Tax Credits and Deductions 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 Tax Credits and Deductions flashcards as text
The Research and Development Tax Credit (Section 41) is available to businesses that incur qualified research expenses in what type of activities?
Answer: Research to develop new or improved business components through technological uncertainty
The R&D credit applies to qualifying research activities that meet a 4-part test including technological uncertainty and elimination of uncertainty through experimentation.
Which of the following is a non-refundable tax credit?
Answer: Foreign Tax Credit
The Foreign Tax Credit is non-refundable and can only offset US tax liability, not generate a refund, though excess may be carried forward.
The Premium Tax Credit (PTC) assists eligible individuals with purchasing health insurance through:
Answer: Health insurance marketplaces established under the ACA
The Premium Tax Credit subsidizes health insurance premiums for eligible individuals and families purchasing coverage through ACA marketplaces.
Business meals with clients are deductible at what percentage under current law?
Answer: 50%
Business meals with clients or for business purposes are generally 50% deductible under IRC Section 274.
Qualified education loan interest is deductible up to what maximum amount per year?
Answer: $2,500
Taxpayers may deduct up to $2,500 of qualified student loan interest per year, subject to income phase-out limits.
The Low-Income Housing Tax Credit (LIHTC) under Section 42 incentivizes:
Answer: Investment in affordable rental housing development
The LIHTC provides tax credits to investors in qualifying low-income housing projects, incentivizing the development and preservation of affordable rental housing.