Taxation & Business Law Flashcards
7 cards from real CPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Taxation & Business Law flashcards as text
Which type of bankruptcy allows an individual with regular income to propose a repayment plan over three to five years?
Answer: Chapter 13
Chapter 13 bankruptcy permits individuals with regular income to reorganize and repay debts over a three-to-five-year court-approved plan.
A taxpayer receives a $10,000 cash gift from a wealthy relative in 2023. How is this treated for federal income tax purposes?
Answer: Excluded from gross income
Gifts received are excluded from the recipient's gross income under IRC Section 102, regardless of the amount.
Under agency law, which type of authority arises when a principal's conduct leads a third party to reasonably believe an agent has authority?
Answer: Apparent authority
Apparent authority arises when the principal's words or conduct reasonably cause a third party to believe the agent is authorized to act on the principal's behalf.
The alternative minimum tax (AMT) for corporations was reinstated by which legislation for tax years beginning after December 31, 2022?
Answer: Inflation Reduction Act
The Inflation Reduction Act of 2022 reinstated a 15% corporate AMT on adjusted financial statement income for large corporations with average annual income exceeding $1 billion.
Which of the following is a key requirement for a valid negotiable instrument under UCC Article 3?
Answer: It must contain an unconditional promise or order to pay a fixed amount of money
UCC Article 3 requires a negotiable instrument to contain an unconditional promise or order to pay a fixed amount of money, among other requirements.
For purposes of the home office deduction, which method allows taxpayers to deduct $5 per square foot of the home office up to 300 square feet?
Answer: Simplified method
The IRS simplified method allows a standard deduction of $5 per square foot of qualifying home office space, capped at 300 square feet ($1,500 maximum).
A creditor has a security interest in collateral. Under UCC Article 9, 'perfection' of that interest is most commonly achieved by:
Answer: Filing a financing statement (UCC-1)
The most common method of perfecting a security interest under UCC Article 9 is by filing a financing statement (Form UCC-1) with the appropriate state office.