CORPORATE PARTNERSHIP ESTATE AND GIFT TAXATION 1ST EDITION PRATT EXAM SCRIPT 2026 FULL SOLUTION EXAM QUESTIONS AND SOLUTIONS

CORPORATE PARTNERSHIP ESTATE AND
GIFT TAXATION 1ST EDITION PRATT EXAM
SCRIPT 2026 FULL SOLUTION EXAM
QUESTIONS AND SOLUTIONS

⩥ What is the basic deduction calculation for the qualified business
income deduction?


a. 30% × Qualified business income (QBI)
b. 20% × W-2 wages
c. 20% × Qualified business income (QBI)
d. 30% × W-2 wage. Answer: 20% × Qualified business income (QBI)


⩥ Which of the following statements is true regarding taxpayers with
taxable income below the taxable income limitations for the qualified
business income (QBI) deduction?


a. QBI deduction is only allowed if a qualified trade or business (QTB).
b. QBI deduction is a phased-out deduction if a specified service trade or
business (SSTB).
c. QBI deduction is limited to 50 percent of W-2 wages.

,d. A qualified trade or business (QTB) and specified trade or business
(SSTB) are treated the same.. Answer: A qualified trade or business
(QTB) and specified trade or business (SSTB) are treated the same.


⩥ Which of the following is true about the qualified business income
(QBI) deduction for taxpayers with taxable income above the
taxableincome limitations?


a. If the taxpayer is a specified service trade or business (SSTB), no QBI
deduction is allowed.
b. If the taxpayer is a qualified trade or business (QTB), W-2 wage and
property limitations do not apply.
c. If the taxpayer is a qualified trade or business (QTB), W-2 wage and
property limitations are phased in.
d. If the taxpayer is a specified service trade or business (SSTB), W-2
wage and property limitations apply.. Answer: a.
If the taxpayer is a specified service trade or business (SSTB), no QBI
deduction is allowed.


⩥ Which of the following is the overall limitation to the qualified
business income (QBI) deduction?


a. Lesser of 50 percent of combined QBI or 20 percent of the taxpayer's
taxable income in excess of net capital gain.

,b. Lesser of combined QBI or 20 percent of the taxpayer's taxable
income in excess of net capital gain.
c. Lesser of 50 percent of W-2 wages or 25 percent of W-2 wages plus
2.5 percent of the unadjusted basis of qualified property.
d. Taxable income limitations based on filing status.. Answer: Lesser of
combined QBI or 20 percent of the taxpayer's taxable income in excess
of net capital gain


⩥ Most limited liability partnerships can own stock in an S corporation


T or F. Answer: False


⩥ The termination of an S election occurs on the day after a corporation
ceases to be a qualifying S corporation.


T or F. Answer: False


⩥ An S corporation must possess which of the following characteristics?


a. Corporation organized in the United States.
b. Not more than 100 shareholders.
c. Only one class of stock.
d. All of these.. Answer: d. All of these.

, ⩥ Identify a disadvantage of being an S corporation
a.Losses flow through immediately to the shareholders.
b.The exclusion of gain on disposition of small business stock is not
available for S stock.
c.Estates can be shareholders.
d.Tax-exempt income at the S level does not lose its special tax
treatment for shareholders. Answer: b. The exclusion of gain on
disposition of small business stock is not available for S stock


⩥ Which statement is incorrect with respect to filing an S election?


a. The election may be filed in the previous year.
b.An extension of time is available for filing the application.
c.All shareholders must consent.
d. Form 2553 must be filed.. Answer: b. An extension of time is
available for filing the application


⩥ Which of the following, if any, are eligible shareholders of an S
corporation? a.The estate of a deceased shareholder.
b.A partnership.
c.A three-person LLC.
d.A nonresident alien.. Answer: a.The estate of a deceased shareholder.