Questions and Answers of Canadian Business And The Law

Virginia has business property that is stolen and partially destroyed by the time it was recovered. She receives an insurance reimbursement of $5,000 on property that had a $14,000 basis and a
Pat sells land for $20,000 cash and a $80,000 four-year note with a reasonable interest rate. If her basis in the property is $30,000 and she receives the $20,000 down payment and the first $20,000
Prashant has business property that is stolen and totally destroyed by the time it was recovered. He receives an insurance reimbursement of $5,000 on property that had a $14,000 basis and a market
Which of the following intangibles is defined as a Section 197 intangible asset?a. An interest in landb. A partnership interestc. An interest in a corporationd. A covenant not to compete acquired as
Which of the following is Section 1231 property?a. Land held for investment purposesb. A machine used in a businessc. Accounts receivabled. Inventorye. Paintings owned by the artist
Which of the following taxpayers would be subject to the Section 1231 lookback rule?a. Gun-Joh sold depreciable business property held for more than one year at a gain this year and has Section 1231
An office machine with a market value of $10,000 used by Josie in her accounting business was completely destroyed by fire. The adjusted basis of the machine was $8,000 (original basis of $14,000
In 2022, Mary sells for $24,000 a machine used in her business. The machine was purchased on May 1, 2019, at a cost of $21,000. Mary has deducted depreciation on the machine of $5,000. Mary has no
Carey exchanges land for other land in a qualifying like-kind exchange. Carey’s basis in the land given up is $115,000, and the property has a fair market value of $150,000. In exchange for her
Fred and Sarajane exchanged land in a qualifying like-kind exchange. Fred gives up land with an adjusted basis of $11,000 (fair market value of $16,000) in exchange for Sarajane’s land with a fair
What is Sarajane’s basis in the land received in the exchange described in Question 28, assuming her basis in the land given up was $12,000?a. $0b. $12,000c. $14,000d. $16,000e. None of the above
Oscar owns a building that is destroyed in a hurricane. His adjusted basis in the building before the hurricane is $130,000. His insurance company pays him $140,000 and he immediately invests in a
Xinyi worked for two different employers in 2022 and her total wages were $80,000 for one and $87,000 for the other (total $167,000). Which of the following best describes Xinyi’s 2022 FICA
For most taxpayers in 2022, which of the following temporary COVID-related tax provisions remains in place?a. The employee retention creditb. The sick pay creditc. The family leave creditd. All of
Typically, estimated payments for individual taxpayers are due on the following dates:a. Twice a year on April 15 and September 15b. Four installments on April 15, June 15, September 15, and January
Amy’s prior year adjusted gross income was $70,000. In order to avoid penalty, what is the required annual payment Amy must make in the current year?a. 110% of the current year tax liability.b. Any
Thibodeau Corporation pays Loretta $3,300 for providing services to Thibodeau during 2022. The nature and scope of the relationship between Thibodeau and Loretta is one of employer-employee. Which of
Which if the following is not generally required to be capitalized?a. An adaption to a better useb. A betterment by expanding the size of a buildingc. A routinely performed item of maintenanced. A
Describe the requirements to apply a de minimis safe harbor to tangible property expenditures for a business taxpayer.
