CGA Taxation & Compliance 2

Question 1

A corporation has a net operating loss (NOL) generated in 2023. Under current US tax law, what is the maximum percentage of taxable income that can be offset by NOL carryforwards?

Accepted Answer

80%

Answer

Under the Tax Cuts and Jobs Act, NOL carryforwards are limited to 80% of taxable income for losses arising after December 31, 2017.

Question 2

Which IRC section governs the treatment of like-kind exchanges for real property, allowing deferral of capital gains?

Accepted Answer

IRC § 1031

Answer

IRC § 1031 allows taxpayers to defer capital gains taxes when exchanging qualifying real property for other like-kind real property.

Question 3

A self-employed individual earns $150,000 in net self-employment income. What percentage of self-employment tax is deductible as an above-the-line deduction on Form 1040?

Accepted Answer

50%

Answer

Self-employed individuals may deduct 50% of self-employment taxes paid as an above-the-line adjustment to income.

Question 4

Under the constructive receipt doctrine, when is income generally recognized by a cash-basis taxpayer?

Accepted Answer

When income is made available without substantial limitation

Answer

The constructive receipt doctrine requires cash-basis taxpayers to recognize income when it is made available to them without substantial limitations, even if not actually received.

Question 5

Which of the following fringe benefits is generally excluded from an employee's gross income under IRC § 132?

Accepted Answer

Working condition fringe benefits

Answer

Working condition fringe benefits—property or services an employee could deduct as a business expense if paid personally—are excluded from gross income under IRC § 132(d).

(CGA) Certified General Accountant Practice Test

(CGA) Certified General Accountant Practice Test

CGA Taxation & Compliance 2