Indiv. 2008 TB Ch 11

Indiv. 2008 TB Ch 11 - Chapter I:11 Accounting Periods and...

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Chapter I:11 Accounting Periods and Methods True-False I:11-1. A taxpayer’s tax year must coincide with the year used to keep the taxpayer's books and records. T, p. I:11-2. I:11-2. A fiscal year is a 12-month period that ends on the last day of any month other than December. T, p. I:11-2. I:11-3. A partnership must generally use the same tax year of the partners who own the majority of partnership income and capital. T, p. I:11-2. I:11-4. If the majority of the partners do not have the same tax year, the partnership must use the tax year of its principal partners. T, p. I:11-2. I:11-5. An improper election to use a fiscal year automatically places the taxpayer on the calendar year. T, p. I:11-3. I:11-6. If Giles Corporation receives a charter in 2005 but does not begin operations and file its first tax return until 2007, Giles may elect a fiscal year on the 2007 return. F, p. I:11-3; Example I:11-2. Solution: Since tax returns were required for 2005 and 2006, the return is not timely filed and the election may not be made. I:11-7. Partnerships, S corporations, and personal service corporations may elect a taxable year which results in a tax deferral of four months or less. F, p. I:11-3. Solution: A tax deferral of three months or less is allowed. I:11-8. Personal service corporations may elect a fiscal year if they make minimum distributions to shareholders during the deferral period. T, p. I:11-4. I:11-9. Except in a few specific circumstances, once adopted, an accounting period may not be changed without IRS approval. T, p. I:11-4. I:11-10. A newly married person may change tax years to conform to that of his or her spouse so that a joint return may be filed. T, p. I:1l-5. I:11-11. Generally, an income tax return covers an accounting period of 12 months. T, p. I:11-5. I:11-12. A subsidiary corporation filing a consolidated return with its parent corporation must I:TB11-1
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change its accounting period to conform with its parent’s tax year. T, p. I:11-5. I:11-13. The final tax return of Marjorie, a single taxpayer on the calendar basis, who died on July 15, 2007, is due on April 15, 2008. T, p. I:11-6; Example I:11-9. I:11-14. Taxpayers who change from one accounting period to another must annualize their income for the resulting short period. T, p. I:11-6. I:11-15. Generally, if inventories are an income-producing factor to the business, the accrual method must be used for sales and cost of goods sold. T, p. I:11-7. I:11-16. Alvin, a practicing attorney who also owns an office supplies store, may use the cash basis for his practice and the accrual basis for his office supplies store. T, p. I:11-7; Example I:11-11. Solution: The fact that an overall accounting method is used in one trade or business does not mean that the same method must be used in a second trade or business or for nonbusiness income and deductions. I:11-17. A taxpayer must use the same accounting method on the personal tax return that the
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This note was uploaded on 11/18/2008 for the course ACCT 45089 taught by Professor Instructor during the Spring '08 term at University of Phoenix.

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Indiv. 2008 TB Ch 11 - Chapter I:11 Accounting Periods and...

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