CPA REG Taxation Of Entities
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CPA taxation of entities involves navigating distinct tax regimes for corporations (C Corp, S Corp), partnerships, and LLCs, focusing on compliance, liability, and strategic planning. Key considerations include double taxation for C corps, flow-through taxation for partnerships/S corps, and managing deductions like Qualified Business Income (QBI).  Key Business Entity Taxation Types C Corporations: Taxed as separate legal entities, leading to double taxation (tax on corporate income and shareholder dividends). They provide maximum liability protection. S Corporations: Flow-through entities... Show more
CPA REG Taxation Of Entities
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18 Questions

1. When representing a client in an uncertain tax position, arrange the following standards in order from least likely to be upheld to most likely to be upheld.
2. Which of the following is correct regarding the due date of a partnership tax return?
I. Partnership tax returns are currently due 3.5 months after the close of the business year.
II. Partnership tax returns will be due 2.5 months after the close of the business year starting in 2017.
3. Krin is a partner in Prager Partnership. Which of the following represents a decrease in Krin’s partnership basis?
I. Distributions of cash from Prager Partnership to Krin
II. Loans made to the partnership from Krin
4. According to Circular 230, which of the following individuals may represent taxpayers before the IRS?
I. Registered tax return preparers
II. Attorneys
III. CPAs and enrolled agents
5. According to Circular 230, which of the following individuals may represent taxpayers before the IRS?
I. Registered tax return preparers
II. Attorneys
III. CPAs and enrolled agents
6. According to the AICPA’s “Statements on Standards for Tax Services” and IRS Circular 230, which of the following is correct?
I. When considering whether to give oral or written advice to a client, a CPA should consider the tax sophistication of the client and whether the client will seek a second opinion.
II. If new legislation will have an impact on advice previously given a year ago, a tax preparer need NOT advise the client of the new legislation even if the original advice was given in writing.
III. A tax return preparer is NOT permitted to endorse a taxpayer’s refund check.
7. Which of the following are generally includable as income by a partner in a partnership?
I. Partnership distributions of cash that are NOT in excess of basis
II. Guaranteed payments to partners
8. Gabriel, a self-employed individual, had income for Year 4 as follows:
In March of Year 6, Gabriel discovers that he had inadvertently omitted some income on his Year 4 return and retains Rutherford and Banks CPAs to determine his position under the statute of limitations. Rutherford and Banks CPAs should advise Gabriel that the six-year statute of limitations would apply to his Year 4 return only if he omitted from gross income an amount in excess of:
9. Which of the following items does a partnership entity pay taxes on?
I. Ordinary business income
II. Municipal bond interest income
10. What are the requirements to form an S corporation?
I. Must have at least two shareholders
II. Must adopt a calendar year (December 31) as its year end
11. When representing a client in an uncertain tax position, arrange the following standards in order from least likely to be upheld to most likely to be upheld.
12. Maskell, an individual taxpayer, had Year 2 taxable income of $195,000 with a corresponding tax liability of $40,000. For Year 3, Maskell expects taxable income of $264,000 and a tax liability of $50,000. In order to avoid a penalty for underpayment of estimated tax, what is the minimum amount of Year 3 estimated tax payments that Maskell can make?
13. Which of the following are generally includable as income by a partner in a partnership?
I. Partnership distributions of cash that are NOT in excess of basis
II. Guaranteed payments to partners
14. Which of the following items does a partnership entity pay taxes on?
I. Ordinary business income
II. Municipal bond interest income
15. Stefano Inc., has sales of inventory in excess of $10,000,000 for the past three tax years. Which of the following costs are subject to uniform capitalization?
I. Repackaging
II. Research
III. Advertising and marketing
16. Which of the following is correct regarding the due date of a partnership tax return?
I. Partnership tax returns are currently due 3.5 months after the close of the business year.
II. Partnership tax returns will be due 2.5 months after the close of the business year starting in 2017.
17. Which of the following entities must make their final payment of Year 4 taxes by December 15, Year 4?
I. C corporations
II. Individuals
III. S corporations
18. Quirk filed his Year 1 tax return on March 12, Year 2, and paid a small tax due for the prior year. What is the statute of limitation for this return?

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