Taxation II Final Exam Study Guide –
2023/2024
Comprehensive Practice Questions and
Detailed Solutions for Advanced U.S.
Federal Taxation Mastery
Prepared for Advanced Taxation Students
Date: June 15, 2025
, Comprehensive Practice Questions Taxation II Final Exam Study Guide 2023/2024
Introduction
This study guide is crafted for students preparing for the Taxation II Final Exam for the 2023/2024
academic year, focusing on advanced U.S. federal taxation topics in a second-semester under-
graduate or graduate tax course. It features 44 new multiple-choice practice questions with
100% verified solutions, aligned with the Internal Revenue Code (IRC) as of 2023/2024. The
questions cover five core domains: Corporate Taxation (9 questions), Partnership Taxation (9
questions), S Corporations (9 questions), Tax-Exempt Organizations (8 questions), and Interna-
tional Taxation (9 questions). Each question includes four answer choices, the correct answer,
and a detailed explanation to foster deep understanding. Additionally, the guide provides prepa-
ration tips, curated resources, a practice strategy, and common pitfalls to avoid, equipping you
to excel in your Tax 2 final exam and master complex tax concepts.
1 Practice Questions and Solutions
1. Under IRC §338, what is the effect of a qualified stock purchase election?
A. Tax-free reorganization
B. Deemed asset purchase
C. No tax consequence
D. Dividend distribution
Correct Answer: B. Deemed asset purchase
Step-by-Step Solution:
1. Review IRC: IRC §338 allows a corporation to treat a qualified stock purchase as a
deemed asset purchase, with the target recognizing gain/loss.
2. Eliminate options: Reorganization (A), no consequence (C), and dividend (D) are
incorrect.
3. Confirm: Deemed asset purchase applies.
Study Tip: Study §338 elections for acquisitions.
2. What is the purpose of IRC §334 regarding liquidations?
A. Tax dividends at capital gains rates
B. Determine basis of distributed property
C. Allow tax deferral
D. Prevent double taxation
Correct Answer: B. Determine basis of distributed property
Step-by-Step Solution:
1. Review IRC: IRC §334 sets the basis of property received in a corporate liquidation,
typically fair market value for shareholders.
2. Eliminate options: Capital gains (A), deferral (C), and double taxation (D) are incor-
rect.
3. Confirm: Basis determination applies.
Study Tip: Study liquidation basis rules under IRC §334.
3. Which IRC section governs tax-free corporate reorganizations?
A. IRC §351
B. IRC §368
C. IRC §382
D. IRC §1031
Correct Answer: B. IRC §368
Page 1
2023/2024
Comprehensive Practice Questions and
Detailed Solutions for Advanced U.S.
Federal Taxation Mastery
Prepared for Advanced Taxation Students
Date: June 15, 2025
, Comprehensive Practice Questions Taxation II Final Exam Study Guide 2023/2024
Introduction
This study guide is crafted for students preparing for the Taxation II Final Exam for the 2023/2024
academic year, focusing on advanced U.S. federal taxation topics in a second-semester under-
graduate or graduate tax course. It features 44 new multiple-choice practice questions with
100% verified solutions, aligned with the Internal Revenue Code (IRC) as of 2023/2024. The
questions cover five core domains: Corporate Taxation (9 questions), Partnership Taxation (9
questions), S Corporations (9 questions), Tax-Exempt Organizations (8 questions), and Interna-
tional Taxation (9 questions). Each question includes four answer choices, the correct answer,
and a detailed explanation to foster deep understanding. Additionally, the guide provides prepa-
ration tips, curated resources, a practice strategy, and common pitfalls to avoid, equipping you
to excel in your Tax 2 final exam and master complex tax concepts.
1 Practice Questions and Solutions
1. Under IRC §338, what is the effect of a qualified stock purchase election?
A. Tax-free reorganization
B. Deemed asset purchase
C. No tax consequence
D. Dividend distribution
Correct Answer: B. Deemed asset purchase
Step-by-Step Solution:
1. Review IRC: IRC §338 allows a corporation to treat a qualified stock purchase as a
deemed asset purchase, with the target recognizing gain/loss.
2. Eliminate options: Reorganization (A), no consequence (C), and dividend (D) are
incorrect.
3. Confirm: Deemed asset purchase applies.
Study Tip: Study §338 elections for acquisitions.
2. What is the purpose of IRC §334 regarding liquidations?
A. Tax dividends at capital gains rates
B. Determine basis of distributed property
C. Allow tax deferral
D. Prevent double taxation
Correct Answer: B. Determine basis of distributed property
Step-by-Step Solution:
1. Review IRC: IRC §334 sets the basis of property received in a corporate liquidation,
typically fair market value for shareholders.
2. Eliminate options: Capital gains (A), deferral (C), and double taxation (D) are incor-
rect.
3. Confirm: Basis determination applies.
Study Tip: Study liquidation basis rules under IRC §334.
3. Which IRC section governs tax-free corporate reorganizations?
A. IRC §351
B. IRC §368
C. IRC §382
D. IRC §1031
Correct Answer: B. IRC §368
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