CPA Excel Tax Questions with 100% correct answers

Parents lend $2,000,000 to their child to start a business. The loan is interest-free and is payable on demand. The imputed interest is subject to A. The gift tax only in the year the parents lend the money. B. The generation-skipping transfer tax, but not the gift tax. C. The gift tax each year the loan is outstanding. D. An excise tax. CORRECT ANSWER C. The gift tax each year the loan is outstanding Which of the following statements is correct with regard to an individual taxpayer who has elected to amortize the premium on a bond that yields taxable interest? A. The amortization is treated as an itemized deduction. B. The amortization is not treated as a reduction of taxable income. C. The bond's basis is reduced by the amortization. D. The bond's basis is increased by the amortization. CORRECT ANSWER C. The bond's basis is reduced by the amortization. Clark bought series EE U.S. Savings Bonds in 2019. Redemption proceeds will be used for payment of college tuition for Clark's dependent child. One of the conditions that must be met for tax exemption of accumulated interest on these bonds is that the A.Purchaser of the bonds must be the sole owner of the bonds (or joint owner with his or her spouse). B. Bonds must be bought by a parent (or both parents) and put in the name of the dependent child. C. Bonds must be bought by the owner of the bonds before the owner reaches the age of 24. D. Bonds must be transferred to the college for redemption by the college rather than by the owner of the bonds. CORRECT ANSWER A. Purchaser of the bonds must be the sole owner of the bonds (or joint owner with his or her spouse).