McGraw-Hill's Taxation of Individuals
and Business Entities 2020 With
Complete Questions And 100% Correct
Verified Answers| Latest Update
Accumulated adjustments account (AAA) - CORRECT ANSWERS-an account that
reflects the cumulative income or loss for the time the corporation has been an S
corporation.
Accumulated earnings and profits - CORRECT ANSWERS-undistributed earnings and
profits from years prior to the current year.
Accumulated earnings tax - CORRECT ANSWERS-a tax assessed on C corporations
that retain earnings without a business reason to do so.
Acquiescence - CORRECT ANSWERS-issued after the IRS loses a trial-level or circuit
court case when the IRS has decided to follow the court's adverse ruling in the future. It
does not mean that the IRS agrees with the court's ruling. Instead, it simply means that
the IRS will no longer litigate this issue.
Acquisition indebtedness - CORRECT ANSWERS-debt secured by a qualified
residence that is incurred in acquiring, constructing, or substantially improving the
residence.
Action on decision - CORRECT ANSWERS-an IRS pronouncement that explains the
background reasoning behind an IRS acquiescence or nonacquiescence.
Active participant in a rental activity - CORRECT ANSWERS-an individual who owns at
least 10 percent of a rental property and participates in the process of making
management decisions, such as approving new tenants, deciding on rental terms, and
approving repairs and capital expenditures.
Ad valorem taxes - CORRECT ANSWERS-taxes based on the value of property.
Additional Medicare tax - CORRECT ANSWERS-a tax imposed at a rate of .9% for
salary or wages or net self-employment earnings in excess of $200,000 ($125,000 for
married filing separate; $250,000 of combined salary or wages or net self-employment
earnings for married filing joint).
Adequate consideration - CORRECT ANSWERS-a price paid that is equal in value to
the service or property received.
, Adjusted basis - CORRECT ANSWERS-An asset's carrying value for tax purposes at a
given point in time, measured as the initial basis (for example, cost) plus capital
improvements less depreciation or amortization. Also called adjusted tax basis.
Adjusted gross estate - CORRECT ANSWERS-gross estate reduced by administrative
expenses, debts of the decedent, losses incurred during the administration of the
estate, and state death taxes.
Adjusted gross income (AGI) - CORRECT ANSWERS-gross income less deductions for
AGI. AGI is an important reference point that is often used in other tax calculations.
Adjusted tax basis - CORRECT ANSWERS-An asset's carrying value for tax purposes
at a given point in time, measured as the initial basis (for example, cost) plus capital
improvements less depreciation or amortization.
Adjusted taxable gifts - CORRECT ANSWERS-cumulative taxable gifts from previous
years other than gifts already included in the gross estate valued at date of gift values.
Affiliated group - CORRECT ANSWERS-two or more "includible" corporations that are
related through common stock ownership and eligible to file a U.S. consolidated tax
return. An affiliated group consists of a parent corporation that owns directly 80 percent
or more of the voting stock and value of another corporation and one or more subsidiary
corporations that meet the 80 percent ownership requirement collectively. Includible
corporations are taxable U.S. corporations, excluding real estate investment trusts,
regulated investment companies, and life insurance companies.
After-tax rate of return - CORRECT ANSWERS-a taxpayer's before-tax rate of return on
an investment minus the taxes paid on the income from the investment. The formula for
an after-tax rate of return that is taxed annually is the before-tax rate of return × (1 −
marginal tax rate) [i.e., r = R × (1 − t)]. A taxpayer's after-tax rate of return on an
investment held for more than one tax period is r = (FV/I)1/n − 1, where r is the after-tax
rate of return, FV is the after-tax future value of the investment, I is the original
investment amount, and n is the number of periods the investment is held.
Aggregate approach - CORRECT ANSWERS-a theory of taxing partnerships that
ignores partnerships as entities and taxes partners as if they directly owned partnership
net assets.
Alimony - CORRECT ANSWERS-a support payment of cash made to a former spouse.