Micah’s business has four different building projects underway. Select the project that is likely to be immediately deductible.a. Micah is installing a new roof on a warehouse. The roof has started
An asset (not an automobile) put in service in June 2022 has a depreciable basis of $24,000 and a recovery period of 5 years. Assuming bonus depreciation is used, half-year convention and no election
Proudfoot, Inc. would like to deduct expenditures for tangible personal property under $4,000 as maintenance and repairs costs. To implement this policy, which of the following is not required?a. A
Alice purchases a rental house on June 22, 2022, for a cost of $174,000. Of this amount, $100,000 is considered to be allocable to the cost of the home, with the remaining $74,000 allocable to the
Flo is a server at a diner in Phoenix and earns a significant portion of her pay through tips from customers. Some of these tips are paid via credit card and others are paid in cash. Flo’s employer
The rate for the Social Security portion of FICA taxes for a non-self-employed individual is:a. 12.4 percent for the employer.b. 15.3 percent for the employee.c. 7.65 percent total for the employee
Lamden Company paid its employee, Chuck, wages of $163,000 in 2022. Calculate each of the following: Social Security withheld from Chuck’s wages, Medicare withheld from Chuck’s wages, Social
James purchased office equipment for his business. The equipment has a depreciable basis of $16,000 and was put in service on June 1, 2022. James decides to elect straight-line depreciation under
Using the information from Question 30, what is Oscar’s basis on his new building?a. $130,000b. $132,000c. $140,000d. $142,000Question 30Oscar owns a building that is destroyed in a hurricane. His
Lamden Company paid its employee, Trudy, wages of $63,000 in 2022. Calculate each of the following: Social Security withheld from Trudy’s wages, Medicare withheld from Trudy’s wages, Social
Which of the following is not true about FICA taxes?a. The FICA tax has two parts, Social Security (Old Age, Survivors, and Disability Insurance) and Medicare.b. In 2022, the maximum wage base for
FICA taxes are generally paid as follows:a. One-half is withheld from the employee and the other half is paid by the employer.b. The entire amount of Social Security is paid by the employee and the
Lamden Company paid its employee, William, wages of $263,000 in 2022. Calculate each of the following: Social Security withheld from William’s wages, Medicare withheld from William’s wages,
Carlotta is an employee and generates wages of $150,000 in 2022. Which of the following best describes the rate of tax associated with the Medicare portion of FICA taxes?a. 7.65 percent payable by
Describe the rules for selecting a partnership year-end.
When calculating ordinary income, partnerships are not allowed which of the following deductions?a. Miscellaneous expensesb. Qualified business income deductionc. Depreciationd. Cost of goods solde.
The FUTA tax is:a. An unemployment tax with a rate of 2.9 percent on wages up to $147,000 per employee.b. A disability tax with a rate of 2.9 percent on wages up to $7,000 per employee.c. An
Which of the following best describes the typical treatment of contributions in an amount below the annual maximum to a qualified retirement plan?a. Employee contributions are currently taxable, but
Greta and Greta’s employer have both been making contributions to a qualified retirement plan for the last twenty-five years. Greta is looking forward to her retirement in a few more years and is
Gail’s employer contributes $2,000 (5 percent of her $40,000 salary) to a qualified retirement plan for Gail. This pension plan is what kind of plan?a. Defined benefit planb. Defined contribution
Tom quits his job with $150,000 in his employer’s qualified retirement plan. Since he is broke, Tom instructs the plan trustee to pay him the balance in his retirement account. How much will Tom
Debbie and Alan open a web-based bookstore together. They have been friends for so long that they start their business on a handshake after discussing how they will share both work and profits or
Elaine’s original basis in the Hornbeam Partnership was $40,000. Her share of the taxable income from the partnership since she purchased the interest has been $70,000, and Elaine has received
Explain the difference in the treatment of liabilities between a general partner and a limited partner.
Describe how the allocation of a partner’s share of income and the distribution of cash to partners differ in triggering the recognition of income by the partner.
In the current year, Hoffa Partnership allocates ordinary business income of $4,000 to Jimmy, a 40-percent partner. In addition, the partnership makes a cash distribution to Jimmy of $1,000, which is
Nan contributes property with an adjusted basis of $50,000 to a partnership. The property has a fair market value of $60,000 on the date of the contribution. What is the partnership’s basis in the
Theodore has an investment in YYZ Corporation and a different investment in CXB Partnership. He has a 50-percent ownership stake in each. YYZ generates $100,000 of taxable income after paying
A partner’s interest in a partnership is decreased by:a. Increases in the partner’s share of the partnership liabilitiesb. Debt relief that a partner experiences when contributing to the
List five items of income or deductions that are required to be separately stated on Schedule K-1.
