CTA Business Taxation 3

Question 1

Which tax form reports a self-employed individual's business income and expenses?

Accepted Answer

Schedule C

Answer

Schedule C (Profit or Loss from Business) is used by sole proprietors to report business income and deductible expenses.

Question 2

The self-employment tax rate for net self-employment earnings is:

Accepted Answer

15.3%

Answer

The self-employment tax rate is 15.3%, covering 12.4% for Social Security and 2.9% for Medicare.

Question 3

What is the net operating loss (NOL) carryforward rule under the Tax Cuts and Jobs Act?

Accepted Answer

No carryback, indefinite carryforward limited to 80% of taxable income

Answer

Post-2017 NOLs generally cannot be carried back but may be carried forward indefinitely, limited to 80% of taxable income.

Question 4

Unreimbursed partnership expenses paid by a partner are reported on:

Accepted Answer

Schedule E, with a notation

Answer

Partners may deduct unreimbursed partnership expenses on Schedule E as a reduction to their distributive share of partnership income.

Question 5

Which of the following is subject to the accumulated earnings tax?

Accepted Answer

C corporations accumulating earnings beyond reasonable business needs

Answer

The accumulated earnings tax applies to C corporations that retain earnings beyond the reasonable needs of the business to avoid shareholder-level tax.

CTA - Certified Tax Advisor Practice Test

CTA - Certified Tax Advisor Practice Test

CTA Business Taxation 3