US Tax Accounting Flashcards
6 cards from real Accounting Online Program practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 US Tax Accounting flashcards as text
A C-corporation's federal income tax is paid by:
Answer: The corporation itself as a separate taxable entity
A C-corporation is a separate taxable entity that pays corporate income tax, and shareholders also pay tax on dividends, resulting in double taxation.
Which entity type avoids corporate double taxation by passing income through to owners' personal returns?
Answer: S-corporation
An S-corporation is a pass-through entity where income, losses, and credits flow through to shareholders' personal tax returns, avoiding corporate-level tax.
What is the purpose of Form W-2 in US tax accounting?
Answer: To report wages, salary, and taxes withheld by an employer
Form W-2 is issued by employers to employees and reports annual wages, tips, and amounts withheld for federal, state, and FICA taxes.
Depreciation for tax purposes under the MACRS system refers to:
Answer: Modified Accelerated Cost Recovery System
MACRS (Modified Accelerated Cost Recovery System) is the depreciation method mandated by the IRS for most tangible business assets placed in service after 1986.
What is a net operating loss (NOL) in US tax law?
Answer: When deductions exceed gross income from business operations
An NOL occurs when a business's allowable deductions exceed its gross income for the tax year, and it may be carried forward to reduce future taxable income.
Self-employment tax in the US covers which programs?
Answer: Social Security and Medicare
Self-employment tax covers both Social Security (12.4%) and Medicare (2.9%), which equals the combined employer and employee FICA contributions that salaried employees split with their employers.