ch16 - 1. A doctors incorporated medical practice may end...

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1. A doctor’s incorporated medical practice may end the last day of any month of the year. a. True *b. False 2. A C corporation in the manufacturing business must use a calendar year as its tax year unless the corporation has a business reason for using a tax year that is not a calendar year. a. True *b. False 3. An S corporation’s tax year, generally, is determined by the tax year of its principal shareholders. a. True *b. False 4. The DEF Partnership had three equal partners when it was formed. Partners D and E were calendar year taxpayers and Partner F’s tax year ended on June 30th before he joined the partnership. Partner F was required to change his tax year to end on December 31st upon joining the partnership. a. True *b. False 5. For purposes of determining the partnership’s tax year, there may be more than one principal partner. *a. True b. False 6. The Seagull Partnership has three equal partners. Partner A’s tax year ends June 30th, and Partners B and C use a calendar year. If the partnership uses the calendar year to report its income, Partner A is permitted to defer partnership income earned from July through December 2011 until he files his tax return for his year ending June 30, 2012. *a. True b. False 7. Red Corporation and Green Corporation are equal partners in the R & G Partnership. Red Corporation’s tax year ends September 30th, and Green Corporation is a calendar year taxpayer. R & G Partnership must use September 30th as its tax year, unless it has a business purpose for using a different tax year.
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*a. True b. False 8. A CPA practice that is incorporated earns 60% of its annual revenues in the months of February, March, and April. Because the CPA practice is a professional services corporation (PSC), it must use a calendar year to report its income. a. True *b. False 9. A partnership cannot elect to use a tax year other than a calendar year merely because the partnership’s CPA is too busy to prepare a calendar year return. *a. True b. False 10. In 2003, a medical doctor who incorporated his practice elected a fiscal year ending September 30th. During the fiscal year ended September 30, 2011, he received a salary of $180,000. During the period from October 1, 2011 to December 31, 2011, the corporation paid the doctor a total salary of $50,000, and paid him $200,000 of salary in the following 9 months. The corporation’s salary deduction for the fiscal year ending September 30, 2012, is limited to $200,000. *a. True b. False 11. Laura Corporation changed its tax year-end from June 30th to December 31st in 2011. The income for the period July 1, 2011 through December 31, 2011 was $45,000. The corporate tax rate is 15% on the first $50,000 of income, 25% on income from $50,001 to $75,000, and 34% on income from $75,001 to $100,000. A portion of Laura’s July – December 2011 income will be taxed at 34%. *a. True
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This note was uploaded on 04/02/2012 for the course ECON 101 taught by Professor Sing during the Spring '12 term at CUNY Hunter.

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ch16 - 1. A doctors incorporated medical practice may end...

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