Taxation & Regulatory Compliance Flashcards

Under IRC Section 163(j), the business interest expense deduction is generally limited to what percentage of adjusted taxable income (ATI) plus business interest income?

Answer: 30%

Section 163(j) limits the deduction for business interest expense to 30% of ATI plus business interest income plus floor plan financing interest.

A company subject to the alternative minimum tax (AMT) for corporations — which was reinstated by the Inflation Reduction Act for large corporations — faces a minimum tax rate of:

Answer: 15%

The Inflation Reduction Act of 2022 reinstated a 15% Corporate Alternative Minimum Tax (CAMT) on adjusted financial statement income for corporations with average annual income exceeding $1 billion.

Which Section of the Internal Revenue Code governs the tax treatment of like-kind exchanges of real property?

Answer: Section 1031

Section 1031 allows deferral of gain on the exchange of real property held for investment or business use, provided the replacement property is identified within 45 days and acquired within 180 days.

What disclosure is required under FIN 48 (ASC 740-10) when a company takes an uncertain tax position on its financial statements?

Answer: The benefit is recognized only if it is more-likely-than-not to be sustained upon examination

Under ASC 740-10, a tax benefit from an uncertain position is recognized only if it is more likely than not (>50% probability) to be sustained on its technical merits upon examination.

Which of the following transactions qualifies as a tax-free Type A reorganization under IRC Section 368?

Answer: Statutory merger or consolidation

A Type A reorganization under Section 368(a)(1)(A) is a statutory merger or consolidation under applicable state or federal law, allowing tax-free treatment for both parties.

Under the Dodd-Frank Wall Street Reform Act, which office handles whistleblower awards for individuals who report securities law violations to the SEC?

Answer: SEC Office of the Whistleblower

The SEC's Office of the Whistleblower administers the Dodd-Frank whistleblower program, which awards 10%–30% of sanctions exceeding $1 million to eligible tipsters.

For a corporation filing a consolidated federal tax return, which of the following describes an 'intercompany transaction'?

Answer: A transaction between two members of the same consolidated group

Intercompany transactions occur between members of the same affiliated group filing a consolidated return, and their income/expense effects are deferred until a triggering event occurs.