[star1726]

What is the difference between tax expense & tax liability

[tinae]

1.Which of the following is a common characteristic of exempt organizations?

A. The organization is not a for-profit entity.
B. The organization serves some type of common good.
C. The organization does not exert political influence.
D. Net earnings do not benefit the members of the organization.
E. All of the above.


2. Which of the following are organizations exempt under § 501(c)(3)?

A. Salvation Army
B. League of Women Voters.
C. Girl's Scout of America
D. All of the above are § 501(c)(3) organizations.




3. Garden, Inc. a qualifying § 501(c)(3) organization, incurs lobbying expenditures of $210,000 during the taxable year. Exempt purpose expenditures are $900,000. If Garden makes the election under § 501(h) to make lobbying expenditures on a limited basis, its tax liability resulting from the lobbying expenditures is:
A. $0.
B. $12,500.
C. $50,000.
D. $60,000.
E. None of the above.







4. Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?
A. Attempt to subject all or part of the organization's income to Federal income tax.
B. Revoke the exempt status of the organization.
C. Impose intermediate sanctions in the form of excise taxes.
D. Only a. and b.
E. a. b. and c.

5. Which of the following statements is correct?


A. For an exempt organization not to be classified as a private foundation under the broadly supported provision, both the external support test and the internal support test must be satisfied.
B. For an exempt organization not to be classified as a private foundation under the broadly supported provision, both the external support test and the internal support test must be failed.
C. For an exempt organization not to be classified as a private foundation under the broadly supported provision, the external support test must be satisfied and the internal support test must be failed.
D. For an exempt organization not to be classified as a private foundation under the broadly supported provision, the external support test must be failed and the internal support test must be passed.
E. None of the above.


6. Eagle, Inc. receives its support from the following sources.

Governmental unit A, for services rendered $20,000
General public, for services rendered 50,000
Gross investment income 35,000
Contributions from individual substantial 35,000
contributors (disqualified persons)

Which of the following statements is correct?
A. Eagle, Inc. is a private foundation because it satisfies both the external support test and the internal support test.
B. Eagle, Inc. is not a private foundation because it satisfies both the external support test and the internal support test.
C. Eagle, Inc. is a private foundation because it fails the external support test and satisfies the internal support test.
D. Eagle, Inc. is not a private foundation because it fails both the internal and external support tests.
E. None of the statements is true.


7. A private foundation is subject to which of the following taxes?

A. Tax on self-dealing.
B. Tax on investments in publicly traded stock.
C. Tax on taxable expenditures that jeopardize charitable purposes.
D. Only a. and c.
E. a. b. and c.


8. Which of the following requirements must be satisfied for an organization to be subject to the unrelated business income tax (UBIT)?

A. The organization is an exempt organization.
B. The organization conducts a trade or business that is regularly carried on.
C. The trade or business is not substantially related to the exempt purpose of the organization.
D. Only b. and c. must be satisfied.
E. a. b. and c. must be satisfied.


9. Hawk, Inc. a tax-exempt organization, leases a building and equipment to XYZ Corporation. The rental income from the building is $300,000 and from the equipment is $22,000. Rental expenses are $50,000 for the building. What adjustment must be made to net unrelated business income?

A. ($272,000).
B. ($250,000).
C. ($22,000).
D. ($272,000.
E. Some other amount.

10. Henry, a calendar year taxpayer, applies for and receives an extension for filing his 2006 income tax return. Of the $80,000 of taxes he owed for 2006, $50,000 had been paid through withholding by the due date in 2007. Henry eventually files on August 20, 2007, and remits the balance due of $30,000. Based on these facts, Henry owes:

A. Neither a failure to file penalty nor a failure to pay penalty.
B. A failure to file penalty of $6,750 and a failure to pay penalty of $750.
C. A failure to file penalty of $0 and a failure to pay penalty of $750.
D. A failure to file penalty of $0 and a failure to pay penalty of $600.
E. Some other amounts.





11. An offer in compromise is appropriate in which of the following circumstances?

A. Payment would constitute an economic hardship on the taxpayer.
B. Payment of the tax would leave the taxpayer unable to meet basic living expenses.
C. There is doubt as to the collectibility of the tax.
D. There is doubt as to the taxpayer's liability for the tax.
E. All of the above.


12. The rules of Circular 230 must be followed by:
A. An attorney.
B. A CPA.
C. A Wal-Mart cashier who does 15 tax returns per filing season.
D. An enrolled agent.
E. All of the above.


13. The Statements on Standards for Tax Services are issued by the:
A. IRS.
B. Sarbanes-Oxley Commission.
C. AICPA.
D. SEC.
E. Dow Jones Corporation.


