Search

In Stock

TEST BANK PRINCIPLES OF TAXATION FOR BUSINESS AND INVESTMENT PLANNING 16TH EDITION JONES

Instant delivery only

 

Original price was: $50.00.Current price is: $28.00.

SKU:tb1002103

TEST BANK PRINCIPLES OF TAXATION FOR BUSINESS AND INVESTMENT PLANNING 16TH EDITION JONES

Chapter 10
Sole Proprietorships, Partnerships, LLCs, and S Corporations

True / False Questions

1. Haddie’s Hats is a regular corporation. The business must file an income tax return each year to report its taxable income or loss and pay any related taxes.
True False

2. A partnership is an unincorporated business activity owned by at least two taxpayers.
True False

3. A corporate shareholder usually cannot be held personally liable for the debts arising from the corporate business.
True False

4. Gabriel operates his business as a sole proprietorship. This year the business incurred an operating loss. The loss can be used to offset other income he earned during the year.
True False

5. Mr. Dilly has expenses relating to a qualifying home office of $14,320. The taxable income generated by the business before any deduction of home office expenses was $13,700. His allowable home office deduction is $14,320.
True False

6. Businesses must withhold payroll taxes from payments made to independent contractors and periodically remit such taxes to the state and federal governments.
True False

7. Matthew earned $150,000 in wages during 2012. FICA taxes withheld by his employer would have been $11,475.
True False

8. The FICA taxes authorized by the Federal Insurance Contribution Act is imposed upon all of the employee’s wages for the year.
True False

9. Businesses are required by law to withhold federal income tax from the compensation paid to their employees.
True False

10. Partners may deduct on their individual income tax returns an amount equal to 100% of self-employment tax paid.
True False

11. Limited partners are prohibited by state law from becoming actively involved in the day-to-day operations of the partnership.
True False

12. All general partners have unlimited personal liability for the debts of the entity.
True False

13. The allocations made to a partner are reported on Schedule K-1 and are referred to as his or her distributive share of partnership items.
True False

14. Drake Partnership earned a net profit of $400,000. Four partners share profits and losses equally. No cash was distributed. The partners will report taxable income from the partnership on their personal income tax returns for the year.
True False

15. A guaranteed payment may be designed to compensate a partner for personal services rendered to the partnership.
True False

16. Partners receiving guaranteed payments are not required to pay self-employment tax on such payments.
True False

17. On June 1, Jefferson had a basis in his partnership interest of $75,000. On June 2, he received a cash distribution from the partnership of $28,000. All of the cash distribution is taxable.
True False

18. A partner’s distributive share of partnership profits will increase his or her tax basis in the partnership interest.
True False

19. A partner’s distributive share of partnership nondeductible expenses does not decrease his or her tax basis in the partnership interest.
True False

20. A partner’s tax basis in his or her partnership interest is decreased by partnership distributions.
True False

21. Carter’s share of a partnership’s operating loss is $17,200. His tax basis in his partnership interest before any adjustment for this loss is $26,000. Carter may deduct the full loss on his individual tax return.
True False

22. John’s share of partnership loss was $60,000. He had only enough tax basis to deduct $34,000 of the loss. He may deduct the remaining loss against other income in the following year, regardless of what happens in the partnership.
True False

23. A limited liability company with more than one member is generally considered a partnership for federal tax purposes.
True False

24. A limited liability company that has only one member is generally treated as a disregarded entity for federal tax purposes.
True False

25. A limited liability company is always taxed as a partnership, regardless of the number of its members.
True False

26. A major advantage of an S corporation is the ability to specially allocate losses to specific members of the company.
True False

27. Corporations cannot be shareholders in an S corporation.
True False

28. If a business is formed as an S corporation, its income may be subject to double taxation.
True False

29. Tax savings achieved by operating a business through a pass-through entity, rather than as a C corporation, is an example of entity variable tax planning.
True False

30. The earnings of a C corporation are taxed only at the shareholder level.
True False

31. The shareholders of an S corporation must pay self-employment tax on their share of the corporation’s ordinary income.
True False

32. A shareholder in an S corporation can include only his or her own loans to the corporation in tax basis.
True False

33. A shareholder in an S corporation includes in tax basis his or her share of the corporation’s liabilities.
True False

Multiple Choice Questions

34. Randolph Scott operates a business as a sole proprietorship. This year his net profit was $10,570. For tax purposes this amount should be reported on:
A. Schedule C, Statement of Profit or Loss from Business
B. The first page of Form 1040 as other income
C. A separate tax return prepared for the business operation
D. Schedule E, Statement of Rent and Royalty Income

35. Aaron James has a qualifying home office. The office is 500 square feet and the entire house is 2,500 square feet. Use the following information to determine his allowable home office deduction:

A. $5,240
B. $4,140
C. $4,260
D. $21,800

36. Rebecca has a qualifying home office. The room is 600 square feet and the entire house is 3,000 square feet. Use the following information to determine her allowable home office deduction:

A. $3,300 home office deduction
B. $16,500 home office deduction
C. $3,500 home office deduction
D. $4,100 home office deduction

37. Which of the following statements regarding sole proprietorships is false?
A. A sole proprietorship has no legal identity separate from that of its owner.
B. Sole proprietorships are the most common form of business entity in the U.S.
C. The cash flow generated by a sole proprietorship belongs to the owner.
D. The assets and liabilities of a sole proprietorship are held in the name of the business, not the owner.

38. Which of the following statements regarding the home office deduction is true?
A. In order to qualify for the deduction, a portion of the taxpayer’s home must be used regularly and exclusively to meet with clients or customers.
B. A home office deduction is not allowed for using the home office for administrative or management activities only.
C. The home office deduction is limited to the taxable income of the business before the deduction.
D. A depreciation deduction is not allowed for a home office.

39. During 2012, Scott Howell received a salary of $125,000. The social security base amount for 2012 was $110,100. How much payroll tax should have been withheld from Scott’s salary for 2012?
A. $0
B. $7,063
C. $8,639
D. $6,437

Reviews

There are no reviews yet.

Write a review

Your email address will not be published. Required fields are marked *

Back to Top
Product has been added to your cart