Allowable Business Investment Losses (ABIL) can be deductible from any source of income to the taxpayer in a given tax year. Name any two sources of income that ABIL can be deducted from: _____________ and _____________.
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- Allowable Business Investment Losses (ABIL) can be deductible from any source of income to the taxpayer in a given tax year. Name any two sources of income that ABIL can be deducted from: _____________ and _____________.
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- As a general rule, which of the following is to be included in the annual tax return as an income for the taxable year? * Earned, accrued or received under cash basis of accounting. Earned and received under accrual basis of accounting excluding receivables. Earned including those not yet received under accrual basis of accounting. Earned, accrued or received either under cash or accrual basis of accounting.For each item listed below, indicate whether it involves a: a. permanent difference. b. temporary difference that will result in future deductible amounts (giving rise to deferred tax assets). c. temporary difference that will result in future taxable amounts (giving rise to deferred tax liabilities). 1. Rent is collected in advance from a tenant. Rent is taxable when received. 2. Warranty costs are accrued at the time of sale for accounting purposes, but are not deductible until paid for income tax purposes. 3. Interest revenue is recorded on municipal bonds. 4. Installment sales are recognized at the point of sale for accounting purposes, but when the cash is received for income tax purposes. 5. A loss contingency is expensed for accounting purposes. The…Cash basis taxpayers deduct rental expenses that apply to a future tax year in the year the expenses are paid. True or false
- Recognition of tax benefits in the loss year due to a NOL carry back involves: O The establishment of an income tax refund receivable. Only a note to the financial statements. The establishment of a deferred tax liability. O The establishment of a deferred tax asset.The excess of allowable deductions over gross income of the business in a taxable year is known as: net operating loss. ordinary loss. net deductible loss. NOLCO.It is a kind of withholding tax which is prescribed on certain income payments and is creditable against the income tax due of the payee for the taxable quarter/year in which the particular income was earned. a. Withholding tax on income b. Creditable withholding tax c. Final withholding tax d. All of the above
- 27. Which of the following is a type of regular income tax a. Individual Income tax b. Corporate Income Tax c. Mixed Earner Income Tax O d. Both A and B 28. A taxpayer using GAAP cash - basis on a calendar year shall compute the taxable income using * a. Tax cash basis on a calendar year b. Tax cash basis on a fiscal year c. Tax accrual basis on a calendar year d. Tax accrual basis on a fiscal yearIn computing the taxable gross income of a taxpayer engaged in business and/or profession, what is deducted from his total sales or revenue? a. Non-taxable business income b. Cost of goods sold or services rendered c. Both a and b d. Allowable deductionsTaxpayers who make after-tax contributions to a qualified employer plan recover their investment (cost) when they begin to take periodic payments. How is their investment recovered? a. The after-tax portion is recovered first b. the after-tax portion is recovered last c. Part of each year's distribution is taxable and part is recovery of cost until all the cost is recovered. d. Each year's distribution is multiplied by a fixed percentage to determine the taxable amount and the cost recovery of each distribution.
- Under this income taxation scheme, the full amount of tax is withheld by the payor before such income is received by the payee taxpayer. a. Final income tax scheme b. Capital gains tax scheme c. Regular income tax scheme d. Any one of the aboveStatement 1: Life insurance premiums shall be reported as a deductible expense for financial reporting purposes if the company paying it is the beneficiary. Statement 2: Life insurance premiums shall be reported as a deductible expense for taxation purposes if the company paying it is the beneficiary. Statement 3: The total income tax expense can be computed as financial income multiplied by the tax rate. Statement 4: Future taxable amounts should be deducted in determining the taxable income which will yield the deferred tax asset. Statement 5: Future deductible amounts should be deducted in determining the taxable income. Which statement/s are true?Which of the following is added to a taxpayer’s gross income from business in computing the total taxable gross income? * Other taxable income from operations Incidental income Non-operating income subject to regular income tax All of the above
