for the NOL?a. It expires unused.b. It can be
Rhianna is a tax resident of the U.S. and has a bank account in in Switzerland with a balance equivalent to about US$14,000. Which of the following best describes Rhianna’s foreign bank account
Which of the following will qualify for the child tax credit of $2,000 in 2022?a. A dependent child age 17b. A dependent child age 21 and a full-time studentc. A dependent child age 13d. A dependent
Which of the following best describes the child tax credit?a. A $2,000 credit available to taxpayers with AGI under certain limits and children under age 17.b. A $500 credit for a dependent that
Russ and Linda are married and file a joint tax return claiming their three children, ages 4, 7, and 18, as dependents. Their adjusted gross income for 2022 is $421,400. What is Russ and Linda’s
Which of the following taxpayers would most likely be eligible to claim an earned income credit with a qualifying child?a. Marco is a single parent and files head of household. Marco’s child,
Which of the following is not a requirement to claim the earned income credit?a. The taxpayer (and spouse if filing jointly) have a valid Social Security number.b. The taxpayer’s investment income
Assuming they all meet the income requirements, which of the following taxpayers qualify for the earned income credit in 2022?a. A married taxpayer that lives with their spouse and who files a
Which of the following payments does not qualify as a child care expense for pur poses of the child and dependent care credit?a. Payments to a day care centerb. Payments to the taxpayer’s sister
Mabel and Marty are married filing jointly and incurred $8,900 of child care expenses in 2022 for their 6-year-old son. Mabel has earned income of $35,000. Marty is a student and attended classes for
Which of the following is not a requirement to receive the premium tax credit for health care in 2022?a. Health care through the employer is not availableb. Health insurance is purchased through the
For purposes of determining income eligibility for the premium tax credit, household AGI isa. AGI for the taxpayer and spouseb. AGI for the taxpayer, spouse, and any other household members required
Jane graduates from high school in June 2022. In the fall, she enrolls for twelve units at Big State University. Big State University considers students who take twelve or more units to be full-time.
Which of the following costs is not a qualified education expense for the American Opportunity tax credit?a. Tuitionb. Student loan paymentsc. Course-related booksd. Lab supplies required by the
In September 2022, Sam pays $1,100 to take a course to improve his job skills to qualify for a new position at work. Assuming there is no phase-out of the credit, his lifetime learning credit for
John, a single father, has AGI of $83,000 in 2022. During the year, he pays $4,000 in quali fied tuition for his dependent son, who just started attending Small University. What is John’s American
In November 2022, Simon pays $1,000 to take a course to improve his job skills to qualify for a new position at work. Simon’s employer reimbursed him for the cost of the course. For 2022, Simon’s
Joan, a single mother, has AGI of $92,000 in 2022. In September 2022, she pays $5,000 in qualified tuition for her dependent son who just started at Big University. What is Joan’s American
Becky, a college freshman, works part-time and pays $1,650 of her college tuition expenses. Although Becky files her own tax return, her parents claim her as a dependent on their tax return.
Lucas, a single U.S. citizen, works in Denmark for MNC Corp during all of 2022. His MNC salary is $187,000. Lucas may exclude from his gross income wages of:a. $0b. $108,700c. $112,000d. $187,000
Taxpayer L has income of $55,000 from Norway, which imposes a 40 percent income tax, and income of $45,000 from France, which imposes a 30 percent income tax. L has additional taxable income from
John and Joan pay $16,500 of qualified adoption expenses in 2022 to finalize the adoption of a qualified child. Their AGI is $199,000 for 2022. What is their adoption credit for 2022?a. $0b.
If a taxpayer does not have enough tax liability to use all the available adoption credit, the unused portion may be carried forward for how many years?a. Twob. Threec. Fived. There is no carryforward
Mike bought a solar electric pump to heat his pool at a cost of $2,500 in 2022. What is Mike’s credit?
In connection with the adoption of an eligible child who is a U.S. citizen and who is not a child with special needs, Sean pays $4,000 of qualified adoption expenses in 2021 and $3,000 of qualified
In 2022, Jeff spends $6,000 on solar panels to heat water for his main home. What is Jeff’s credit for his 2022 purchases?
