CTA Business Taxation 2

Question 1

Which IRC Section allows small businesses to immediately expense the cost of qualifying property rather than depreciate it over time?

Accepted Answer

Section 179

Answer

IRC Section 179 allows businesses to immediately deduct the cost of qualifying property up to an annual limit.

Question 2

What is the purpose of Schedule K-1 in partnership taxation?

Accepted Answer

To allocate each partner's distributive share of income, deductions, and credits

Answer

Schedule K-1 is issued by partnerships to each partner showing their allocated share of income, losses, deductions, and credits for use on their individual returns.

Question 3

Which of the following expenses is generally NOT deductible for a C corporation?

Accepted Answer

Dividends paid to shareholders

Answer

Dividends paid to shareholders are not deductible by a C corporation and represent the core of double taxation.

Question 4

What is the corporate alternative minimum tax (CAMT) rate introduced by the Inflation Reduction Act?

Accepted Answer

15%

Answer

The Inflation Reduction Act of 2022 established a 15% corporate alternative minimum tax on adjusted financial statement income for large corporations.

Question 5

Under the MACRS system, what is the recovery period for 5-year property (e.g., automobiles, computers)?

Accepted Answer

5 years

Answer

Under MACRS, 5-year property has a 5-year recovery period using the 200% declining balance method.

CTA - Certified Tax Advisor Practice Test

CTA - Certified Tax Advisor Practice Test

CTA Business Taxation 2