Certified Public Accountant Taxation — Individual & Corporate 3

Question 1

What is the net investment income tax (NIIT) rate imposed under the Affordable Care Act on high-income individuals?

Accepted Answer

3.8%

Answer

The NIIT imposes an additional 3.8% tax on the lesser of net investment income or the excess of modified AGI above the threshold ($200,000 single, $250,000 MFJ).

Question 2

Under the IRC, what is the maximum deductibility limit for business meals (as of 2023 and beyond)?

Accepted Answer

50% deductible

Answer

Business meals are generally 50% deductible (as of 2023 and beyond), after the temporary 100% deduction for restaurant meals expired at the end of 2022.

Question 3

What is the federal tax treatment of alimony payments under divorce agreements executed after December 31, 2018?

Accepted Answer

Not deductible by the payer, not includable in recipient's income

Answer

Under the Tax Cuts and Jobs Act, for divorces executed after December 31, 2018, alimony is not deductible by the payer and not included in the recipient's gross income.

Question 4

Which depreciation method allows businesses to deduct a larger portion of an asset's cost in the early years of its life?

Accepted Answer

Double declining balance

Answer

The double declining balance method is an accelerated depreciation method that applies twice the straight-line rate to the asset's declining book value, front-loading deductions.

Question 5

What is the corporate alternative minimum tax (CAMT) rate introduced under the Inflation Reduction Act of 2022?

Accepted Answer

15%

Answer

The Inflation Reduction Act of 2022 created a new 15% corporate alternative minimum tax on the adjusted financial statement income of large corporations with over $1 billion in book income.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant Taxation — Individual & Corporate 3