TYVM Partnership allocates ordinary business income, long-term capital gains, and guaranteed payments of $13,000, $1,000, and $7,000, respectively, to Ariana Extensa, a general partner. Based on this
Rhianna owns a two-thirds interest in the ANTI Partnership and a 75-percent interest in the LOUD Partnership. In the current year, ANTI sells property to LOUD at a loss of $10,000. Later in the same
Which of the following items is generally reported as a separately stated item on a partnership return?a. Gross ordinary income from the operations of the partnership businessb. Typical MACRS
Feela is a one-third owner of Alchemy LLC, which is taxed as a partnership. Her basis prior to Alchemy paying Feela an $11,000 cash distribution is $6,000. How much income does Feela recognize from
Khushboo’s basis in her 25-percent interest in the Rishi Partnership is $40,000 at the start of the current year. During the current year, Rishi reports ordinary business income of $80,000. Rishi
Laura is a non-passive general partner in the Douglass Partnership. At the start of 2022, her outside basis in Douglass is $10,000. During 2022, Douglass allocates loss of $8,000 to Laura and makes a
Octavio starts the year with outside basis of $23,000 and an amount at-risk of $23,000 in his 40-percent general partnership interest in Brown Partnership. In the current year, the partnership
Which of the following circumstances will not cause a partnership to close its tax year early?a. The partnership terminates by agreement of the partners.b. The business activity of the partnership
Van makes an investment in an LLC in the current year. Van’s capital contributions to the LLC consist of $30,000 cash and a building with an adjusted basis of $70,000, subject to a nonrecourse
Joe, Ben, and Melissa are partners in Collins Partnership. All three use a calendar year-end for their individual taxes. Collins Partnership’s year-end is likely to be:a. October 31 since that is
Kendra is an attorney and owns 60 percent of a law partnership. Kendra sells land to the partnership for $50,000 in the current tax year. She bought the land for $100,000 eight years ago when real
A loss from the sale or exchange of property will be disallowed in which of the following situations?a. A transaction between a partnership and a partner who owns 40 percent of the partnership
Mike, an individual taxpayer, purchases a rental property for $200,000 using cash of $100,000 and borrowing the remaining $100,000 from a lending institution. The loan is considered to be qualified
Gloria is a 30-percent general partner in the VH Partnership. During the year, VH borrows $40,000 from a bank to fund operations and is able to pay back $10,000 before year-end. VH also borrows
Which of the following properly describes a difference between a partnership and an LLC?a. Partnerships pass income and losses through to the partners while LLCs generally pay an entity level tax and
Which of the following generate self-employment income for partners/members?a. Partnership income allocated to a limited partnerb. Long-term capital gains allocated to an LLC memberc. Income
Tayla Corporation generated $400,000 of taxable income in the 2022. What is Tayla’s corporate tax liability?a. $71,400b. $84,000c. $115,600d. $136,000e. None of the above
Harrison Corporation generates capital gains/(losses) of ($2,000), $4,000, ($14,000) in 2020, 2021, and 2022, respectively. Harrison started operating in 2020. What is Harrison’s capital loss
Clarion Corporation generated taxable income of $15,000 in 2021 and a net operating loss of $12,000 in 2022. If Clarion generates taxable income of $5,000 in 2023, what is the NOL carryforward into
Katsura Corporation incurred pre-operating costs:• Investigatory expenses of $17,000• New employee training $25,000• Advertising $10,000• Land and building for use as a retail store when
Which of the following is not a corporate organizational expenditure that may be amortized?a. The cost of organizational meetingsb. Fees paid to the state for incorporationc. Accounting fees incident
In 2022, Citradoria Corporation is a corporation that contributes $35,000 cash to qualified charitable organizations during the current tax year. The corporation has net operating income of $91,000,
In 2022, charitable contributions by a corporation are limited to what percent of taxable income?a. 100 percentb. 50 percentc. 25 percentd. 10 percent
Which of the following statements is true regarding the dividends received deduction in 2022?a. Dividends from an 80 percent-owned corporation are eligible for a 65 percent dividends received
Which of the following statements is true about estimated tax payments?a. The annualized income method uses four quarters of estimated income to determinerequired estimated payments.b. A large
The allocated non-passive loss of an S corporation is deductible:a. If the shareholder has adequate sources of other incomeb. Only if the S corporation is engaged in a residential rental businessc.