14. At the time of his death, Joshua owned stock as follows.

Date of Death Value Six
Value Months Later
Maize Corporation $1,500,000 $1,100,000
Blue Corporation 1,300,000 1,400,000
The Maize Corporation stock is sold by the executor of the estate five months after Joshua's death for $1,200,000. If the alternate valuation date is properly elected, the value of Joshua's estate as to these stocks is:

A. $2,300,000.
B. $2,400,000.
C. $2,500,000.
D. $2,600,000.
E. None of the above.






15. In which, if any, of the following independent situations has Geraldine made a gift?
A. Geraldine gives her 19-year old son $20,000 to be used by him for his college expenses.
B. Geraldine buys her grandfather a new Jaguar for his birthday.
C. Geraldine sends $20,000 to Duke University to cover her nephew's tuition. The nephew does not qualify as Geraldine's dependent.
D. Geraldine contributes $10,000 to her Congressman's reelection campaign.
E. None of the above.


16. Which of the following is a typical duty of an executor?
A. Pay funeral expenses.
B. Pay off the decedent's financial liabilities.
C. Distribute the net assets of the probate estate.
D. Manage the decedent's assets until they are liquidated or distributed.
E. All of the above

17. Parties to an estate do not typically include the:
A. Decedent.
B. Executor.
C. Trustee.
D. Beneficiary.


18. Which of the following statements is false, with respect to the income taxation of an estate?
A. The estate likely receives amounts of income in respect of a decedent immediately upon the decedent's death.
B. The estate is a tax-reporting, not a tax-paying, entity.
C. The estate may need to make estimated tax payments.
D. The IRS will look to terminate the estate if it determines that the entity is being kept open simply to avoid income tax liabilities.


19. The Code defines a “simple trust” as which of the following?
A. One which is allowed to file Form 1041-EZ.
B. One which has only one income beneficiary.
C. One which has only one remainder beneficiary.
D. One whose grantor was not a corporation.
E. One which must distribute its accounting income every year.



20. The Wilson Trust is required to distribute its accounting income every year, one-half to Missy Wilson, and one-half to the Lung Cancer Research Center. What is the Trust's personal exemption?
A. $0.
B. $100.
C. $300.
D. $600.
E. $2,500, indexed for inflation.



21. The Jain Estate is required to pay its entire annual accounting income to Sam and Janet. The estate's personal exemption is:
A. $0.
B. $100.
C. $300.
D. $600.
E. Some other amount.

22. The distributable net income (DNI) of a fiduciary taxpayer:
A. Marks the maximum amount of gross income that income beneficiaries must report when receiving distributions.
B. Constitutes the maximum amount for the fiduciary's distribution deduction.
C. Specifies the character of the distributions in the hands of the year's income beneficiaries.
D. All of the above.


23. Which of the following is the annual maximum amount to be included as gross income by all of the income beneficiaries of the trust or estate?
A. Distributable net income.
B. Entity taxable income.
C. Adjusted gross income.
D. Fiduciary accounting income.
E. $1 million, indexed for inflation ($1,225,000 for 2006).


24. The Williamson Estate generated distributable net income this year of $100,000, one-third of which was tax-exempt interest, and the balance of which was long-term capital gain. Muffy Williamson, the sole income beneficiary of the Estate, received a distribution of the entire $150,000 fiduciary income of the entity. How is this distribution accounted for by Muffy?
A. $150,000 ordinary income.
B. $100,000 ordinary income.
C. $66,667 long-term capital gain, $33,333 exempt interest.
D. $100,000 long-term capital gain, $50,000 exempt interest.
E. $50,000 long-term capital gain, $50,000 exempt interest.

25. In 1986, Russell and Katie (mother and daughter) acquire real estate listing title as: “Russell and Katie, joint tenants with the right of survivorship.” Of the $200,000 purchase price, $60,000 was furnished by Russell and $140,000 by Katie. The $140,000 Katie provided had been received by her as an inheritance from her father. In 2006, Katie predeceases Russell at a time when the property is worth $500,000. As to this property, Katie's gross estate includes:
a. $350,000.
b. $250,000.
c. $200,000.
d. $150,000.
e. None of the above.


26. What is the name given to a tax levied on the right to pass property at death?
A. Inheritance Tax.
B. Succession Tax.
C. Estate Tax.
D. Gift Tax.
E. None of the above.

[morgaine300]

Ditto what I said on your other post. Do not submit a bunch of multiple choice questions and just expect someone to answer them all for you.

[hoep]

What are the answers to these questions?

