Which of the following entities may select any tax period (calendar or fiscal)?

A corporation filing its first return must “annualize” its income if the tax period is less than 12 months. A corporation filing its first return must “annualize” its income if the tax period is less than 12 months.1. A corporation filing its first return must “annualize” its income if the tax period is less than 12 months.a. Trueb. False2. A taxable year may be as short as one day and may exceed 366 days.a. Trueb. False3. Computing “cost of goods sold” and being on the accrual basis are independent of each other.a. Trueb. False4. If, in the IRS’s opinion, the taxpayer’s books do not “clearly reflect income,” the IRS may revise them so that they do.a. Trueb. False5. Taxpayers must generally obtain the permission of the IRS to change accounting methods.a. Trueb. False6. A correction of an error in a tax return is usually considered a change in accounting method.a. Trueb. False7. A business cannot be taxed as a corporation unless it is incorporated under local law.a. Trueb. False8. A partnership is not a tax-paying entity.a. Trueb. False9. The dividends received deduction is 70 percent of dividends received out of the earnings and profits of taxable, domestic corporations.a. Trueb. False10. Cash basis corporations can only deduct charitable contributions in the year made.a. Trueb. False11. A shareholder recognizes no gain on a capital contribution to a corporation merely because he is a minority shareholder.a. Trueb. False12. The receipt of boot in a Code Sec. 351 transfer precludes any nonrecognition treatment.a. Trueb. False13. Most corporations must use the accrual method of accounting.a. Trueb. False14. A corporation’s deduction for charitable contributions is limited to 50 percent of adjusted taxable income.a. Trueb. False15. Organizational expenditures must be capitalized but may be amortized over 60 months or longer.a. Trueb. False16. A distribution is not a dividend if the accumulated deficit exceeds current E&P.a. Trueb. False17. A distribution of nontaxable stock dividends does not reduce the corporation’s E&P.a. Trueb. False18. Code Sec. 302(b)(2) provides that a substantially proportionate redemption be treated as a sale or exchange.a. Trueb. False19. In computing current E&P, the realized (but not recognized) gain on an involuntary conversion is added to taxable income.a. Trueb. False20. A distribution by a corporation can never make its E&P negative.a. Trueb. FalseMultiple Choice1. Which of the following is not a method of accounting?a. Cash receipts and disbursements methodb. Accrual methodc. LIFO inventoryd. Long-term contracts methode. None of the above2. An accrual basis taxpayer must recognize income when a sale is made, even if on credit. This means that income is recognized:a. When the order is receivedb. When the delivery is madec. When the invoice is mailedd. At any of the above events, if consistently used3. A corporation must “annualize” a short taxable year resulting from:a. Going out of businessb. Starting in businessc. Changing from one fiscal year to anotherd. Joining an affiliated group and filing consolidated returns4. The following statements about cash and accrual basis taxpayers are all false, except:a. Both cash and accrual basis taxpayers include prepaid rent in gross income.b. Both cash and accrual basis taxpayers are taxed on rent paid late when received.c. The timing of dividend income may depend on the record date.d. Constructive receipt is a concept affecting both cash and accrual method taxpayers.5. All of the following tax years are acceptable tax years except:a. 52-53-week tax year.b. Short tax year which occurred because a business was not in existence for an entire year.c. Short tax year which occurred because a business had a change in accounting period.d. Fiscal tax year (other than a 52-53-week tax year) that ends on any day of the month other than the last day.6. The uniform capitalization rules apply to which one of the following properties?a. Property you produce under a long-term contractb. Personal property you purchase for resale, if your average annual gross receipts are $10,000,000 or lessc. Costs paid or incurred by an individual (other than as an employee) or a qualified employee-owner of a personal service corporation in the business of being a writer, photographer, or artistd. Real property or tangible personal property which you produce for sale to customers7. Which of the following entities may select any tax period (calendar or fiscal)?a. sole partnershipb. partnershipc. S corporationsd. trustse. corporations other than S corporations.8. Which entities must have tax years that conform with the tax years of their owners?a. partnershipsb. S corporationsc. personal service corporationsd. all of the abovee. none of the above9. Which factors should be considered when selecting a tax year for a taxpayer?a. business factorsb. natural business yearc. timing of income and deductionsd. tax law requirementse. all of the abovef. none of the above10. The check-the-box election to be taxed as a corporation applies to:a. corporationsb. partnershipsc. trustsd. all of the abovee. none of the above11. When deciding if a corporate instrument is debt or equity, the IRS will consider:a. the corporation’s debt to equity ratiob. if the debt is convertable into stockc. the relationship between stock and debt ownership percentagesd. if the debt is preferred over or subordinate to other debte. all of the abovef. none of the above12. A corporation must do which of the following with respect to its accounting period?a. select a calendar yearb. select a fiscal year if it has a business reason for selctionc. select a calendar year or fiscal, regardless of the reason for selectiond. select a year that is the saem as its major shareholderse. none of the above13. Members of a parent-subsidiary controlled group may:a. file separate tax returnsb. file separate tax returns and may elect a 100 percent dividends-received deductionc. file a consolidated tax returnd. all of the abovee. none of the above14. The following entities are not subject to double taxation except:a. partnershipb. sole proprietorshipc. C corporationd. S corporatione. all are subject to double taxationf. none are subject to double taxation15. Under the “check-the-box” system, which of the following entities could not select, or qualify for, corporate status?a. sole proprietorshipb. partnershipc. associationsd. none of the above may elect or qualify for corporate statuse. all of the above may elect or qualify for corporate status16. Absent any special provision (e.g., Code Sec. 351), a transfer of property from a shareholder to a corporation in return for its shares would result in:a. full gain or loss recognitionb. partial gain or loss recognitionc. no gain or loss recognitiond. none of the above17. The provisions of Code Sec. 351 are:a. Optional if elected by a majority of the shareholdersb. Optional if elected by all the shareholdersc. Optional if elected by the corporationd. Mandatory18. Corporations and individuals differ in that:a. corporations are not permitted tax creditsb. corporations are not entitled to exclusionsc. corporations do not have for AGI and from AGI deductionsd. like-kind exchange provisions do not apply to corporations19. In general, a large C corporation:a. may use any accounting method it selectsb. may use any hybrid methodc. must use the cash basis onlyd. must use the accrual basis only20. A distribution to the shareholders of stock in the distributor constitutes a taxable dividend, except for the following:a. Distribution of preferred stock to the common shareholdersb. Proportionate distribution of common stock to the common shareholders, where they all could have taken cash instead, but nobody didc. Distribution of convertible preferred stock to any shareholderd. Distribution of common stock to the preferred stockholdersShare this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Google+ (Opens in new window)


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