Tax (Final Exam) – Complete Questions and Answers 2025 – 100% Solved
A company's effective rate is known as...? - ✔✔✔-Income tax expense divided by net income
from continuing operations.
Are life insurance proceeds deducted? - ✔✔✔-No, they are included in tax exempt income.
ASC 740 requires publicly traded companies to disclose the estimated amount and nature of
each _____ reconciling item. - ✔✔✔--Significant
BTD for receiving a dividend (ignoring the DRD)? - ✔✔✔-Owns < 20% - Typically no BTD
20% < Owns < 50% - BTD = the amount of difference between amount of dividend and amount
of income corporation recognizes on its bank for pro rata share of distributing earnings
(Recipient includes share of compensation under equity method for book purposes, the
dividend being a return of basis)
Owns > 50% - Eliminated for book purposes on f/s but eliminated for tax when Owns > 80%
Businesses must recognize prepayment income from rent and interest immediately upon
receipt. T/F - ✔✔✔-True
For Accrual deductions, the business must meet what two parts? - ✔✔✔--All events test
-Economic performance
For corporations, Net Operating Losses are not deducted.
TRUE/FALSE - ✔✔✔-True
For corporations, what is the exceptions of using NOL's towards net income? - ✔✔✔-Can offset
a net capital gain, 5 year carry forward, 3 year carryback.
For deducting rental/leasing expenses, deduct _____. - ✔✔✔--Ratably
, Tax (Final Exam) – Complete Questions and Answers 2025 – 100% Solved
For goods expecting to be received, can deduct as long as goods are received _____ after the
payment. - ✔✔✔-3.5 months
Four sources of negative evidence in determining whether a DTA will not be recognized in the
future? - ✔✔✔--Cumulative book losses (3 years)
-History of expiring loss c/f
-Expectation of losses in near future
-Unsettled circumstances that could generate losses from operations in future years
How do you calculate the DRD modified taxable income?
How do you calculate limit? - ✔✔✔-Gross Income+Dividends-Business Expenses-Charity.
**Cannot include NOL at all
Must use DRD Modified Income*DRD Rate, and take lesser of this or the DRD.
If a company is incurring a positive trend in UTB's, what does this tell you about their tax
planning strategy? - ✔✔✔--More aggressive tax strategies
If asked for the CETR, and not given the cash flow, how do you calculate it? - ✔✔✔-=((Pretax-
Perm-Temp)*Tax Rate)/Pretax
In what case can you use the DRD over the limit, if the limit is less than the DRD? - ✔✔✔-When
you take the DRD modified income-Full DRD and this value is negative;
In what case would a company prefer conversion or assignment over deferral? - ✔✔✔-When
their CETR is comparable to their ETR.
A company's effective rate is known as...? - ✔✔✔-Income tax expense divided by net income
from continuing operations.
Are life insurance proceeds deducted? - ✔✔✔-No, they are included in tax exempt income.
ASC 740 requires publicly traded companies to disclose the estimated amount and nature of
each _____ reconciling item. - ✔✔✔--Significant
BTD for receiving a dividend (ignoring the DRD)? - ✔✔✔-Owns < 20% - Typically no BTD
20% < Owns < 50% - BTD = the amount of difference between amount of dividend and amount
of income corporation recognizes on its bank for pro rata share of distributing earnings
(Recipient includes share of compensation under equity method for book purposes, the
dividend being a return of basis)
Owns > 50% - Eliminated for book purposes on f/s but eliminated for tax when Owns > 80%
Businesses must recognize prepayment income from rent and interest immediately upon
receipt. T/F - ✔✔✔-True
For Accrual deductions, the business must meet what two parts? - ✔✔✔--All events test
-Economic performance
For corporations, Net Operating Losses are not deducted.
TRUE/FALSE - ✔✔✔-True
For corporations, what is the exceptions of using NOL's towards net income? - ✔✔✔-Can offset
a net capital gain, 5 year carry forward, 3 year carryback.
For deducting rental/leasing expenses, deduct _____. - ✔✔✔--Ratably
, Tax (Final Exam) – Complete Questions and Answers 2025 – 100% Solved
For goods expecting to be received, can deduct as long as goods are received _____ after the
payment. - ✔✔✔-3.5 months
Four sources of negative evidence in determining whether a DTA will not be recognized in the
future? - ✔✔✔--Cumulative book losses (3 years)
-History of expiring loss c/f
-Expectation of losses in near future
-Unsettled circumstances that could generate losses from operations in future years
How do you calculate the DRD modified taxable income?
How do you calculate limit? - ✔✔✔-Gross Income+Dividends-Business Expenses-Charity.
**Cannot include NOL at all
Must use DRD Modified Income*DRD Rate, and take lesser of this or the DRD.
If a company is incurring a positive trend in UTB's, what does this tell you about their tax
planning strategy? - ✔✔✔--More aggressive tax strategies
If asked for the CETR, and not given the cash flow, how do you calculate it? - ✔✔✔-=((Pretax-
Perm-Temp)*Tax Rate)/Pretax
In what case can you use the DRD over the limit, if the limit is less than the DRD? - ✔✔✔-When
you take the DRD modified income-Full DRD and this value is negative;
In what case would a company prefer conversion or assignment over deferral? - ✔✔✔-When
their CETR is comparable to their ETR.