1.Which of the following is a common characteristic of exempt organizations?

A. The organization is not a for-profit entity.
B. The organization serves some type of common good.
C. The organization does not exert political influence.
D. Net earnings do not benefit the members of the organization.
E. All of the above.


2. Which of the following are organizations exempt under § 501(c)(3)?

A. Salvation Army
B. League of Women Voters.
C. Girl’s Scout of America
D. All of the above are § 501(c)(3) organizations.




3. Garden, Inc., a qualifying § 501(c)(3) organization, incurs lobbying expenditures of $210,000 during the taxable year. Exempt purpose expenditures are $900,000. If Garden makes the election under § 501(h) to make lobbying expenditures on a limited basis, its tax liability resulting from the lobbying expenditures is:
A. $0.
B. $12,500.
C. $50,000.
D. $60,000.
E. None of the above.







4. Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?
A. Attempt to subject all or part of the organization’s income to Federal income tax.
B. Revoke the exempt status of the organization.
C. Impose intermediate sanctions in the form of excise taxes.
D. Only a. and b.
E. a., b., and c.

5. Which of the following statements is correct?


A. For an exempt organization not to be classified as a private foundation under the broadly supported provision, both the external support test and the internal support test must be satisfied.
B. For an exempt organization not to be classified as a private foundation under the broadly supported provision, both the external support test and the internal support test must be failed.
C. For an exempt organization not to be classified as a private foundation under the broadly supported provision, the external support test must be satisfied and the internal support test must be failed.
D. For an exempt organization not to be classified as a private foundation under the broadly supported provision, the external support test must be failed and the internal support test must be passed.
E. None of the above.


6. Eagle, Inc., receives its support from the following sources.

Governmental unit A, for services rendered $20,000
General public, for services rendered 50,000
Gross investment income 35,000
Contributions from individual substantial 35,000
contributors (disqualified persons)

Which of the following statements is correct?
A. Eagle, Inc., is a private foundation because it satisfies both the external support test and the internal support test.
B. Eagle, Inc., is not a private foundation because it satisfies both the external support test and the internal support test.
C. Eagle, Inc., is a private foundation because it fails the external support test and satisfies the internal support test.
D. Eagle, Inc., is not a private foundation because it fails both the internal and external support tests.
E. None of the statements is true.


7. A private foundation is subject to which of the following taxes?

A. Tax on self-dealing.
B. Tax on investments in publicly traded stock.
C. Tax on taxable expenditures that jeopardize charitable purposes.
D. Only a. and c.
E. a., b., and c.


8. Which of the following requirements must be satisfied for an organization to be subject to the unrelated business income tax (UBIT)?

A. The organization is an exempt organization.
B. The organization conducts a trade or business that is regularly carried on.
C. The trade or business is not substantially related to the exempt purpose of the organization.
D. Only b. and c. must be satisfied.
E. a., b., and c. must be satisfied.


9. Hawk, Inc., a tax-exempt organization, leases a building and equipment to XYZ Corporation. The rental income from the building is $300,000 and from the equipment is $22,000. Rental expenses are $50,000 for the building. What adjustment must be made to net unrelated business income?

A. ($272,000).
B. ($250,000).
C. ($22,000).
D. ($272,000.
E. Some other amount.

10. Henry, a calendar year taxpayer, applies for and receives an extension for filing his 2006 income tax return. Of the $80,000 of taxes he owed for 2006, $50,000 had been paid through withholding by the due date in 2007. Henry eventually files on August 20, 2007, and remits the balance due of $30,000. Based on these facts, Henry owes:

A. Neither a failure to file penalty nor a failure to pay penalty.
B. A failure to file penalty of $6,750 and a failure to pay penalty of $750.
C. A failure to file penalty of $0 and a failure to pay penalty of $750.
D. A failure to file penalty of $0 and a failure to pay penalty of $600.
E. Some other amounts.





11. An offer in compromise is appropriate in which of the following circumstances?

A. Payment would constitute an economic hardship on the taxpayer.
B. Payment of the tax would leave the taxpayer unable to meet basic living expenses.
C. There is doubt as to the collectibility of the tax.
D. There is doubt as to the taxpayer's liability for the tax.
E. All of the above.


12. The rules of Circular 230 must be followed by:
A. An attorney.
B. A CPA.
C. A Wal-Mart cashier who does 15 tax returns per filing season.
D. An enrolled agent.
E. All of the above.


13. The Statements on Standards for Tax Services are issued by the:
A. IRS.
B. Sarbanes-Oxley Commission.
C. AICPA.
D. SEC.
E. Dow Jones Corporation.


