CORPORATE PARTNERSHIP ESTATE AND
GIFT TAXATION 1ST EDITION PRATT
COMPREHENSIVE EXAMINATION TEST
2026 SOLVED QUESTIONS GUARANTEED
TO PASS
⩥ John wants to buy a business whose assets have appreciated in value.
If the business is operated as a C corporation, it does not matter to John
whether he purchases the assets or the stock.
T or F. Answer: False
⩥ Which of the following statements is correct?
a.A general partnership has a greater opportunity to raise capital than
does a limited partnership.
b. A partnership has a greater opportunity to raise capital than does a
sole proprietorship.
c. An S corporation has a greater opportunity to raise capital than does a
C corporation.
d. Only "An S corporation has a greater opportunity to raise capital than
does a C corporation" and "A general partnership has a greater
opportunity to raise capital than does a limited partnership" are correct..
,Answer: b. A partnership has a greater opportunity to raise capital than
does a sole proprietorship.
⩥ Techniques that can be used to minimize the current period tax
liability include:
a.Utilizing special allocations.
b.Having favorable treatment of certain fringe benefits.
c.Minimizing double taxation.
d.All of these can be used for effective tax planning.. Answer: d. All of
these can be used for effective tax planning.
⩥ Both Malcolm and Cho (shareholders) loan Crow Corporation
$50,000 at the market rate of interest. Which of the following statements
are false?
a. Crow may deduct the interest expense, and the interest income is
taxable to Malcolm and Cho.
b. If the IRS were successful in reclassifying the notes as equity,
repayment of the note principal to Malcolm and Cho to return of capital
treatment and would most likely result in dividend income treatment for
Malcolm and Cho.
, c. If the IRS were successful in reclassifying the notes as equity, the
interest payments would not be deductible by CrowCho would still
recognize income.
d. All of these are true.. Answer: d. All of these are true.
⩥ Which of the following statements is correct?
a. The sale of an unincorporated sole proprietorship always is treated as
the sale of the individual business assets.
b. The sale of a corporation is treated either as the sale of the corporate
stock or as the sale of the individual assets.
c. The sale of a partnership is treated as the sale of the individual assets
only if the sales transaction is structured as the individual assets.
d. "The sale of an unincorporated sole proprietorship always is treated as
the sale of the individual business assets," "The sale of a partnership is
treated as the sale of the individual assets only if the sales transaction is
structured as the sale of the individual assets," and "The sale of a
corporation is treated either as the sale of the corporate stock or as the
sale of the individual assets" are correct.. Answer: "The sale of an
unincorporated sole proprietorship always is treated as the sale of the
individual business assets," "The sale of a partnership is treated as the
sale of the individual assets only if the sales transaction is structured as
the sale of the individual assets," and "The sale of a corporation is
treated either as the sale of the corporate stock or as the sale of the
individual assets" are correct.
GIFT TAXATION 1ST EDITION PRATT
COMPREHENSIVE EXAMINATION TEST
2026 SOLVED QUESTIONS GUARANTEED
TO PASS
⩥ John wants to buy a business whose assets have appreciated in value.
If the business is operated as a C corporation, it does not matter to John
whether he purchases the assets or the stock.
T or F. Answer: False
⩥ Which of the following statements is correct?
a.A general partnership has a greater opportunity to raise capital than
does a limited partnership.
b. A partnership has a greater opportunity to raise capital than does a
sole proprietorship.
c. An S corporation has a greater opportunity to raise capital than does a
C corporation.
d. Only "An S corporation has a greater opportunity to raise capital than
does a C corporation" and "A general partnership has a greater
opportunity to raise capital than does a limited partnership" are correct..
,Answer: b. A partnership has a greater opportunity to raise capital than
does a sole proprietorship.
⩥ Techniques that can be used to minimize the current period tax
liability include:
a.Utilizing special allocations.
b.Having favorable treatment of certain fringe benefits.
c.Minimizing double taxation.
d.All of these can be used for effective tax planning.. Answer: d. All of
these can be used for effective tax planning.
⩥ Both Malcolm and Cho (shareholders) loan Crow Corporation
$50,000 at the market rate of interest. Which of the following statements
are false?
a. Crow may deduct the interest expense, and the interest income is
taxable to Malcolm and Cho.
b. If the IRS were successful in reclassifying the notes as equity,
repayment of the note principal to Malcolm and Cho to return of capital
treatment and would most likely result in dividend income treatment for
Malcolm and Cho.
, c. If the IRS were successful in reclassifying the notes as equity, the
interest payments would not be deductible by CrowCho would still
recognize income.
d. All of these are true.. Answer: d. All of these are true.
⩥ Which of the following statements is correct?
a. The sale of an unincorporated sole proprietorship always is treated as
the sale of the individual business assets.
b. The sale of a corporation is treated either as the sale of the corporate
stock or as the sale of the individual assets.
c. The sale of a partnership is treated as the sale of the individual assets
only if the sales transaction is structured as the individual assets.
d. "The sale of an unincorporated sole proprietorship always is treated as
the sale of the individual business assets," "The sale of a partnership is
treated as the sale of the individual assets only if the sales transaction is
structured as the sale of the individual assets," and "The sale of a
corporation is treated either as the sale of the corporate stock or as the
sale of the individual assets" are correct.. Answer: "The sale of an
unincorporated sole proprietorship always is treated as the sale of the
individual business assets," "The sale of a partnership is treated as the
sale of the individual assets only if the sales transaction is structured as
the sale of the individual assets," and "The sale of a corporation is
treated either as the sale of the corporate stock or as the sale of the
individual assets" are correct.
