Taxation II Final Exam – 2023/2024
Practice Questions & Verified Answers
Comprehensive Study Guide for Advanced Taxation Students
Date: June 15, 2025
, Practice Questions Taxation II Final Exam 2023/2024
Introduction
This study guide is designed 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
undergraduate 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 span 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 promote deep understanding. The guide also provides preparation
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 §304, how is a stock acquisition between related corporations treated?
A. Tax-free exchange
B. Dividend distribution
C. Capital gain transaction
D. Ordinary income
Correct Answer: B. Dividend distribution
Step-by-Step Solution:
1. Review IRC: IRC §304(a)(1) treats stock acquisitions between related corporations as
dividend distributions if cash or property is received.
2. Eliminate options: Tax-free (A), capital gain (C), and ordinary income (D) are incor-
rect.
3. Confirm: Dividend distribution applies.
Study Tip: Study related-party stock transactions under IRC §304.
2. What is the tax treatment of a C corporation’s research and experimental expendi-
tures under IRC §174 in 2023?
A. Fully deductible
B. Amortized over 5 years
C. Capitalized indefinitely
D. Not deductible
Correct Answer: B. Amortized over 5 years
Step-by-Step Solution:
1. Review IRC: IRC §174(a)(2) (post-TCJA) requires domestic R&E expenditures to be
amortized over 5 years starting in 2022.
2. Eliminate options: Fully deductible (A), capitalized (C), and not deductible (D) are
incorrect.
3. Confirm: 5-year amortization applies.
Study Tip: Study R&E rules under IRC §174.
3. Which IRC section governs the tax treatment of corporate liquidations to sharehold-
ers?
A. IRC §331
B. IRC §336
C. IRC §338
Page 1
Practice Questions & Verified Answers
Comprehensive Study Guide for Advanced Taxation Students
Date: June 15, 2025
, Practice Questions Taxation II Final Exam 2023/2024
Introduction
This study guide is designed 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
undergraduate 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 span 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 promote deep understanding. The guide also provides preparation
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 §304, how is a stock acquisition between related corporations treated?
A. Tax-free exchange
B. Dividend distribution
C. Capital gain transaction
D. Ordinary income
Correct Answer: B. Dividend distribution
Step-by-Step Solution:
1. Review IRC: IRC §304(a)(1) treats stock acquisitions between related corporations as
dividend distributions if cash or property is received.
2. Eliminate options: Tax-free (A), capital gain (C), and ordinary income (D) are incor-
rect.
3. Confirm: Dividend distribution applies.
Study Tip: Study related-party stock transactions under IRC §304.
2. What is the tax treatment of a C corporation’s research and experimental expendi-
tures under IRC §174 in 2023?
A. Fully deductible
B. Amortized over 5 years
C. Capitalized indefinitely
D. Not deductible
Correct Answer: B. Amortized over 5 years
Step-by-Step Solution:
1. Review IRC: IRC §174(a)(2) (post-TCJA) requires domestic R&E expenditures to be
amortized over 5 years starting in 2022.
2. Eliminate options: Fully deductible (A), capitalized (C), and not deductible (D) are
incorrect.
3. Confirm: 5-year amortization applies.
Study Tip: Study R&E rules under IRC §174.
3. Which IRC section governs the tax treatment of corporate liquidations to sharehold-
ers?
A. IRC §331
B. IRC §336
C. IRC §338
Page 1
