Solution Manual for McGraw Hill's Taxation
of Individuals and Business Entities Latest
Update15th Edition Chapter 1-25 Verified
Question and Answers Key Download
§1231 assets - Correct Answers-depreciable or real property used in a taxpayer's trade or business
owned for more than one year.
§1231 look-back rule - Correct Answers-a tax rule requiring taxpayers to treat current year net §1231
gains as ordinary income when the taxpayer has deducted a §1231 loss as an ordinary loss in the five
years preceding the current tax year.
§1245 property - Correct Answers-tangible personal property and intangible property subject to cost
recovery deductions.
§1250 property - Correct Answers-real property subject to cost recovery deductions.
§162(m) limitation - Correct Answers-the $1 million deduction limit on nonperformance-based salary
paid to certain key executives.
§179 expense - Correct Answers-an incentive for small businesses that allows them to immediately
expense a certain amount of tangible personal property placed in service during the year.
§197 intangibles - Correct Answers-intangible assets that are purchased that must be amortized over
180 months regardless of their actual useful lives.
§291 depreciation recapture - Correct Answers-the portion of a corporate taxpayer's gain on real
property that is converted from §1231 gain to ordinary income.
§338 election - Correct Answers-an election by a corporate buyer of 80-percent-or-more of a
corporation's stock to treat the acquisition as an asset acquisition and not a stock acquisition.
§338(h)(10) election - Correct Answers-a joint election by the corporate buyer and corporate seller of
the stock of a subsidiary of the seller to treat the acquisition as a sale of the subsidiary's assets by the
seller to the buyer.
§481 adjustment - Correct Answers-a change to taxable income associated with a change in
accounting methods.
§704(b) capital accounts - Correct Answers-partners' capital accounts maintained using the accounting
rules prescribed in the Section 704(b) regulations. Under these rules, capital accounts reflect the fair
market value of property contributed to and distributed property from partnerships.
12-month rule - Correct Answers-regulation that allows prepaid business expenses to be currently
deducted when the contract does not extend beyond 12 months and the contract period does not extend
beyond the end of the tax year following the year of the payment.
, 30-day letter - Correct Answers-the IRS letter received after an audit that instructs the taxpayer that he
or she has 30 days to either (1) request a conference with an appeals officer or (2) agree to the proposed
adjustment.
83(b) election - Correct Answers-a special tax election that employees who receive restricted stock or
other property with ownership restrictions can make to accelerate income recognition from the normal
date when restrictions lapse to the date when the restricted stock or other property is granted. The election
also accelerates the employer's compensation deduction related to the restricted stock or other property.
90-day letter - Correct Answers-the IRS letter received after an audit and receipt of the 30-day letter
that explains that the taxpayer has 90 days to either (1) pay the proposed deficiency or (2) file a petition in
the U.S. Tax Court to hear the case. The 90-day letter is also known as the statutory notice of deficiency.
Abandoned spouse - Correct Answers-a married taxpayer who lives apart from his or her spouse for
the last six months of the year (excluding temporary absences), who files a tax return separate from his or
her spouse, and who maintains a household for a qualifying child.
Accelerated death benefits - Correct Answers-early receipt of life insurance proceeds that are not
taxable under certain circumstances, such as the taxpayer is medically certified with an illness that is
expected to cause death within 24 months.
Accountable plan - Correct Answers-an employer's reimbursement plan under which employees must
submit documentation supporting expenses to receive reimbursement and reimbursements are limited to
legitimate business expenses.
Accounting method - Correct Answers-the procedure for determining the taxable year in which a
business recognizes a particular item of income or deduction, thereby dictating the timing of when a
taxpayer reports income and deductions.
Accounting period - Correct Answers-a fixed period in which a business reports income and
deductions.
Accrual method - Correct Answers-a method of accounting that generally recognizes income in the
period earned and recognizes deductions in the period that liabilities are incurred.
Accrued market discount - Correct Answers-a ratable amount of the market discount at the time of
purchase (based on the number of days the bond is held over the number of days until maturity when the
bond is purchased) that is treated as interest income when a bond with market discount is sold before it
matures.
