Practice Quiz

CompTIA PDI+ Exam Prep - Question List

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11. A partnership, S corporation or personal service corporation can elect to use a tax year other than its required tax year, if it:
  1. Elects a year that meets the deferral period requirement
  2. Is not a member of a tiered structure as defined by the regulations
  3. Has not previously had an election in effect to use a tax year other than its required tax year
  4. All of the above
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12. Eric, a cash basis taxpayer, owned 25% of Watson, Inc. stock. Watson, Inc. files a calendar year U.S. Corporate Income Tax Return Form 1120 employing the accrual method of accounting. Eric loaned Watson, Inc. $100,000 at the beginning of 2003. The accrued interest on this loan was $5,000 as of December 31, 2003. Watson,Inc.paid Eric the $5,000 in January of 2004. How should Eric report the interest income and Watson, Inc. report the interest expense from this transaction?
  1. Watson, Inc. reports the expense in 2003 and Eric reports the income in 2003
  2. Watson, Inc. reports the expense in 2003 and Eric reports the income in 2004
  3. Watson, Inc. reports the expense in 2004 and Eric reports the income in 2004
  4. None of the above
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13. Which of the following transactions qualifies as a likekind exchange?
  1. The exchange of a copyright on a novel for a copyright on a song
  2. An exchange of the “goodwill or going concern value” of a business for the “goodwill or going concern value” of another business
  3. An exchange of land improved with an apartment house for land improved with a store building
  4. An exchange of personal property used predominantly in the United States for personal property used predominantly outside the United States
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14. Special rules apply to like kind exchanges between related persons. Under these rules, related persons are:
  1. The taxpayer and a member of his/her family
  2. The taxpayer and a corporation in which the taxpayer has a 25% ownership
  3. The taxpayer and a partnership in which the taxpayer directly or indirectly owns a 25% interest in the capital or profits
  4. All of the above
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15. Which of the following does not qualify as a nontaxable exchange or transfer?
  1. A life insurance contract for an annuity contract
  2. A general partnership interest for a general partnership interest in the same partnership
  3. A transfer of property from an individual to a former spouse, incident to divorce
  4. None of the above
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