CCA Taxation & Regulatory Compliance 4

Question 1

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?

Accepted Answer

30%

Answer

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

Question 2

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:

Accepted Answer

15%

Answer

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.

Question 3

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

Accepted Answer

Section 1031

Answer

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.

Question 4

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

Accepted Answer

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

Answer

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.

Question 5

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

Accepted Answer

Statutory merger or consolidation

Answer

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.

(CCA) Certified Corporate Accountant Practice Test

(CCA) Certified Corporate Accountant Practice Test

CCA Taxation & Regulatory Compliance 4