Practice Test Geeks(ABC) Accredited Business Communicator Practice Test
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Tax Planning & Compliance Flashcards

7 cards from real ABC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A company wants to accelerate deductions into the current tax year to reduce taxable income. Which strategy best achieves this?

    Answer: Prepay deductible expenses before year-end

    Prepaying deductible expenses such as rent, insurance, or subscriptions before December 31 allows businesses to accelerate deductions into the current tax year.

  2. Under the Internal Revenue Code, what is the general statute of limitations for the IRS to audit a standard federal income tax return?

    Answer: 3 years from filing date or due date, whichever is later

    The IRS generally has 3 years from the later of the filing date or due date to assess additional tax on a standard return.

  3. A business communicator drafting a press release about a corporate merger must avoid disclosing which of the following without proper authorization?

    Answer: Material nonpublic information that could affect stock price

    Material nonpublic information (MNPI) must not be disclosed publicly before official release, as doing so can violate SEC Regulation FD and insider trading rules.

  4. Which tax form do U.S. partnerships use to report income, deductions, and credits passed through to partners?

    Answer: Form 1065

    Form 1065 is the U.S. Return of Partnership Income, used to report the partnership's income and pass through items to partners via Schedule K-1.

  5. What is the primary purpose of a Section 1031 like-kind exchange in business tax planning?

    Answer: To defer capital gains taxes on the sale of qualifying business property

    A Section 1031 exchange allows taxpayers to defer recognition of capital gains when they sell business or investment property and reinvest proceeds in like-kind replacement property.

  6. A corporation pays dividends to shareholders. How are qualified dividends generally taxed at the individual level in the U.S.?

    Answer: At preferential long-term capital gains rates

    Qualified dividends are taxed at the preferential long-term capital gains rates of 0%, 15%, or 20%, depending on the taxpayer's taxable income.

  7. Which concept describes the practice of timing income recognition and deductions to minimize total tax liability across multiple years?

    Answer: Intertemporal income shifting

    Intertemporal income shifting legally moves income and deductions between tax years to take advantage of lower rates or higher deductions in specific periods.