14. At the time of his death, Joshua owned stock as follows.

Date of Death Value Six
Value Months Later
Maize Corporation $1,500,000 $1,100,000
Blue Corporation 1,300,000 1,400,000
The Maize Corporation stock is sold by the executor of the estate five months after Joshua’s death for $1,200,000. If the alternate valuation date is properly elected, the value of Joshua’s estate as to these stocks is:

A. $2,300,000.
B. $2,400,000.
C. $2,500,000.
D. $2,600,000.
E. None of the above.






15. In which, if any, of the following independent situations has Geraldine made a gift?
A. Geraldine gives her 19-year old son $20,000 to be used by him for his college expenses.
B. Geraldine buys her grandfather a new Jaguar for his birthday.
C. Geraldine sends $20,000 to Duke University to cover her nephew’s tuition. The nephew does not qualify as Geraldine’s dependent.
D. Geraldine contributes $10,000 to her Congressman’s reelection campaign.
E. None of the above.


16. Which of the following is a typical duty of an executor?
A. Pay funeral expenses.
B. Pay off the decedent’s financial liabilities.
C. Distribute the net assets of the probate estate.
D. Manage the decedent’s assets until they are liquidated or distributed.
E. All of the above

17. Parties to an estate do not typically include the:
A. Decedent.
B. Executor.
C. Trustee.
D. Beneficiary.


18. Which of the following statements is false, with respect to the income taxation of an estate?
A. The estate likely receives amounts of income in respect of a decedent immediately upon the decedent’s death.
B. The estate is a tax-reporting, not a tax-paying, entity.
C. The estate may need to make estimated tax payments.
D. The IRS will look to terminate the estate if it determines that the entity is being kept open simply to avoid income tax liabilities.


19. The Code defines a “simple trust” as which of the following?
A. One which is allowed to file Form 1041-EZ.
B. One which has only one income beneficiary.
C. One which has only one remainder beneficiary.
D. One whose grantor was not a corporation.
E. One which must distribute its accounting income every year.



20. The Wilson Trust is required to distribute its accounting income every year, one-half to Missy Wilson, and one-half to the Lung Cancer Research Center. What is the Trust’s personal exemption?
A. $0.
B. $100.
C. $300.
D. $600.
E. $2,500, indexed for inflation.



21. The Jain Estate is required to pay its entire annual accounting income to Sam and Janet. The estate’s personal exemption is:
A. $0.
B. $100.
C. $300.
D. $600.
E. Some other amount.

22. The distributable net income (DNI) of a fiduciary taxpayer:
A. Marks the maximum amount of gross income that income beneficiaries must report when receiving distributions.
B. Constitutes the maximum amount for the fiduciary’s distribution deduction.
C. Specifies the character of the distributions in the hands of the year’s income beneficiaries.
D. All of the above.


23. Which of the following is the annual maximum amount to be included as gross income by all of the income beneficiaries of the trust or estate?
A. Distributable net income.
B. Entity taxable income.
C. Adjusted gross income.
D. Fiduciary accounting income.
E. $1 million, indexed for inflation ($1,225,000 for 2006).


24. The Williamson Estate generated distributable net income this year of $100,000, one-third of which was tax-exempt interest, and the balance of which was long-term capital gain. Muffy Williamson, the sole income beneficiary of the Estate, received a distribution of the entire $150,000 fiduciary income of the entity. How is this distribution accounted for by Muffy?
A. $150,000 ordinary income.
B. $100,000 ordinary income.
C. $66,667 long-term capital gain, $33,333 exempt interest.
D. $100,000 long-term capital gain, $50,000 exempt interest.
E. $50,000 long-term capital gain, $50,000 exempt interest.

25. In 1986, Russell and Katie (mother and daughter) acquire real estate listing title as: “Russell and Katie, joint tenants with the right of survivorship.” Of the $200,000 purchase price, $60,000 was furnished by Russell and $140,000 by Katie. The $140,000 Katie provided had been received by her as an inheritance from her father. In 2006, Katie predeceases Russell at a time when the property is worth $500,000. As to this property, Katie's gross estate includes:
a. $350,000.
b. $250,000.
c. $200,000.
d. $150,000.
e. None of the above.


26. What is the name given to a tax levied on the right to pass property at death?
A. Inheritance Tax.
B. Succession Tax.
C. Estate Tax.
D. Gift Tax.
E. None of the above.

[morgaine300]

Read the post right above yours, the one that says we don't just provide you with answers. Read the guidelines for posting homework that is in the red print at the top of this forum.

And then please post your question in your own thread instead of tagging onto someone else's.