CA Taxation & Regulatory Compliance 2

Question 1

A corporation with a fiscal year ending March 31 must file its federal income tax return by which date (without extension)?

Accepted Answer

July 15

Answer

C-corporations must file Form 1120 by the 15th day of the fourth month after the fiscal year ends, so March 31 year-end → July 15.

Question 2

Under IRC Section 1231, which of the following assets would be classified as a Section 1231 asset when held for more than one year?

Accepted Answer

Depreciable business equipment

Answer

Section 1231 assets include depreciable property and real property used in a trade or business and held for more than one year; inventory and receivables are excluded.

Question 3

Which penalty applies when a taxpayer substantially understates income tax (understating by more than $5,000 or 10% of correct tax)?

Accepted Answer

Accuracy-related penalty of 20% of underpayment

Answer

IRC Section 6662 imposes a 20% accuracy-related penalty on the underpayment attributable to a substantial understatement of income tax.

Question 4

A calendar-year individual taxpayer must make estimated tax payments if expected tax liability after withholding will exceed:

Accepted Answer

$1,000

Answer

Under IRC Section 6654, estimated tax payments are required if the taxpayer expects to owe at least $1,000 in tax after withholding and credits.

Question 5

For federal income tax purposes, a passive activity loss can generally be deducted against:

Accepted Answer

Passive income only

Answer

Under IRC Section 469, passive activity losses can only offset passive activity income; excess losses are suspended until the activity is disposed of.

(CA) Certified Accountant Practice Test

(CA) Certified Accountant Practice Test

CA Taxation & Regulatory Compliance 2