ACCA Taxation Principles and Regulations 2

Question 1

Under the US Internal Revenue Code, what is the standard deduction for a single filer for tax year 2024?

Accepted Answer

$14,600

Answer

For tax year 2024, the standard deduction for single filers is $14,600, adjusted annually for inflation.

Question 2

Which of the following best describes the concept of 'substance over form' in taxation?

Accepted Answer

Tax authorities look at the economic reality of a transaction rather than its legal form

Answer

The substance over form doctrine allows tax authorities to tax transactions based on their true economic substance rather than their legal characterization.

Question 3

A corporation has a net operating loss (NOL) in the current tax year. Under current US tax law, how may this NOL generally be treated?

Accepted Answer

Carried forward indefinitely, limited to 80% of taxable income

Answer

Post-2017 Tax Cuts and Jobs Act, NOLs are generally carried forward indefinitely but limited to 80% of taxable income in any carryforward year.

Question 4

Which type of tax treaty provision is specifically designed to prevent 'treaty shopping'?

Accepted Answer

Limitation on Benefits (LOB) clause

Answer

The Limitation on Benefits clause restricts treaty benefits to residents who meet specific ownership and activity tests, preventing third-country residents from exploiting treaties.

Question 5

Under ACCA's ATX module, what is the primary purpose of the General Anti-Abuse Rule (GAAR)?

Accepted Answer

To counteract tax advantages from abusive arrangements that cannot reasonably be regarded as reasonable

Answer

GAAR targets arrangements that are abusive—where obtaining a tax advantage cannot reasonably be regarded as a reasonable course of action in the circumstances.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Taxation Principles and Regulations 2