ABC Tax Planning & Compliance 2

Question 1

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

Accepted Answer

Prepay deductible expenses before year-end

Answer

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

Question 2

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

Accepted Answer

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

Answer

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

Question 3

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

Accepted Answer

Material nonpublic information that could affect stock price

Answer

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

Question 4

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

Accepted Answer

Form 1065

Answer

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.

Question 5

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

Accepted Answer

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

Answer

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.

(ABC) Accredited Business Communicator Practice Test

(ABC) Accredited Business Communicator Practice Test

ABC Tax Planning & Compliance 2