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.
of Individuals and Business Entities Latest
Update15th Edition Chapter 1-25 Verified
Question and Answers Key Download
§1231 assets - Correct Answers-depreciable or real property used in a taxpayer's trade or business
owned for more than one year.
§1231 look-back rule - Correct Answers-a tax rule requiring taxpayers to treat current year net §1231
gains as ordinary income when the taxpayer has deducted a §1231 loss as an ordinary loss in the five
years preceding the current tax year.
§1245 property - Correct Answers-tangible personal property and intangible property subject to cost
recovery deductions.
§1250 property - Correct Answers-real property subject to cost recovery deductions.
§162(m) limitation - Correct Answers-the $1 million deduction limit on nonperformance-based salary
paid to certain key executives.
§179 expense - Correct Answers-an incentive for small businesses that allows them to immediately
expense a certain amount of tangible personal property placed in service during the year.
§197 intangibles - Correct Answers-intangible assets that are purchased that must be amortized over
180 months regardless of their actual useful lives.
§291 depreciation recapture - Correct Answers-the portion of a corporate taxpayer's gain on real
property that is converted from §1231 gain to ordinary income.
§338 election - Correct Answers-an election by a corporate buyer of 80-percent-or-more of a
corporation's stock to treat the acquisition as an asset acquisition and not a stock acquisition.
§338(h)(10) election - Correct Answers-a joint election by the corporate buyer and corporate seller of
the stock of a subsidiary of the seller to treat the acquisition as a sale of the subsidiary's assets by the
seller to the buyer.
§481 adjustment - Correct Answers-a change to taxable income associated with a change in
accounting methods.
§704(b) capital accounts - Correct Answers-partners' capital accounts maintained using the accounting
rules prescribed in the Section 704(b) regulations. Under these rules, capital accounts reflect the fair
market value of property contributed to and distributed property from partnerships.
12-month rule - Correct Answers-regulation that allows prepaid business expenses to be currently
deducted when the contract does not extend beyond 12 months and the contract period does not extend
beyond the end of the tax year following the year of the payment.
, 30-day letter - Correct Answers-the IRS letter received after an audit that instructs the taxpayer that he
or she has 30 days to either (1) request a conference with an appeals officer or (2) agree to the proposed
adjustment.
83(b) election - Correct Answers-a special tax election that employees who receive restricted stock or
other property with ownership restrictions can make to accelerate income recognition from the normal
date when restrictions lapse to the date when the restricted stock or other property is granted. The election
also accelerates the employer's compensation deduction related to the restricted stock or other property.
90-day letter - Correct Answers-the IRS letter received after an audit and receipt of the 30-day letter
that explains that the taxpayer has 90 days to either (1) pay the proposed deficiency or (2) file a petition in
the U.S. Tax Court to hear the case. The 90-day letter is also known as the statutory notice of deficiency.
Abandoned spouse - Correct Answers-a married taxpayer who lives apart from his or her spouse for
the last six months of the year (excluding temporary absences), who files a tax return separate from his or
her spouse, and who maintains a household for a qualifying child.
Accelerated death benefits - Correct Answers-early receipt of life insurance proceeds that are not
taxable under certain circumstances, such as the taxpayer is medically certified with an illness that is
expected to cause death within 24 months.
Accountable plan - Correct Answers-an employer's reimbursement plan under which employees must
submit documentation supporting expenses to receive reimbursement and reimbursements are limited to
legitimate business expenses.
Accounting method - Correct Answers-the procedure for determining the taxable year in which a
business recognizes a particular item of income or deduction, thereby dictating the timing of when a
taxpayer reports income and deductions.
Accounting period - Correct Answers-a fixed period in which a business reports income and
deductions.
Accrual method - Correct Answers-a method of accounting that generally recognizes income in the
period earned and recognizes deductions in the period that liabilities are incurred.
Accrued market discount - Correct Answers-a ratable amount of the market discount at the time of
purchase (based on the number of days the bond is held over the number of days until maturity when the
bond is purchased) that is treated as interest income when a bond with market discount is sold before it
matures.
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.
