C201 Business Acumen Exam Questions with
correct answers
An individual has taxable income of $60,000. The first $20,000 is taxed at 20%, the next $20,000 is taxed
at 20%, and all income above $40,000 is taxed at 20%.Which tax structure is being applied to the
individual's taxable income?
Base
Regressive
Progressive
Proportional - ✅✅Proportional
Which federal income tax structure imposes an increasing marginal tax rate as the tax base increases?
Regressive tax
Incremental tax
Progressive tax
Proportional tax - ✅✅Progressive
What would a graph look like for Progressive, Proportional, Incremental, and Regressive tax structures? -
✅✅Progressive- ascending
Proportional- flat line
Incremental- stair-steps
Regressive- descending
What describes a gift tax?
Tax on the retail sale of particular products
Tax on the fair market value of wealth transfers
Tax on the retail price of goods and services
Tax on income earned by an individual - ✅✅Tax on the fair market value of wealth transfers
,What is a key element of an economy tax structure?
Attracts and stimulates investment
Helps ensure equality and ability to pay
Assists in reducing unemployment and inflation
Requires minimal compliance and administration costs - ✅✅Requires minimal compliance and
administration costs
Which objective of the federal tax law requires that a good tax system minimizes the compliance and
administration costs?
Equity
Convenience
Certainty
Economy - ✅✅Economy
Consider how the tax burden should be distributed across taxpayers - ✅✅Questions of Equity
Means taxpayers should be able to determine when, where, and how much to pay - ✅✅Certainty
A tax system should minimize compliance and administration costs - ✅✅Convenience
Which partnership item would flow through to an individual's tax return?
Capital gains
Gross income
Partnership exemptions
Dividends received deduction - ✅✅Capital Gains
An Eleventh Circuit client who files in the U.S. Court of Federal Claims wants to know whether to include
the terms of multiple options to renew a sale-leaseback to calculate a deduction.
, What is the authoritative reference?
A Second Circuit case which used disjunctive analysis
A tax court decision which used economic substance
An Eleventh Circuit Case which analyzed sale-leaseback transactions that generate tax deductions
A U.S. Court of Federal Claims case which analyzed sale-leaseback transactions for operating equipment
- ✅✅A U.S. Court of Federal Claims case which analyzed sale-leaseback transactions for operating
equipment
Which tax rate calculation is an appropriate step in tax planning strategy to reduce tax?
The average tax rate, because it represents the percent of tax on each dollar
The tax-exempt tax rate, because effective tax planning utilizes tax exempt bonds
The effective tax rate, because economic income is less broad than taxable income
The marginal tax rate, because it represents the tax applicable to the next taxable dollar - ✅✅The
marginal tax rate, because it represents the tax applicable to the next taxable dollar
Where is a corporation's non-business income allocated when computing the corporation's state taxable
income?
To multiple states per the functional test
To one state per the transaction test
To the state of the corporate headquarters of the payer
To each state where the income is earned - ✅✅To the state of the corporate headquarters of the
payer
What is a key operating element of doing business as an S corporation?
Fiscal year ends can be chosen without establishing a business purpose.
Corporate profits are taxed at the shareholders level in the year earned.
correct answers
An individual has taxable income of $60,000. The first $20,000 is taxed at 20%, the next $20,000 is taxed
at 20%, and all income above $40,000 is taxed at 20%.Which tax structure is being applied to the
individual's taxable income?
Base
Regressive
Progressive
Proportional - ✅✅Proportional
Which federal income tax structure imposes an increasing marginal tax rate as the tax base increases?
Regressive tax
Incremental tax
Progressive tax
Proportional tax - ✅✅Progressive
What would a graph look like for Progressive, Proportional, Incremental, and Regressive tax structures? -
✅✅Progressive- ascending
Proportional- flat line
Incremental- stair-steps
Regressive- descending
What describes a gift tax?
Tax on the retail sale of particular products
Tax on the fair market value of wealth transfers
Tax on the retail price of goods and services
Tax on income earned by an individual - ✅✅Tax on the fair market value of wealth transfers
,What is a key element of an economy tax structure?
Attracts and stimulates investment
Helps ensure equality and ability to pay
Assists in reducing unemployment and inflation
Requires minimal compliance and administration costs - ✅✅Requires minimal compliance and
administration costs
Which objective of the federal tax law requires that a good tax system minimizes the compliance and
administration costs?
Equity
Convenience
Certainty
Economy - ✅✅Economy
Consider how the tax burden should be distributed across taxpayers - ✅✅Questions of Equity
Means taxpayers should be able to determine when, where, and how much to pay - ✅✅Certainty
A tax system should minimize compliance and administration costs - ✅✅Convenience
Which partnership item would flow through to an individual's tax return?
Capital gains
Gross income
Partnership exemptions
Dividends received deduction - ✅✅Capital Gains
An Eleventh Circuit client who files in the U.S. Court of Federal Claims wants to know whether to include
the terms of multiple options to renew a sale-leaseback to calculate a deduction.
, What is the authoritative reference?
A Second Circuit case which used disjunctive analysis
A tax court decision which used economic substance
An Eleventh Circuit Case which analyzed sale-leaseback transactions that generate tax deductions
A U.S. Court of Federal Claims case which analyzed sale-leaseback transactions for operating equipment
- ✅✅A U.S. Court of Federal Claims case which analyzed sale-leaseback transactions for operating
equipment
Which tax rate calculation is an appropriate step in tax planning strategy to reduce tax?
The average tax rate, because it represents the percent of tax on each dollar
The tax-exempt tax rate, because effective tax planning utilizes tax exempt bonds
The effective tax rate, because economic income is less broad than taxable income
The marginal tax rate, because it represents the tax applicable to the next taxable dollar - ✅✅The
marginal tax rate, because it represents the tax applicable to the next taxable dollar
Where is a corporation's non-business income allocated when computing the corporation's state taxable
income?
To multiple states per the functional test
To one state per the transaction test
To the state of the corporate headquarters of the payer
To each state where the income is earned - ✅✅To the state of the corporate headquarters of the
payer
What is a key operating element of doing business as an S corporation?
Fiscal year ends can be chosen without establishing a business purpose.
Corporate profits are taxed at the shareholders level in the year earned.
