Reference no: EM131211220
T or F
1.------ Nearly 3 of every 4 businesses that report to the IRS are operated by sole proprietors.
2.------ S corporations file annual income tax return just like other corporations.
3.------ Gross income equals all income from all sources minus allowable deductions.
4.------ NOL can be carried back as a deduction against taxable income twenty years and forward for two due to the uncertainty in the future.
5.------ For MACRS purposes, depreciable assets are assumed to have no residual value
6.------ Start-up costs exceeding $5,000 should be amortized over 15 years.
7.------ Cost of the leasehold improvements must be expensed annually.
8.------ An asset’s tax basis plays a key role in the calculation of cash flows.
9.------ Pension and retirements cost of employees are examples of the cost that should follow Unicap rules.
10.----- Under MACRS, the estimated useful life of an asset is irrelevant in computing tax depreciation.
11.----- Assets used in petroleum refining and water transportation equipment are in 7 years recovery category of MACRS
12.----- If more than 40% of the depreciable personalty acquired during a taxable year is placed in service during the last three months, mid-quarter convention has to be used.
13.----- Interest paid on the money borrowed for the business is not a deductible expense on schedule C.
14.----- Sole proprietors can claim an income tax deduction to arrive at Adjustment to Gross Income, that portion of the SE tax equivalent to the employer payroll tax
15.----- IRS allows new businesses accumulate earnings of up to 250,000 before being subject to accumulated earning tax penalty.
16.----- A partnership should only report guaranteed payments paid to its partners in the partners’ schedule K-1.
17.----- LLC members who work for the business, must treat their share of the entity’s income as net earnings from self-employment and pay self-employment tax.
18.----- Individuals with AGI in excess of a threshold amount must reduce their exemption amount by 10%.
19.----- Dividends and capital gains are subject to preferential tax rate.
20.----- Excess social security tax withheld from an employee is an example of credits received by tax-apyer.
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