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CPA Exam REG |Questions with 100% Verified Answers
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CPA Exam REG |Questions with 100% VerifiedAnswers
A C corporation has the following capital gains and capital losses for years 1 and 2:
Capital Gains Capital Losses
Year 1 $250,000 $300,000
Year 2 $425,000 $350,000
If the C corporation had NO capital gains or losses prior to year 1, what is the
minimum net capital gain that can be reported for year 2?
A) $25,000
B) $50,000
C) 75,000
D) $425,000 - ✔️✔️A) $25,000
The following information relates to three corporations, Mauve, Teal, and
Fuchsia:
Stockholders Mauve Teal Fuchsia
Adams 10% 18% 22%
Jefferson 40% 22% 0%
Washington 50% 0% 0%
Brook 0% 33% 70%
,Smith 0% 27% 8%
Total 100% 100% 100%
None of the corporations has made a subchapter S election. Which of the
following statements about the corporation is true?
A) All three corporations must file a consolidated return.
B) All three corporations can elect to file a consolidated return.
C) Two of the three corporations can elect to file a consolidated return.
D) None of the corporations can file a consolidated return. - ✔️✔️D) None of the
corporations can file a consolidated return.
An S corporation is owned equally by A and B, whose respective stock bases at the
beginning of the year are $12,000 and $13,000. During the year, the corporation
had $100,000 in ordinary business income and $5,000 in tax-exempt income. The
corporation distributed $50,000 to each shareholder for the year. What is owner
B's stock basis at year end?
A) $15,500
B) $15,000
C) $13,000
D) $10,500 - ✔️✔️A) $15,500
J and K formed a general partnership by contributing $10,000 each. The
partnership incurred a loss of $30,000 in year 1, income of $6,000 in year 2, and
income of $10,000 in year 3. What is the adjusted basis for tax purposes of each
partner's interest in the partnership at the end of each year?
, Year 1 Year 2 Year 3
A) ($5,000) ($2,000) $3,000
B) $0 $0 $0
C) $0 $0 $3,000
D) $5,000 $2,000 ($3,000) - ✔️✔️Year 1 Year 2 Year 3
C) $0 $0 $3,000
Partner A has a 40% interest in ABC partnership, with a basis of $40,000. ABC
increased its liabilities by $125,000. What is Partner A's basis in ABC as a result of
the increase in liabilities?
A) ($10,000)
B) $0
C) $40,000
D) $90,000 - ✔️✔️D) $90,000
An individual taxpayer rejected the IRS examiner's findings in an audit of the
taxpayer's tax return. What will the IRS do in response to the taxpayer's rejection?
A) Issue a 30-day letter.
B) Begin immediate collection action.
C) Issue a statutory notice of deficiency.
D) Refer the case to the IRS Independent Office of Appeals. - ✔️✔️A) Issue a 30-day
letter.
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