Business Taxation Flashcards
6 cards from real CTA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Business Taxation flashcards as text
Which IRC Section allows small businesses to immediately expense the cost of qualifying property rather than depreciate it over time?
Answer: Section 179
IRC Section 179 allows businesses to immediately deduct the cost of qualifying property up to an annual limit.
What is the purpose of Schedule K-1 in partnership taxation?
Answer: To allocate each partner's distributive share of income, deductions, and credits
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.
Which of the following expenses is generally NOT deductible for a C corporation?
Answer: Dividends paid to shareholders
Dividends paid to shareholders are not deductible by a C corporation and represent the core of double taxation.
What is the corporate alternative minimum tax (CAMT) rate introduced by the Inflation Reduction Act?
Answer: 15%
The Inflation Reduction Act of 2022 established a 15% corporate alternative minimum tax on adjusted financial statement income for large corporations.
Under the MACRS system, what is the recovery period for 5-year property (e.g., automobiles, computers)?
Answer: 5 years
Under MACRS, 5-year property has a 5-year recovery period using the 200% declining balance method.
Which of the following business entities provides limited liability protection to all owners while being taxed as a partnership by default?
Answer: Limited liability company (LLC)
An LLC with multiple members provides limited liability to all members and is taxed as a partnership by default.