Question 1

_____ 3.When a taxpayer has a tax year of less than 12 months,the taxpayer must always annualize income.

Accepted Answer

A) True 
 B)False

Question 2

_____ 20.Individuals who live in one state but work in another may be subject to income taxes at the state level in both jurisdictions.

Accepted Answer

A) True 
 B)False

Question 3

All of the following result in nontaxable income except:

Accepted Answer

A) Stock dividend 
B) Interest on municipal bonds 
C) Capital gain distribution reinvested in the mutual fund 
D) Distribution identified as a return of capital 
A) Stock dividend 
B) Interest on municipal bonds 
C) Capital gain distribution reinvested in the mutual fund 
D) Distribution identified as a return of capital

Question 4

Under the competed contract method of accounting,how much profit (loss)should Carbon recognize in years 1,2,and 3 respectively?

Accepted Answer

A) $0,$0,$250,000 
B) $0,$0,$400,000 
C) $100,000,$300,000, ($150,000) 
D) $75,000,$225,000, ($50,000) 
A) $0,$0,$250,000 
B) $0,$0,$400,000 
C) $100,000,$300,000, ($150,000) 
D) $75,000,$225,000, ($50,000)

Question 5

William lives in Delaware but works for a company that has offices in both Maryland and Pennsylvani a.William spent four months working in Pennsylvania and 8 months working in Maryland.

Accepted Answer

A) Only Delaware can impose a state income tax on his income. 
B) Only Maryland can impose a state income tax on his income as he worked there the longer time period. 
C) Only Pennsylvania and Maryland can impose state income taxes on his income. 
D) Delaware,Pennsylvania,and Maryland can impose state income taxes on his income.
Use the following information for problems 45 through 48.
Carbon Corporation had a $2,000,000 contract to build a small hospital with total costs estimated at $1,600,000.It received the following payments and incurred the following expenses over the three-year contract period:
Year Payments Expenses
1 $ 400,000 $300,000
2 $1,200,000 $900,000
3 $ 400,000 $550,000 
A) Only Delaware can impose a state income tax on his income. 
B) Only Maryland can impose a state income tax on his income as he worked there the longer time period. 
C) Only Pennsylvania and Maryland can impose state income taxes on his income. 
D) Delaware,Pennsylvania,and Maryland can impose state income taxes on his income.
Use the following information for problems 45 through 48.
Carbon Corporation had a $2,000,000 contract to build a small hospital with total costs estimated at $1,600,000.It received the following payments and incurred the following expenses over the three-year contract period:
Year Payments Expenses
1 $ 400,000 $300,000
2 $1,200,000 $900,000
3 $ 400,000 $550,000

Question 6

Clayton Corporation receives $100,000 to provide garbage service for the next four years:

Accepted Answer

A) Clayton must recognize income over the four years for both tax and accounting purposes. 
B) Clayton can include the entire $100,000 in income currently for both tax and accounting purposes. 
C) The $100,000 creates a permanent difference between tax and accounting income. 
D) The $100,000 creates a timing difference between tax and accounting income. 
A) Clayton must recognize income over the four years for both tax and accounting purposes. 
B) Clayton can include the entire $100,000 in income currently for both tax and accounting purposes. 
C) The $100,000 creates a permanent difference between tax and accounting income. 
D) The $100,000 creates a timing difference between tax and accounting income.

Question 7

All of the following are allowable tax years except:

Accepted Answer

A) The last Friday of July 
B) December 31 
C) The Sunday closest to March 1 
D) August 31 
A) The last Friday of July 
B) December 31 
C) The Sunday closest to March 1 
D) August 31

Question 8

_____ 23.A taxpayer must elect to use the installment method on qualifying sales.

Accepted Answer

A) True 
 B)False

_____ 3.When a taxpayer has a tax year of less than 12 months,the taxpayer must always annualize income.

_____ 20.Individuals who live in one state but work in another may be subject to income taxes at the state level in both jurisdictions.

All of the following result in nontaxable income except:

Under the competed contract method of accounting,how much profit (loss)should Carbon recognize in years 1,2,and 3 respectively?

William lives in Delaware but works for a company that has offices in both Maryland and Pennsylvani a.William spent four months working in Pennsylvania and 8 months working in Maryland.

Clayton Corporation receives $100,000 to provide garbage service for the next four years:

All of the following are allowable tax years except:

_____ 23.A taxpayer must elect to use the installment method on qualifying sales.

Introduction to Taxation

The Tax Practice Environment

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters

Exam 3: Determining Gross Income

_____ 3.When a taxpayer has a tax year of less than 12 months,the taxpayer must always annualize income.

_____ 20.Individuals who live in one state but work in another may be subject to income taxes at the state level in both jurisdictions.

All of the following result in nontaxable income except:

Under the competed contract method of accounting,how much profit (loss)should Carbon recognize in years 1,2,and 3 respectively?

William lives in Delaware but works for a company that has offices in both Maryland and Pennsylvani a.William spent four months working in Pennsylvania and 8 months working in Maryland.

Clayton Corporation receives $100,000 to provide garbage service for the next four years:

All of the following are allowable tax years except:

_____ 23.A taxpayer must elect to use the installment method on qualifying sales.

Introduction to Taxation

The Tax Practice Environment

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters