Tax Research & Planning
This form of tax planning is legal
What is tax avoidance
Accrual basis taxpayers recognize income when the _____ test is met
What is the all-events test
Which is more conservative in regards to the recognition of expenses, financial reporting or tax reporting?
What is tax reporting
Relative to depreciation for book purposes, depreciation for tax purposes is
What is accelerated
The mid-quarter convention means taxpayers get a half of this in the year of sale
What is half a quarter of depreciation
Gains or losses on business assets are classified as ordinary, capital, or this
What is Section 1231
This form of tax planning is illegal
What is tax evasion
Selena is a cash-method taxpayer. This year, she received $5,000 for services she will provide next year. What amount of income does she recognize this year?
What is $5,000
What is the 12-month rule
If a taxpayer places only one asset (furniture) in service during the fourth quarter of this year, this convention must be used
What is mid-quarter
This is an asset's initial basis less cost recovery (accumulated depreciation)
What is adjusted basis
For corporations subject to depreciation recapture on Section 1250 assets, Section 291 recaptures this percent of the lesser of depreciation or the realized gain.
What is 20 percent
Three common methods of tax planning include timing, income shifting, and ______.
What is conversion
The all-events test is satisfied on the earliest of these dates: the task required to earn the income is completed, the payment is due, or _______
What is the payment is received
Mike started a business on September 1st of this year by paying 12-months of rent on his shop at $1,000 per month. What is the maximum amount of rent Mike can deduct this year under the cash method of accounting?
What is $12,000
Lax LLC purchased only one asset during the current year. On August 26 Lax placed in service computer equipment (five-year property) with a basis of $20,000. This is the maximum depreciation expense for the current year (ignoring Section 179 and bonus depreciation).
What is $4,000
If a machine (seven-year property) being depreciated using the half-year convention is disposed of during the 5th year, a taxpayer must multiply the appropriate depreciation percentage from the MACRS table by this percentage to calculate the deprecation expense.
What is 50 percent
Net Section 1231 gains become ____ while net Section 1231 losses become ____
What is capital and ordinary
Your textbook is a great example of a secondary source that does not have _____ in a court of law
What is authority
Regina is an accrual method taxpayer. This year, she signed a contract to provide $5,000 of consulting services in March of the following year. Payment for the services is due in December of this year, but she doesn't actually receive it until January of next year. What amount of income does Regina recognize this year?
What is $5,000
Mike started a business on September 1st of this year by paying 12-months of rent on his shop at $1,000 per month. What is the maximum amount of rent Mike can deduct this year under the accrual method of accounting?
What is $4,000
Beth's business purchased only one asset during the current year. On December 1st, Beth placed in service machinery (seven-year property) with a basis of $60,000. This is the maximum depreciation expense (ignoring Section 179 and bonus depreciation).
What is $2,142
Anne LLC purchased computer equipment (five-year property) on August 29 for $42,000 and used the half-year convention to depreciate it. Anne LLC did not take Section 179 or bonus depreciation in the year it acquired the computer equipment. During the current year, which is the fourth year Anne LLC owned the property, the property was disposed of on January 15th. This is the maximum depreciation expense in the year of sale.
What is $2,419
What is $9,500 Section 1231
Difficulties in accelerating a tax deduction without accelerating the actual cash outflow that generates the tax deduction is a limitation of which tax planning strategy?
What is timing
Luca is an accrual method taxpayer. He received $10,000 for services that will be provided over a three year period, beginning in year 2. What amount of income must he recognize this year?
What is $0
Holly took a prospective client to dinner at a restaurant, and after agreeing to a business deal, they went to the theater. Holly paid $470 for the meal and separately paid $178 for the theater tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?
What is $235
Carmen LLC placed in service in May equipment (seven-year property) with a basis of $1,000,000 and machinery (five-year property) with a basis of $300,000. Considering Section 179 but ignoring bonus depreciation, this is the total depreciation on the two pieces of property for the year.
What is $1,124,000
Adhira LLC purchased an office building and land several years ago for $250,000. The purchase price was allocated as follows: $200,000 to the building and $50,000 to the land. The property was placed in service on October 2. If the property is disposed of on February 27 during the 10th year, this is Adhira's maximum depreciation in the 10th year.
What is $641
Summer LLC sold equipment that uses in its business for $50,000. Summer bought the equipment a few years ago for $40,000 and has $20,000 of accumulated depreciation. This is the amount and character of Summer's gain or loss on the sale.
What is $20,000 ordinary gain, $10,000 Section 1231