Louise owns 45 percent of a partnership, and her brother owns the remaining 55 percent interest. During the current tax year, Louise sold a building to the partnership for $160,000 to be used for the
Kidd is a self-employed single taxpayer in 2022 that files Schedule C for his sole proprietorship. He pays for his own health insurance and the premiums are less than his net profits. Kidd will
Which of the following gifts is a deductible contribution?a. A gift of $100 to a homeless personb. A $500 gift to the Democratic National Committeec. $1,000 spent on church bingo gamesd. A $200
On January 3, 2022, Carey discovers his diamond bracelet has been stolen. The bracelet had a fair market value and adjusted basis of $7,500. Assuming Carey had no insurance coverage on the bracelet
Rico a single taxpayer, makes $5,000 of cash donations in 2022. His standard deduction exceeds his itemized deductions including the contribution. What amount will Rico deduct for charitable
Kathy, a single taxpayer, donates cash of $600 and also provides some gently-used clothing worth $150 to a local church. Kathy does not itemize deductions. What is the nature of any deduction for
Stanley donates a hotel to a university for use as a conference center. The building was purchased three years ago for $1,200,000 and has a fair market value of $1,500,000 on the date the
Which of the following donations are not deductible as a charitable contribution?a. A donation of clothing to Goodwill Industriesb. A cash contribution to a churchc. A contribution of stock to a
Which of the following interest expense amounts is not deductible in the current year?a. Education loan interest of $2,000, assuming the taxpayer has income of $30,000.b. Home equity loan interest of
Carrie, a single taxpayer, finished her undergraduate degree using money from a student loan. She earned $56,000 her first year and paid $2,600 in interest in 2022. She can take a deduction for
Which of the following is deductible as interest on Schedule A?a. Fees for having the home’s value assessed by the bank for purposes of getting a mortgageb. Purchase mortgage insurance paid in
The itemized deduction for state and local taxes in 2022 isa. Total taxes less 10 percent of AGIb. Limited to no more than $10,000c. Unlimitedd. Only deductible if the taxes are business relatede.
Antonio is a small business owner and files jointly with his spouse. In 2022, he generates $100,000 of net profits from his business. His spouse, Maria, has $4,000 of state income tax withheld from
In April 2022, Fred paid $40 of state income tax that was due when he filed his 2021 income tax return. During 2022, Fred’s employer withheld $1,200 of state income tax from his pay. In April 2023,
Which of the following taxes may be deducted as an itemized deduction?a. State gasoline taxesb. Local property taxesc. Federal income taxesd. Social Security taxese. Medicare taxes
Which of the following is not considered a deductible medical expense?a. Once daily multivitaminb. Prescription eyeglassesc. Acupunctured. Filling a tooth cavity
Mary paid $2,000 of state income taxes in 2022. She paid $1,500 of state sales tax on the purchase of goods and she also purchased a car in 2022 and paid sales tax of $3,000. How should Mary treat
The cost of which of the following is deductible as a medical expense?a. Travel to a warm climateb. Birth control pillsc. A disability insurance policy that pays $200 for each day the taxpayer is in
The cost of which of the following expenses is not deductible as a medical expense on Schedule A, before the 7.5 percent of adjusted gross income limitation?a. A psychiatristb. Botox treatment to
Jessica is a U.S. Army Reservist and in 2022 traveled 130 miles each way to serve duty at a local military installation. She was required to report four times in 2022, two times before June 30 and
Lyndon’s employer withheld $8,700 in state income taxes from Lyndon’s wages in 2022. Lyndon obtained a refund of $1,700 this year for overpayment of state income taxes for 2021. State income
Linda installed a special pool for the hydrotherapeutic treatment of severe arthritis, as prescribed by her doctor. The cost of installing the pool was $20,000, and her insurance company paid $5,000
Which of the following would not be considered a prohibited transaction between an IRA and its owner?a. The owner taking a loan from the IRAb. The owner selling property to the IRAc. Investing in
What is the deadline for making a contribution to a traditional IRA or a Roth IRA for 2022?a. April 18, 2023b. July 15, 2022c. December 31, 2022d. October 15, 2023
Mario, a self-employed plumber, makes a maximum contribution to a SEP for his employee, Peach. Peach’s compensation is $50,000 for the year. How much is he allowed to contribute to the plan for

Showing 600 - 700 of 938