Tax Planning & Preparation Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Tax Planning & Preparation flashcards as text
A C corporation has taxable income of $500,000. What flat federal corporate income tax rate applies under current law (post-TCJA)?
Answer: 21%
The Tax Cuts and Jobs Act of 2017 established a flat 21% federal corporate income tax rate for C corporations.
Which of the following is NOT a qualifying reason to avoid the 10% early withdrawal penalty from a traditional IRA?
Answer: Purchase of a vacation home
Purchase of a vacation home is not a listed exception to the 10% early distribution penalty under IRC Section 72(t).
A taxpayer contributes $6,000 to a Health Savings Account (HSA). What is the primary federal tax advantage of an HSA?
Answer: Contributions are deductible, grow tax-free, and qualified withdrawals are tax-free
HSAs offer a triple tax advantage: deductible contributions, tax-free growth, and tax-free qualified medical expense withdrawals.
What is the 'kiddie tax' and who does it apply to?
Answer: A rule taxing a child's unearned income at the parent's marginal rate
The kiddie tax taxes a child's net unearned income exceeding a threshold at the parent's marginal tax rate to prevent income-shifting strategies.
Under the alternative minimum tax (AMT) system, which of the following is an AMT preference item that may trigger AMT liability?
Answer: Accelerated depreciation on personal property
Accelerated MACRS depreciation in excess of straight-line depreciation is a preference item added back for AMT calculation purposes.
A taxpayer uses the home office deduction. Which method allows a simplified calculation of $5 per square foot up to 300 square feet?
Answer: Simplified method
The IRS simplified method allows $5 per square foot (max 300 sq ft = $1,500) without tracking actual home expenses.
What is the 'wash sale' rule, and what does it disallow?
Answer: Deducting losses on securities sold and repurchased within 30 days before or after the sale
The wash sale rule disallows a loss deduction when substantially identical securities are purchased within 30 days before or after the sale.