(CPA) Regulation Flashcards
7 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 (CPA) Regulation flashcards as text
A taxpayer sells a capital asset held for 14 months at a gain. How is this gain classified for federal income tax purposes?
Answer: Long-term capital gain
Assets held more than 12 months qualify for long-term capital gain treatment.
Under the Uniform Partnership Act, which of the following acts requires unanimous consent of all partners?
Answer: Admitting a new partner
Admitting a new partner requires unanimous consent of all existing partners.
Which of the following best describes the 'check-the-box' regulations for federal tax purposes?
Answer: Rules allowing eligible entities to elect their tax classification
Check-the-box regulations allow eligible entities to elect how they are classified for federal tax purposes.
A client receives $5,000 in compensatory damages and $20,000 in punitive damages from a personal injury lawsuit. What amount is includible in gross income?
Answer: $20,000
Compensatory damages for physical injury are excluded from income, but punitive damages are always taxable.
Under the Statute of Frauds, which contract must be in writing to be enforceable?
Answer: A contract for the sale of real property
Contracts for the sale of real property must be in writing to be enforceable under the Statute of Frauds.
Which of the following is an above-the-line deduction for individual taxpayers?
Answer: Student loan interest
Student loan interest is deductible above-the-line (as an adjustment to gross income) on Form 1040.
A corporation distributes property with a fair market value of $80,000 and an adjusted basis of $50,000 to a shareholder. What gain does the corporation recognize?
Answer: $30,000
Under IRC Section 311, a corporation recognizes gain on a property distribution as if it sold the property at fair market value.