CFC Tax Planning & Strategy 5

Question 1

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

Accepted Answer

April 15

Answer

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

Question 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?

Accepted Answer

Tax-loss harvesting

Answer

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.

Question 3

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

Accepted Answer

Transferring wealth out of the taxable estate free of gift tax

Answer

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.

Question 4

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

Accepted Answer

The full lease payment is typically deductible as a business expense

Answer

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

Question 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?

Accepted Answer

Value chain analysis / economic substance

Answer

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.

(CFC) Certified Financial Controller Practice Test

(CFC) Certified Financial Controller Practice Test

CFC Tax Planning & Strategy 5