CTC Business Taxation & Entity Structures 5

Question 1

Under the corporate alternative minimum tax (CAMT) enacted by the Inflation Reduction Act of 2022, which corporations are subject to the 15% minimum tax?

Accepted Answer

Corporations with average adjusted financial statement income over $1 billion

Answer

All C corporations with taxable income over $1 million

Answer

S corporations with passive income over $500,000

Answer

Foreign corporations with US-source income over $100 million

Question 2

When computing a partner's self-employment tax, which income from the partnership is generally included?

Accepted Answer

Guaranteed payments and distributive share of ordinary income for general partners

Answer

Only capital gain distributions from the partnership

Answer

Only guaranteed payments exceeding $10,000

Answer

All partnership distributions regardless of character

Question 3

A corporation's net operating loss (NOL) generated after December 31, 2017 can be carried back how many years?

Accepted Answer

0 years (no carryback allowed)

Answer

2 years

Answer

5 years

Answer

20 years

Question 4

What is the primary purpose of the accumulated earnings tax (AET) under IRC Sections 531-537?

Accepted Answer

To penalize corporations that accumulate earnings beyond reasonable business needs to avoid shareholder-level tax

Answer

To tax corporations that distribute excessive dividends to shareholders

Answer

To impose a minimum tax on corporations with no taxable income

Answer

To recapture excess depreciation upon corporate liquidation

Question 5

In a liquidating distribution, how does a corporate shareholder treat the gain or loss received from a subsidiary under IRC Section 332?

Accepted Answer

The liquidation is generally tax-free to the parent corporation receiving the distribution

Answer

The gain is taxable as ordinary income to the parent

Answer

The parent recognizes capital gain based on its stock basis in the subsidiary

Answer

The parent must amortize any gain over 15 years

Question 6

Which of the following correctly describes a 'pass-through deduction' limitation under IRC Section 199A for specified service trades or businesses (SSTBs)?

Accepted Answer

The SSTB deduction phases out for taxpayers with taxable income above a threshold (~$383,900 MFJ for 2024)

Answer

SSTBs always receive the full 20% deduction regardless of income

Answer

SSTBs are limited to a 10% deduction rather than 20%

Answer

SSTBs are exempt from the W-2 wage limitation

Question 7

For the purposes of the at-risk rules, which type of debt can increase a partner's at-risk amount?

Accepted Answer

Qualified nonrecourse financing for real property from a qualified lender

Answer

Nonrecourse debt secured only by real property

Answer

Debt owed to a related party with no personal liability

Answer

Debt guaranteed by another partner with no recourse against the borrowing partner