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Taxation and Deduction Concepts: A Review of Key Tax Rules and Elections

Overview of key tax rules, deductions, and elections affecting individuals and businesses.

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    Taxation and Deduction Concepts: A Review of Key Tax Rules and Elections Question 2 1 points Save The tax benefit received from a tax credit is affected by the tax rate of the taxpayer. True False Question 3 1 points Save If the shareholders of a calendar year C corporation elect S status on April 13, 2007, the election is effective for all of 2007. True False Question 4 1 points Save Realized gain or loss is measured by the difference between the amount realized from the sale or other disposition of property and the property’s adjusted basis at the date of disposition. True False Question 5 1 points Save In April 2007 Bertie, a calendar year cash basis taxpayer, had to pay the state of Michigan additional income tax for 2006. Even though it relates to 2006, for federal income tax purposes the payment qualifies as a tax deduction for tax year 2007. True False Question 6 1 points Save An eligible taxpayer may elect to receive advance payments of the earned income credit from his or her employer. True

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    False Question 7 1 points Save Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence. The appraisal fee qualifies as a deductible medical expense. True False Question 8 1 points Save The education tax credits are not available to help defray the cost of higher education if the income level of the taxpayer exceeds certain thresholds. True False Question 9 1 points Save When a taxpayer has purchased several lots of stock on different dates at different purchase prices and cannot identify the lot of stock that is being sold, he may choose which lot of stock is deemed to be sold. True False Question 10 1 points Save Partnerships are considered to be separate taxable entities and, consequently, do not avoid taxation at the entity level. True False Question 11 1 points Save An education expense deduction is not allowed if the education results in a promotion or pay raise for the employee. True False Question 12 1 points Save The § 179 deduction can exceed $112,000 in 2007 if the

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    taxpayer had a § 179 amount that exceeded the taxable income limitation in the prior year. True False Question 13 1 points Save In computing the NOL of a corporation, the dividends received deduction can be claimed. True False Question 14 1 points Save A partner’s basis in the partnership interest is decreased by his or her share of the tax - exempt income received by the partnership. True False Question 15 1 points Save Although partnerships are not subject to income tax, they are required to file income tax returns. True False Question 16 1 points Save Both education tax credits are available for qualified tuition expenses and, in certain instances, may also be available for room, board, and book costs. True False Question 17 1 points Save If Wal - Mart stock decreases in value during the tax year by $4,500, the amount realized is a negative $4,500. True False Question 18 1 points Save

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