Intuit Academy Business Tax Exam
Intuit Academy Business Tax Exam
Intuit Academy Business Tax Exam
Intuit Academy Business Tax Exam
Intuit Academy Business Tax Exam
Mostly Tested Exam Coverage Areas
1. Entity classification and formation consequences
2. Partnership and S corporation operating distributions
3. Partner and shareholder basis calculations
4. Business income recognition and gross receipts
5. Ordinary and necessary business deductions
6. Depreciation, Section 179, and MACRS conventions
7. Qualified Business Income (QBI) deduction limitations
, 8. Self-employment tax and payroll classification
9. Business credits and estimated tax requirements
10. Liquidating distributions and disposition of business interests
1. A partnership distributes appreciated land to a partner in a non-liquidating
distribution, and the partner’s outside basis is lower than the land’s adjusted basis; how
is the partner’s basis in the land determined?
A. Carryover basis equal to the partnership’s adjusted basis in the land
B. Fair market value of the land on the distribution date
C. Outside basis of the partner, with the excess treated as capital gain
D. Zero basis because the distribution is non-taxable
Answer: C
Rationale: In a non-liquidating distribution, the partner takes a carryover basis but
cannot exceed outside basis; any excess reduces the property basis and may trigger
gain if outside basis is lower than the property’s adjusted basis.
,2. A sole proprietor uses the cash method and receives a $5,000 check on December
28 but does not deposit it until January 5; when must the income be recognized?
A. January 5 of the following year when deposited
B. December 28 of the current year under constructive receipt
C. The date the check clears the bank
D. When the client’s tax return is filed
Answer: B
Rationale: Under the constructive receipt doctrine, income is recognized when it is
made available without substantial restrictions, not when the taxpayer chooses to
deposit it.
3. An S corporation shareholder’s stock basis is $10,000, and the corporation
distributes $15,000 cash in a non-liquidating distribution; what is the tax treatment?
A. $5,000 capital gain and basis reduced to zero
B. $15,000 ordinary income and basis remains $10,000
C. $5,000 return of capital and $10,000 dividend
D. Entire $15,000 is tax-free with negative basis
Answer: A
, Rationale: Distributions in excess of stock basis are taxable as capital gain; basis is
reduced to zero before the excess is recognized.
4. A calendar-year C corporation accrues a $50,000 bonus to its CEO on December 31
but does not pay it until March 10 of the following year; when is the deduction allowed?
A. Current year, because the liability is fixed and determinable
B. Following year, because payment occurs after year-end
C. Current year only if paid by March 15
D. Never deductible until the CEO reports it
Answer: A
Rationale: Accrual-method corporations can deduct bonuses accrued to related
parties within 2.5 months after year-end if paid by the 15th day of the third month.
5. A taxpayer places a $1,200,000 piece of qualifying equipment in service and elects
Section 179; what is the maximum deduction limitation threshold before phase-out
begins for 2025?
A. $1,000,000
B. $2,500,000
C. $2,890,000
Intuit Academy Business Tax Exam
Intuit Academy Business Tax Exam
Intuit Academy Business Tax Exam
Intuit Academy Business Tax Exam
Mostly Tested Exam Coverage Areas
1. Entity classification and formation consequences
2. Partnership and S corporation operating distributions
3. Partner and shareholder basis calculations
4. Business income recognition and gross receipts
5. Ordinary and necessary business deductions
6. Depreciation, Section 179, and MACRS conventions
7. Qualified Business Income (QBI) deduction limitations
, 8. Self-employment tax and payroll classification
9. Business credits and estimated tax requirements
10. Liquidating distributions and disposition of business interests
1. A partnership distributes appreciated land to a partner in a non-liquidating
distribution, and the partner’s outside basis is lower than the land’s adjusted basis; how
is the partner’s basis in the land determined?
A. Carryover basis equal to the partnership’s adjusted basis in the land
B. Fair market value of the land on the distribution date
C. Outside basis of the partner, with the excess treated as capital gain
D. Zero basis because the distribution is non-taxable
Answer: C
Rationale: In a non-liquidating distribution, the partner takes a carryover basis but
cannot exceed outside basis; any excess reduces the property basis and may trigger
gain if outside basis is lower than the property’s adjusted basis.
,2. A sole proprietor uses the cash method and receives a $5,000 check on December
28 but does not deposit it until January 5; when must the income be recognized?
A. January 5 of the following year when deposited
B. December 28 of the current year under constructive receipt
C. The date the check clears the bank
D. When the client’s tax return is filed
Answer: B
Rationale: Under the constructive receipt doctrine, income is recognized when it is
made available without substantial restrictions, not when the taxpayer chooses to
deposit it.
3. An S corporation shareholder’s stock basis is $10,000, and the corporation
distributes $15,000 cash in a non-liquidating distribution; what is the tax treatment?
A. $5,000 capital gain and basis reduced to zero
B. $15,000 ordinary income and basis remains $10,000
C. $5,000 return of capital and $10,000 dividend
D. Entire $15,000 is tax-free with negative basis
Answer: A
, Rationale: Distributions in excess of stock basis are taxable as capital gain; basis is
reduced to zero before the excess is recognized.
4. A calendar-year C corporation accrues a $50,000 bonus to its CEO on December 31
but does not pay it until March 10 of the following year; when is the deduction allowed?
A. Current year, because the liability is fixed and determinable
B. Following year, because payment occurs after year-end
C. Current year only if paid by March 15
D. Never deductible until the CEO reports it
Answer: A
Rationale: Accrual-method corporations can deduct bonuses accrued to related
parties within 2.5 months after year-end if paid by the 15th day of the third month.
5. A taxpayer places a $1,200,000 piece of qualifying equipment in service and elects
Section 179; what is the maximum deduction limitation threshold before phase-out
begins for 2025?
A. $1,000,000
B. $2,500,000
C. $2,890,000
