Taxation and Compliance Flashcards

For federal income tax purposes, which of the following fringe benefits is generally excludable from an employee's gross income?

Answer: Employer-provided health insurance premiums

Employer-paid health insurance premiums are excluded from employees' gross income under IRC §106.

A calendar-year S corporation must file its Form 1120-S by:

Answer: March 15, with an extension to September 15

S corporation Form 1120-S is due the 15th day of the 3rd month after year-end (March 15) with a 6-month extension to September 15.

The at-risk rules under IRC §465 limit loss deductions to:

Answer: The amount a taxpayer has economically at risk in the activity

At-risk rules prevent taxpayers from deducting losses exceeding the amount they could actually lose, including cash invested and recourse debt.

Which of the following income items is subject to self-employment tax?

Answer: Net profit from a Schedule C sole proprietorship

Net earnings from self-employment reported on Schedule C are subject to self-employment tax under IRC §1401.

Under the wash-sale rule (IRC §1091), a loss on a stock sale is disallowed if the taxpayer purchases substantially identical securities within:

Answer: 30 days before or after the sale

The wash-sale rule disallows a loss when substantially identical securities are purchased within the 61-day window (30 days before to 30 days after the sale).

An employer must issue Form W-2 to employees no later than:

Answer: January 31 of the following year

Employers are required to furnish Form W-2 to employees and file copies with the SSA by January 31.

Which depreciation method is required for most real property under MACRS for regular tax purposes?

Answer: Straight-line method over 27.5 years (residential) or 39 years (nonresidential)

MACRS requires straight-line depreciation for residential rental property over 27.5 years and nonresidential real property over 39 years.