The payment must be made under a written separation agreement or divorce decree
that does not designate the payment as something other than alimony, the payment
must be made when the spouses do not live together, and the payments must cease no
later than when the recipient dies.
and Business Entities 2020 With
Complete Questions And 100% Correct
Verified Answers| Latest Update
Accumulated adjustments account (AAA) - CORRECT ANSWERS-an account that
reflects the cumulative income or loss for the time the corporation has been an S
corporation.
Accumulated earnings and profits - CORRECT ANSWERS-undistributed earnings and
profits from years prior to the current year.
Accumulated earnings tax - CORRECT ANSWERS-a tax assessed on C corporations
that retain earnings without a business reason to do so.
Acquiescence - CORRECT ANSWERS-issued after the IRS loses a trial-level or circuit
court case when the IRS has decided to follow the court's adverse ruling in the future. It
does not mean that the IRS agrees with the court's ruling. Instead, it simply means that
the IRS will no longer litigate this issue.
Acquisition indebtedness - CORRECT ANSWERS-debt secured by a qualified
residence that is incurred in acquiring, constructing, or substantially improving the
residence.
Action on decision - CORRECT ANSWERS-an IRS pronouncement that explains the
background reasoning behind an IRS acquiescence or nonacquiescence.
Active participant in a rental activity - CORRECT ANSWERS-an individual who owns at
least 10 percent of a rental property and participates in the process of making
management decisions, such as approving new tenants, deciding on rental terms, and
approving repairs and capital expenditures.
Ad valorem taxes - CORRECT ANSWERS-taxes based on the value of property.
Additional Medicare tax - CORRECT ANSWERS-a tax imposed at a rate of .9% for
salary or wages or net self-employment earnings in excess of $200,000 ($125,000 for
married filing separate; $250,000 of combined salary or wages or net self-employment
earnings for married filing joint).
Adequate consideration - CORRECT ANSWERS-a price paid that is equal in value to
the service or property received.
, Adjusted basis - CORRECT ANSWERS-An asset's carrying value for tax purposes at a
given point in time, measured as the initial basis (for example, cost) plus capital
improvements less depreciation or amortization. Also called adjusted tax basis.
Adjusted gross estate - CORRECT ANSWERS-gross estate reduced by administrative
expenses, debts of the decedent, losses incurred during the administration of the
estate, and state death taxes.
Adjusted gross income (AGI) - CORRECT ANSWERS-gross income less deductions for
AGI. AGI is an important reference point that is often used in other tax calculations.
Adjusted tax basis - CORRECT ANSWERS-An asset's carrying value for tax purposes
at a given point in time, measured as the initial basis (for example, cost) plus capital
improvements less depreciation or amortization.
Adjusted taxable gifts - CORRECT ANSWERS-cumulative taxable gifts from previous
years other than gifts already included in the gross estate valued at date of gift values.
Affiliated group - CORRECT ANSWERS-two or more "includible" corporations that are
related through common stock ownership and eligible to file a U.S. consolidated tax
return. An affiliated group consists of a parent corporation that owns directly 80 percent
or more of the voting stock and value of another corporation and one or more subsidiary
corporations that meet the 80 percent ownership requirement collectively. Includible
corporations are taxable U.S. corporations, excluding real estate investment trusts,
regulated investment companies, and life insurance companies.
After-tax rate of return - CORRECT ANSWERS-a taxpayer's before-tax rate of return on
an investment minus the taxes paid on the income from the investment. The formula for
an after-tax rate of return that is taxed annually is the before-tax rate of return × (1 −
marginal tax rate) [i.e., r = R × (1 − t)]. A taxpayer's after-tax rate of return on an
investment held for more than one tax period is r = (FV/I)1/n − 1, where r is the after-tax
rate of return, FV is the after-tax future value of the investment, I is the original
investment amount, and n is the number of periods the investment is held.
Aggregate approach - CORRECT ANSWERS-a theory of taxing partnerships that
ignores partnerships as entities and taxes partners as if they directly owned partnership
net assets.
Alimony - CORRECT ANSWERS-a support payment of cash made to a former spouse.
The payment must be made under a written separation agreement or divorce decree
that does not designate the payment as something other than alimony, the payment
must be made when the spouses do not live together, and the payments must cease no
later than when the recipient dies.
