Practice Test Geeks(CFC) Certified Financial Controller Practice Test
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Tax Planning & Strategy Flashcards

7 cards from real CFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A calendar-year C corporation files its federal income tax return. What is the standard due date (without extension) for its Form 1120?

    Answer: April 15

    Form 1120 for a calendar-year C corporation is due on April 15, with an available automatic 6-month extension to October 15.

  2. Which tax planning technique involves deliberately realizing capital losses before year-end to offset capital gains and reduce the current year's tax bill?

    Answer: Tax-loss harvesting

    Tax-loss harvesting is the strategic sale of securities or assets at a loss to offset realized capital gains, reducing net taxable gain for the year.

  3. Under the unified gift and estate tax system, what is the primary purpose of annual exclusion gifting ($18,000 per recipient in 2024)?

    Answer: Transferring wealth out of the taxable estate free of gift tax

    Annual exclusion gifts remove assets from the donor's taxable estate without using any lifetime exemption or triggering gift tax, gradually reducing the gross estate.

  4. A corporation leases rather than purchases equipment. From a tax planning perspective, one key advantage is:

    Answer: The full lease payment is typically deductible as a business expense

    Operating lease payments are generally fully deductible as ordinary business expenses, which may provide greater immediate deductions than capitalizing and depreciating purchased property.

  5. Which international tax concept requires that a multinational's profit be allocated to the country where economic value is created, based on OECD BEPS guidelines?

    Answer: Value chain analysis / economic substance

    OECD BEPS Action Plans require that profits be aligned with the actual functions, assets, and risks in the value chain—preventing profit allocation to jurisdictions with no real economic activity.

  6. A financial controller is structuring an employee stock ownership plan (ESOP). A key federal tax benefit for a C corporation sponsoring an ESOP is:

    Answer: The corporation can deduct contributions of stock or cash used to repay ESOP acquisition loans

    C corporations can deduct both principal and interest on loans used by the ESOP to acquire employer stock, making ESOPs a tax-efficient way to finance acquisitions and reward employees.

  7. Under IRC §1245, when depreciable personal property is sold at a gain, what portion of the gain is subject to recapture as ordinary income?

    Answer: All depreciation previously deducted, up to the total gain recognized

    §1245 recaptures all depreciation deductions previously taken on personal property as ordinary income, up to but not exceeding the total gain realized on the sale.