ABA Tax Preparation & Compliance 4

Question 1

Which of the following best describes the 'kiddie tax' rules under IRC §1(g)?

Accepted Answer

Unearned income of children under age 19 (or full-time students under 24) above a threshold is taxed at the parent's marginal rate

Answer

The kiddie tax taxes net unearned income of qualifying children above a threshold at the parent's marginal rate to prevent income-shifting to lower-bracket children.

Question 2

A taxpayer has a $12,000 net capital loss in 2024. How much can be deducted against ordinary income, and what happens to the remainder?

Accepted Answer

$3,000 deducted; $9,000 carries forward indefinitely

Answer

Individuals may deduct up to $3,000 of net capital losses against ordinary income per year; the remaining $9,000 carries forward to future years.

Question 3

What is the standard mileage rate for business use of a vehicle for 2024?

Accepted Answer

67 cents per mile

Answer

For 2024, the IRS standard mileage rate for business use is 67 cents per mile, up from 65.5 cents in 2023.

Question 4

Under IRC §1231, which of the following assets qualifies as a Section 1231 property?

Accepted Answer

Depreciable real property used in a trade or business held over one year

Answer

Section 1231 property includes depreciable property and real property used in a trade or business and held for more than one year, providing favorable tax treatment.

Question 5

A calendar-year C corporation must file its Form 1120 by what date (without extension)?

Accepted Answer

April 15 (3.5 months after year-end)

Answer

C corporations filing Form 1120 must file by the 15th day of the 4th month after year-end, which is April 15 for calendar-year corporations.

(ABA) Accredited Business Accountant Practice Test

(ABA) Accredited Business Accountant Practice Test

ABA Tax Preparation & Compliance 4