State income taxes reduce taxable income they are not

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Unformatted text preview: ecture: Regulation 3 CPA-02066 Type1 M/C A-D 25. CPA-02066 ARE Nov 95 #17 Corr Ans: B PM#35 R 3-01 Page 6 A corporation may reduce its regular income tax by taking a tax credit for: a. b. c. d. Dividends-received exclusion. Foreign income taxes. State income taxes. Accelerated depreciation. CPA-02066 Explanation Choice "b" is correct. Under certain conditions a taxpayer may take a credit against its U.S. income tax for foreign income taxes paid. Choice "a" is incorrect. The dividends-received deduction (not exclusion) reduces taxable income; it is not a tax credit. Choice "c" is incorrect. State income taxes reduce taxable income; they are not tax credits. Choice "d" is incorrect. Accelerated depreciation reduces taxable income; it is not a tax credit. CPA-02068 Type1 M/C A-D 26. CPA-02068 ARE Nov 95 #18 Corr Ans: D PM#36 R 3-01 Page 37 The accumulated earnings tax can be imposed: a. b. c. d. On both partnerships and corporations. On companies that make...
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