CGA Taxation & Compliance 3

Question 1

A corporation pays a dividend to a domestic C corporation shareholder that owns 25% of the distributing corporation's stock. What dividends-received deduction (DRD) percentage applies?

Accepted Answer

80%

Answer

A corporation owning at least 20% but less than 80% of a distributing corporation's stock qualifies for an 80% dividends-received deduction.

Question 2

Under FBAR requirements, when must a US person file FinCEN Form 114 to report foreign financial accounts?

Accepted Answer

When aggregate foreign account balances exceed $10,000 at any time during the year

Answer

A US person must file an FBAR when the aggregate value of all foreign financial accounts exceeds $10,000 at any point during the calendar year.

Question 3

Which of the following accurately describes the tax treatment of qualified opportunity zone (QOZ) investments under current US tax law?

Accepted Answer

Capital gains invested in a QOZ fund can be deferred and potentially reduced if held long enough

Answer

Investing capital gains in a Qualified Opportunity Fund allows deferral until 2026 or disposition, and gains on the QOF investment itself are excluded if held at least 10 years.

Question 4

An S corporation shareholder has a stock basis of $20,000 and a loan basis of $5,000. The corporation allocates a $30,000 loss to the shareholder. How much loss may the shareholder deduct?

Accepted Answer

$25,000

Answer

S corporation losses are first limited by combined stock and debt basis; the shareholder can deduct up to $25,000 ($20,000 stock + $5,000 loan basis).

Question 5

Under the US transfer pricing rules of IRC § 482, what is the primary standard used to evaluate intercompany transactions between related parties?

Accepted Answer

The arm's length standard

Answer

IRC § 482 requires that intercompany transactions between related parties reflect the arm's length standard—the price that unrelated parties would agree to in similar circumstances.

(CGA) Certified General Accountant Practice Test

(CGA) Certified General Accountant Practice Test

CGA Taxation & Compliance 3