Accounting Online Program US Tax Accounting 2

Question 1

A C-corporation's federal income tax is paid by:

Accepted Answer

The corporation itself as a separate taxable entity

Answer

A C-corporation is a separate taxable entity that pays corporate income tax, and shareholders also pay tax on dividends, resulting in double taxation.

Question 2

Which entity type avoids corporate double taxation by passing income through to owners' personal returns?

Accepted Answer

S-corporation

Answer

An S-corporation is a pass-through entity where income, losses, and credits flow through to shareholders' personal tax returns, avoiding corporate-level tax.

Question 3

What is the purpose of Form W-2 in US tax accounting?

Accepted Answer

To report wages, salary, and taxes withheld by an employer

Answer

Form W-2 is issued by employers to employees and reports annual wages, tips, and amounts withheld for federal, state, and FICA taxes.

Question 4

Depreciation for tax purposes under the MACRS system refers to:

Accepted Answer

Modified Accelerated Cost Recovery System

Answer

MACRS (Modified Accelerated Cost Recovery System) is the depreciation method mandated by the IRS for most tangible business assets placed in service after 1986.

Question 5

What is a net operating loss (NOL) in US tax law?

Accepted Answer

When deductions exceed gross income from business operations

Answer

An NOL occurs when a business's allowable deductions exceed its gross income for the tax year, and it may be carried forward to reduce future taxable income.

Accounting Online Program Practice Test

Accounting Online Program Practice Test

Accounting Online Program US Tax Accounting 2