Enrolled Agent Exam - Part 2 Business
Questions with Correct Answers
Solo Proprietorship - Answer-can't be passed to a new owner, must be sold
qualified joint venture - only married couples business
-file separate Schedules C and separate Schedule SE
Statutory employees, disregarded entities also must file Schedule C
Partnerships - Answer--must have at least 1 general partner
joint undertaking to share expenses is not a partnership
From 1065 amd K-1 to each partner (not W 2)
limited partner may not sign return or represent before IRS
Limited Liability Partnership (LLC) partner only at risk for his interest in partnership
assets
C Corporations - Answer-From 1120
board of directors oversight of company and has shareholders
S Corporations - Answer-S corp must
-be domestic
-shareholders (may not be partnerships, corporations, non resident aliens)
-no more than 100 shareholders
-one class of stock (voting and non are same stock)
-not be ineligible type corporation
Limited Liability Companies (LLC) - Answer-taxed as partnership
corporation protection and avoids double taxation
Personal Service Corporations (PSC) - Answer-taxed at flat rate of 35%
CLOSELY HELD CORP
-can offset passive losses with any active income
PERSONAL SERVICE CORP can't offset passive losses with any active income
when at least 95% of stock held by owners performing personal services.
Farmers and Fishermen - Answer-may be partnership or corporation
, Tax-Exempt Orgs (non profit entities) - Answer-Form 1023 application for regognition of
exemption
by default non profit: churches, synagogues, mosques, temples
Form 990 file annually
Entity Classification Election Rules - Answer-can choose to be classified for tax
purposes
not before 75 days or after 12 months.
election cannot be changed for 5yrs (60 months)
Employer Identification Number (EIN) - Answer-Request for EIN From SS-4
must have if:
have employees
excise tax
alcohol, tobacco, firearms
If solo no employees, not required EIN
Business Recordkeeping - Answer-Later of 3 years when due or filed
payroll employment info 4 years
Income Statement
Balance Sheet
Business Reporting Requirements - Answer-Form 8300 - cash transaction $10,000 or
more (report 15th day after day of transaction)
W-4 employee's withholding allowance certificate
W-2 wages and tax statement (if file over 250 must file electronically)
Form 1099 contractors, self employed if paid $600 or more (no need for one if personal
payments, paint my house)
Employment Taxes and Self-Employment Tax - Answer-Form 944
SS 6.2% Medicare 1.45%
Additional Medicare Tax 0.9%
if not file 944, must file 941 each quarter regardless if paid wages or not
Only Options: by Mail or E-file
Trust Fund Recovery Penalty (TFRP) - Answer-penalty 100% can apply to everyone
who is responsible.
responsible and willfully fails
Federal Unemployment (FUTA) Tax - Answer-6% on first $7,000 of each employee
can later get credit of 5.4% on Form 940 so true tax is 0.6%
Questions with Correct Answers
Solo Proprietorship - Answer-can't be passed to a new owner, must be sold
qualified joint venture - only married couples business
-file separate Schedules C and separate Schedule SE
Statutory employees, disregarded entities also must file Schedule C
Partnerships - Answer--must have at least 1 general partner
joint undertaking to share expenses is not a partnership
From 1065 amd K-1 to each partner (not W 2)
limited partner may not sign return or represent before IRS
Limited Liability Partnership (LLC) partner only at risk for his interest in partnership
assets
C Corporations - Answer-From 1120
board of directors oversight of company and has shareholders
S Corporations - Answer-S corp must
-be domestic
-shareholders (may not be partnerships, corporations, non resident aliens)
-no more than 100 shareholders
-one class of stock (voting and non are same stock)
-not be ineligible type corporation
Limited Liability Companies (LLC) - Answer-taxed as partnership
corporation protection and avoids double taxation
Personal Service Corporations (PSC) - Answer-taxed at flat rate of 35%
CLOSELY HELD CORP
-can offset passive losses with any active income
PERSONAL SERVICE CORP can't offset passive losses with any active income
when at least 95% of stock held by owners performing personal services.
Farmers and Fishermen - Answer-may be partnership or corporation
, Tax-Exempt Orgs (non profit entities) - Answer-Form 1023 application for regognition of
exemption
by default non profit: churches, synagogues, mosques, temples
Form 990 file annually
Entity Classification Election Rules - Answer-can choose to be classified for tax
purposes
not before 75 days or after 12 months.
election cannot be changed for 5yrs (60 months)
Employer Identification Number (EIN) - Answer-Request for EIN From SS-4
must have if:
have employees
excise tax
alcohol, tobacco, firearms
If solo no employees, not required EIN
Business Recordkeeping - Answer-Later of 3 years when due or filed
payroll employment info 4 years
Income Statement
Balance Sheet
Business Reporting Requirements - Answer-Form 8300 - cash transaction $10,000 or
more (report 15th day after day of transaction)
W-4 employee's withholding allowance certificate
W-2 wages and tax statement (if file over 250 must file electronically)
Form 1099 contractors, self employed if paid $600 or more (no need for one if personal
payments, paint my house)
Employment Taxes and Self-Employment Tax - Answer-Form 944
SS 6.2% Medicare 1.45%
Additional Medicare Tax 0.9%
if not file 944, must file 941 each quarter regardless if paid wages or not
Only Options: by Mail or E-file
Trust Fund Recovery Penalty (TFRP) - Answer-penalty 100% can apply to everyone
who is responsible.
responsible and willfully fails
Federal Unemployment (FUTA) Tax - Answer-6% on first $7,000 of each employee
can later get credit of 5.4% on Form 940 so true tax is 0.6%
