Question: Each of the following is a common exemption/exclusion from state sales/use tax except:

Answer Choices: a. Purchases of inventory for resale b. Tangible personal property c. Food purchased from the grocery store d. Real property purchases

Answer: b. Tangible personal property

Question: The “inside basis” is defined as a partner’s basis in the partnership interest.

Answer Choices: True False

Answer: False

Question: Partners treat guaranteed payments as ordinary income.

Answer Choices: True False

Answer: True

Question: How much of Perk’s losses may Monica deduct for the current year?

Answer Choices: a. $130,000 b. $90,000 c. $150,000 d. $105,000

Answer: b. $90,000

Question: Which of the following is the correct order in which loss limitation rules are applied to S Corporation shareholders?

Answer Choices: a. At-Risk Rules, Basis Rules, Passive Loss Rules b. Basis Rules, At-Risk Rules, Passive Loss Rules c. Passive Loss Rules, Basis Rules, At-Risk Rules d. Basis Rules, Passive Loss Rules, At-Risk Rules

Answer: b. Basis Rules, At-Risk Rules, Passive Loss Rules

Question: Which of the following would be a negative adjustment ABC would make in its calculation?

Answer Choices: a. Federal Dividends Received Deduction b. State X Income Tax c. State X Municipal Bond Interest Income d. State X Depreciation in excess of Federal Depreciation

Answer: d. State X Depreciation in excess of Federal Depreciation

Question: The state in which a corporation has its headquarters and directs its operations establishes the corporation’s commercial domicile.

Answer Choices: True False

Answer: True

Question: Under the at-risk rules, qualifying non-recourse financing generally is included in the partner’s amount at risk.

Answer Choices: True False

Answer: True

Question: When property is contributed to partnerships during formation qualifying under section 721, the partner will recognize all gains and losses.

Answer Choices: True False

Answer: False

Question: Economies of scale (i.e. group discounts and efficiencies due to size) does not establish whether a group of businesses is unitary.

Answer Choices: True False

Answer: True

Question: How much sales tax must Hannah collect and remit?

Answer Choices: a. $79,700 b. $64,250 c. $85,495 d. $75,650

Answer: c. $85,495

Question: What is the passive income penalty tax payable, if any?

Answer Choices: a. $26,775 b. $17,462 c. $83,152 d. $0

Answer: b. $17,462

Question: Calculate Phoebe’s gain or loss recognized and her stock basis.

Answer Choices: a. Recognized gain of $10,000; stock basis $350,000 b. Recognized gain of $60,000; stock basis $400,000 c. Recognized gain of $10,000; stock basis $340,000 d. Recognized gain of $0; stock basis $350,000

Answer: a. Recognized gain of $10,000; stock basis $350,000

Question: Partnerships are required to file which tax form?

Answer Choices: a. Form 1120 b. Form 1040 c. Form 1065 d. Form 1120-S

Answer: c. Form 1065

Question: Which of the following would not be a deductible item when a partnership is formed?

Answer Choices: a. Organizational expenditures b. Startup expenditures c. Syndication costs d. All of the above are deductible items

Answer: c. Syndication costs