Barbara purchased a new Honda Clarity electric vehicle in 2022 for $36,000. Her federal tax credit will be:a. $0b. $2,500c. $5,000d. $7,500e. $10,000
Virginia and Richard are married taxpayers with adjusted gross income of $43,000 in 2022. If Virginia is able to make a $1,500 contribution to her IRA and Richard makes a $1,500 contribution to his
When a taxpayer capitalizes an expenditure:a. The taxpayer pays for it with debt or a liabilityb. The amount is expensed immediately in accordance with ordinary and necessary deduction rulesc. The
Define each of the following as it relates to the tax rules for capitalization of expenditures:a. Bettermentb. Adaptationc. Restoration
Jennifer is divorced and files a head of household tax return claiming her children, ages 4, 7, and 11, as dependents. Her adjusted gross income for 2022 is $81,200. What is Jennifer’s total child
Abigail contributes land with an adjusted basis of $50,000 and a fair market value of $60,000 to Blair and Partners, a partnership. Abigail receives a 50-percent interest in Blair. What is
K&T Company is a partnership with two equal partners, Kai and Taonga. The partnership has income of $60,000 for the year before guaranteed payments. Guaranteed payments of $25,000 are paid to Kai
Abigail contributes land with an adjusted basis of $50,000 and a fair market value of $60,000 to Blair and Partners, a partnership. Abigail receives a 50-percent interest in Blair. What is Blair’s
Georgina receives a Schedule K-1 for her general partner interest in the CCI Partnership that reports the following:● Ordinary business income $4,000● Net rental real estate income $2,000●
Blake and Ryan form the Poole Partnership. Blake contributes cash of $15,000. Ryan contributes land with an adjusted basis of $1,000 and a fair market value of $21,000. The land is subject to a
Elijah and Rona are both 50-percent partners in the Thakkar Partnership. At the start of the current year, Elijah’s outside basis in Thakkar is $3,000 and Rona’s outside basis in Thakkar is
Which of the following items do not have to be reported separately on a partnership return?a. Tax-exempt incomeb. Dividend incomec. Typical MACRS depreciation expensed. Capital gains and lossese.
Walter receives cash of $18,000 and land with a fair market value of $75,000 (adjusted basis of $50,000) in a current distribution. His basis in his partnership interest is $16,000 before the
When does the required annual payment for estimated income taxes increase to 110% of the prior year tax liability?a. When the current year taxable income exceeds $100,000.b. When prior year adjusted
Under the special COVID tax provisions in 2020, Basalt Corporation elected to defer a portion of their payroll taxes. Which of the following best describes when Basalt must pay the deferred payroll
Griffin Inc. reimburses employees for travel and business expenses using an accountable plan. As a result:a. Griffin must include all reimbursements as compensation and withhold appropriately.b.
During 2022, Peters Corporation sells rental real property for $180,000, which was acquired in 2001 for $160,000. Peters has claimed straight-line depreciation on the building of $50,000. What is the
Which of the following statements with respect to the depreciation of property under MACRS is incorrect?a. Under the half-year convention, one-half year of depreciation is allowed in the year the
Explain the use of the mid-quarter convention for MACRS depreciation.
Which of the following is true about the MACRS depreciation system:a. A salvage value must be determined before depreciation percentages are applied to depreciable real estate.b. Residential rental
On July 20, 2022, Kelli purchases office equipment at a cost of $24,000. Kelli elects out of bonus depreciation but makes the election to expense for 2022. She is selfemployed as an attorney, and in
On September 14, 2022, Jay purchased a passenger automobile that is used 75 percent in his business. The automobile has a basis for depreciation purposes of $48,000, and Jay uses the accelerated
Which of the following is not considered a limit on the immediate expensing election of Section 179?a. Fifty percent of qualified improvement propertyb. Total Section 179-eligible property acquired
Which of the following is a true statement about depreciation on listed property?a. All listed property is not depreciable, and any costs are recovered when the property is sold.b. Cellphones and
Derek purchases a small business from Art on August 30, 2022. He paid the following amounts for the business:a. How much of the $240,000 purchase price is for Section 197 intangible assets?b. What
In 2022, Ben purchases and places in service a new auto for his business. The auto costs $57,000 and will be used 60 percent for business. Assuming the half-year convention applies and Ben elects out
In 2022, Ben purchases and places in service a new auto for his business. The auto costs $57,000 and will be used 100 percent for business. Assuming the half-year convention applies and Ben does not
Tom has a successful business with $100,000 of taxable income before the election to expense in 2022. He purchases one new asset in 2022, a new machine which is seven-year MACRS property and costs
Tupper Corp. purchases a new auto in 2022 for $62,000. The auto is used 100 percent for business and the half-year convention applies. Tupper uses bonus depreciation when available. What is the 2023
The amortization period for Section 197 intangibles is:a. 5 yearsb. 7 yearsc. 10 yearsd. 15 yearse. 40 years
During 2022, Paul, an individual taxpayer, sells residential rental property for $180,000, which he acquired in 2001 for $160,000. Paul has claimed straight-line depreciation on the building of
Jeanie acquires an apartment building in 2011 for $280,000 and sells it for $480,000 in 2022. At the time of sale there is $60,000 of accumulated straight-line depreciation on the apartment building.

Showing 500 - 600 of 938