,1. Which of the following is a key feature of the Alternative
Minimum Tax (AMT)?
- A) It provides a flat tax rate for all taxpayers.
- B) It disallows exemptions and certain deductions.
- C) It eliminates capital gains tax.
- D) It applies only to corporate taxpayers.
- Correct Answer: B
- Rationale: The AMT is designed to ensure that high-
income taxpayers pay a minimum amount of tax,
disallowing certain deductions and exemptions typically
allowed under the regular income tax system.
2. Under Section 1031 of the Internal Revenue Code,
which type of property is eligible for like-kind exchange
treatment?
- A) Personal residence
- B) Artwork
- C) Inventory held for sale
- D) Rental property
- Correct Answer: D
- Rationale: Section 1031 allows for tax deferral on the
exchange of like-kind properties, and rental properties
qualify under this provision.
, accounting.
- D) It mandates specific accounting methods for all
transactions.
- Correct Answer: B
- Rationale: "Substance over form" dictates that the
economic realities of transactions take precedence over
their legal forms for tax purposes.
Fill-in-the-Blank Questions
4. The IRS uses _______________ to allocate income
and expenses between related entities for tax purposes.
- Correct Answer: Transfer Pricing
- Rationale: Transfer pricing rules are established to
ensure that transactions between related entities are priced
fairly for tax purposes.
5. Under the IRS rules, S corporations must have no more
than _______________ shareholders to maintain their
status.
- Correct Answer: 100
- Rationale: An S corporation is limited to a maximum
of 100 shareholders in order to qualify for S corporation
taxation.
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller emiliophd. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $18.39. You're not tied to anything after your purchase.
