Tax in Small Business- Tax Update (Tax Season 2022) Test complete upcoming exam solution

Tax in Small Business- Tax Update (Tax Season 2022) Test complete upcoming exam solution Test - Tax in Small Business: Tax Update (Tax Season 2022) Test Section 1 Question 1 of 8. Melvin sustained a net operating loss (NOL) from farming activity in 2020. He filed an extension and will complete his return by October 15, 2021. Which is NOT a valid option for claiming this loss? The loss may be carried back three years and forward 20 using the pre-TCJA rules. The loss can be carried back five years and forward indefinitely using the CARES Act rules. Melvin can disregard the CARES Act rules and carry the loss back two years and forward indefinitely. Melvin can elect to waive the carryback period, and carry the loss forward indefinitely. Mark for follow up Question 2 of 8. Which taxpayer would NOT receive Form 1099-K for 2021? Natasha received $25,000 in rent payments that were processed through a third party. She had five transactions of $5,000 each from August through December. Marcus drives for a food delivery company. He is paid through a third party. He had 1,000 transactions totaling $30,000 during 2021. Tina is a direct seller. She had credit card receipts of $6,000 during 2021, with a total of 120 transactions. Jeff is a sole proprietor operating a retail shop that accepts credit card payments. He had 1,000 transactions totaling $35,000 during 2021. Mark for follow up Question 3 of 8. Wanda is a sole proprietor who paid sick and family leave wages for several of her employees. Which employee's wages are NOT eligible for the credit for paid leave? Henry missed two days of work while waiting for the results of a COVID-19 test after he was exposed. Nancy was unable to work for three weeks while caring for her husband, who had spine surgery. Toby missed work for two weeks when his daughter's school was closed due to COVID-19. Lydia was unable to work for three days due to conditions related to a COVID-19 vaccine. Mark for follow up Question 4 of 8. Qualifying small business taxpayers using the non-incidental materials and supplies inventory method may deduct their inventory costs: The earlier of when the item is paid for or when it is delivered to a customer. Using the last-in, first-out method. Using the cost of goods sold portion of their return. By including the allocated cost of production labor in their cost of goods sold. Mark for follow up Question 5 of 8. Eligible expenses for PPP loan forgiveness include all of the following EXCEPT: Utilities. The cost of improvements that adapt the business to meet social distancing standards. Payroll expenses. Inventory purchases. Mark for follow up Question 6 of 8. Each of the following taxpayers is a sole proprietor who received a Paycheck Protection Program (PPP) loan. Which statement is TRUE? Johanna has no employees. She may deduct the expenses used to apply for PPP forgiveness on her return. Dwayne has three employees. He is not eligible for the Employee Retention Credit (ERC). Jeannie has six employees. If she claims the credit for paid leave for any of her employees, she may not claim it for her own leave. Spencer has four employees. If he claims the Employee Retention Credit (ERC), he may use the same wages for the ERC and PPP loan forgiveness. Mark for follow up Question 7 of 8. Which statement is TRUE for 2020? Barney is a sole proprietor with no employees. He was diagnosed with COVID-19 and missed 10 days of work during 2020. When determining his credit for paid sick leave, Barney must use his 2019 income. Tamara is a sole proprietor with five employees. She received a PPP loan and used the funds for payroll expenses during 2020. The entire loan was forgiven. Tamara may deduct the expenses paid with the forgiven loan. Xander is a sole proprietor with no employees. He may take the Employee Retention Credit for himself on his 2020 return. Saul is a sole proprietor with ten employees. He received $100,000 in PPP funds during 2020. Saul may not claim the Employee Retention Credit or the credit for paid leave. Question 8 of 8. For 2021, the Employee Retention Credit (ERC) is allowed for: Up to $20,000 in per-employee wages in any calendar quarter. All wages paid for employers with 1,000 or fewer employees. Up to 70% of qualified wages and health costs. Employers who experienced at least a 50% reduction in gross receipts in a calendar quarter when compared to the same quarter in 2020.