Taxation & Regulatory Compliance Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Taxation & Regulatory Compliance flashcards as text
A sole proprietor's net self-employment income is $100,000. What is the deductible portion of self-employment tax on Schedule 1?
Answer: One-half of the SE tax calculated on Schedule SE
IRC Section 164(f) allows a deduction equal to one-half of the self-employment tax computed on Schedule SE, reducing adjusted gross income.
Under the at-risk rules of IRC Section 465, a taxpayer's deductible loss is limited to the amount:
Answer: The taxpayer is personally liable for or has at risk
The at-risk rules limit deductions to amounts the taxpayer has personally invested plus recourse debt for which the taxpayer is personally liable.
A corporation distributes a dividend of $10,000 to an individual shareholder. The dividends qualify as 'qualified dividends.' What is the maximum federal tax rate on this income for a high-income taxpayer?
Answer: 23.8%
High-income taxpayers pay 20% on qualified dividends plus the 3.8% Net Investment Income Tax (NIIT), totaling 23.8%.
Which of the following is NOT a requirement for the home office deduction under IRC Section 280A?
Answer: The taxpayer must own (not rent) the home
The home office deduction is available to both homeowners and renters; ownership of the home is not a requirement under Section 280A.
When an S corporation has a built-in gain from its prior C corporation status, the built-in gains tax applies during the:
Answer: First 5 years after S election
The built-in gains tax under IRC Section 1374 applies to dispositions of assets within 5 years of the S corporation election (recognition period).
For gift tax purposes, the annual exclusion per donee in 2024 is:
Answer: $18,000
For 2024, the annual gift tax exclusion is $18,000 per donee, indexed for inflation.
Which entity type is NOT subject to the corporate alternative minimum tax (CAMT) enacted by the Inflation Reduction Act?
Answer: S corporations
S corporations are pass-through entities not subject to the 15% Corporate AMT; the CAMT applies only to large C corporations.