MC

Question 1

Type B reorganization

Answer 1

Stock of the target corporation is acquired solely for the voting stock of either the acquir­ing corporation or its parent

Question 2

A reorganization is…

Answer 2

a non-taxable event wherein a corporation determines to continue the business enterprise in a modified form. The main criteria for reorganization area that there is continuity of shareholder interest as well as continuity of the business enterprise. There are multiple types of reorganization

Question 3

The private foundation status of an exempt organization will terminate if it

Answer 3

Becomes a public charity

Question 4

When do title and risk of loss for conforming goods pass to the buyer under a shipment contract covered by the Sales Article of the UCC?

Answer 4

When the goods are given to a common carrier

Under a shipment contract, title and risk of loss pass when the seller puts goods in the possession of the carrier. Under a destination contract, the seller must bear the risk and cost of transporting goods to the named destination; title passes on tender at destination.

Question 5

An express trust will always have the following parties

Answer 5

Grantor
Trustee
Beneficiary

Question 6

An express trust

Answer 6

simply a trust created on purpose, and not imposed by a court.
may be created without a remainderman or a successor trustee as there will be a grantor and other trustees.

Question 7

Fair Labor Standards Act

Answer 7

Federal Statute that governs employees’ wages and hours

Question 8

The National Labor Relations and Taft-Hartley Act govern

Answer 8

employees’ rights to bargain collectively

Question 9

The forfeited interest penalty for premature withdrawal of time deposits is a

Answer 9

deduction from gross income in arriving at adjusted gross income

Question 10

can a corporation offer securities for sale or issue stock certificates before registration?

Answer 10

no

Question 11

registration becomes effective

Answer 11

only after a 20-day waiting period from the date of filing for registration.

Question 12

prospectus must be made available to

Answer 12

every investor, whether accredited or non-accredited.

Question 13

stockholder approval is not required to

Answer 13

purchase 55% of another corporation’s stock. This is an example of an investment decision that is the responsibility of management.

Question 14

Syl voluntarily pays the entire FICA tax for its share and the amounts that it could have withheld from the employees. The employees’ share of FICA taxes paid by Syl to the IRS is

Answer 14

Deductible by Syl as additional compensation that is includible in the employees’ taxable income

Question 15

Which of the following acts always will result in the total release of a compensated surety?

Answer 15

The principal debtor’s performance is tendered.

If the principal debtor offers to satisfy the obligation (i.e., tenders performance), then the surety is released of any further liability. A principal debtor’s partial release would also partially release a surety from liability. A change in the manner or time for repayment has no impact on a surety’s liability.

Question 16

Which of the following disqualifies an individual from the earned income credit?

Answer 16

The taxpayer has a filing status of married filing separately.

Earned Income Tax credit (EITC) is a refundable credit available to low income taxpayers, when certain conditions are met. One of those conditions is, taxpayers are required to file a joint return with spouse to claim the credit.

Question 17

What is the latest date that an IRA contribution can be made in order to qualify as a deduction on the prior years return?

Answer 17

April 15

IRA contributions are deductions to arrive at AGI. However, to qualify as a deduction on the current year tax return, IRA contributions should be made on or before the due date of the tax return. In case of a calendar-year taxpayer, the due date is April 15 not including extensions.

Question 18

To qualify as an exempt organization other than a church or an employees’ qualified pension or profit-sharing trust, the applicant

Answer 18

Must file a written application with the Internal Revenue Service

Regulation §1.501(a)-1(a)(2) requires an organization other than an employees’ trust described in §401(a) to file an application form with the District Director requesting exempt status

Question 19

In a written trust containing no specific powers, the trustee will have all of the following implied powers except

Answer 19

Accumulate income

Question 20

A written trust containing no specific powers does not grant the trustee the implied power to accumulate income. The most common implied powers are the power to

Answer 20

sell assets, the power to lease assets and the power to incur and pay reasonable expens

Question 21

When completing a return with the possibility of a taxpayer penalty being assessed, a tax advisor should

Answer 21

inform the taxpayer of potential penalties and advise to disclose the position on the tax return. Note that the final decision of whether or not the position is disclosed on the return rests with the taxpayer, not the tax advisor.

Question 22

The alternative minimum tax (AMT) is computed as the

Answer 22

Excess of the tentative AMT over the regular tax

Question 23

spendthrift trust often is created to

Answer 23

protect a beneficiary from creditors or from her/his squandering of the trusts’ assets. This type of trust prohibits any transfer of the beneficiary’s rights by assignment or otherwise, and prevents creditors of the beneficiary from obtaining trust principal or its income until it actually is paid to the beneficiary.

Question 24

Which of the following statements concerning an initial intrastate securities offering made by an issuer residing in and doing business in that state is correct?

Answer 24

The offering would be exempt from the registration requirements of the Securities Act of 1933.

Question 25

Intrastate securities offerings are

Answer 25

transactions exempt from registration. These are securities offered exclusively to residents of a state by entities which carry out at least 80% of their operations in that state. Additionally, investors should agree not to resell the securities to non-residents for at least 9 months.