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samples Ch12 - Tax Credits and Payments CHAPTER 12 TAX...

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Tax Credits and Payments 12-1 CHAPTER 12 TAX CREDITS AND PAYMENTS EXAMINATION QUESTIONS ____1. The work opportunity tax credit is available for wages paid to employees in their first and second year of employment. ____2. A small employer incurs $4,000 for consulting fees related to establishing a qualified retirement plan for its 85 employees. As a result, the employer may claim the credit for small employer pension plan startup costs for $2,000. 3. Several years ago, Freddie purchased a structure for $50,000 that was originally placed in service in 1929. In the current year, he incurred qualifying rehabilitation expenditures of $100,000. The amount of the tax credit for rehabilitation expenditures, and the amount by which the building’s basis for cost recovery would increase as a result of the rehabilitation expenditures are the following amounts: a. $10,000 credit, $90,000 basis. b. $10,000 credit, $100,000 basis. c. $10,000 credit, $150,000 basis. d. $20,000 credit, $8,000 basis. e. None of the above.
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