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1 PRESORTED STANDARD U.S. POSTAGE PAID WEST 545 Westcott Road Eagan, MN ASCE American Society for Continuing Education One of the Largest CPE Providers with Thousands of Satisfied Customers Now Part of Thomson Reuters Don t put your license in jeopardy. Get your CPE from ASCE! 2018 Thomson Reuters/Tax & Accounting. All Rights Reserved. Company, products and service names may be trademarks of their respective owners. AFFORDABLE CPE: ONLY ASCE MAKES IT THIS EASY! See inside back cover. VIP and CPE Block Specials Inside! See page ii or call American Society for Continuing Education NEW! for 2018 Now Part of Thomson Reuters Affordable. Easy. Fast. Earn CPE Starting at $6.05 Per Credit Hour 100% Satisfaction Guaranteed Instant Online Grading True/False Quizzers 387 Credits Inside + More Online Use Your Own Materials or The Credits You Need. The Price You Want. Share Credits and Save Even More Earn CPE With Materials You Already Own Hundreds of Credits Available Online Credits as Low as $6.05 Per Hour Fast! Convenient! Affordable! CATASCP 18 / ASCE SO START NOW! Share With Your Firm and Save! Complete CPE Coverage for You and Your Firm! CPE One of the Largest CPE Providers With Thousands of Satisfied Customers asce.com Free Resources Online Fast! Convenient! Affordable! asce.com

2 ASCE American Society for Continuing Education Now Part of Thomson Reuters ASCE American Society for Continuing Education Now Part of Thomson Reuters FAST, AFFORDABLE CPE. ONLY ASCE MAKES IT THIS EASY. Earn CPE credit in an instant for as low as $6.05 per hour! With ASCE s convenient quizzers, you can start earning CPE credits immediately. Simply choose your format (catalog or online), select a quiz, complete a series of true/false questions and submit your answers. ASCE quizzers are based on popular books, software and publications you already own or can access free on the internet and they even include references to help you locate relevant information. ASCE PRE-PAID CREDIT BLOCKS ARE IDEAL FOR INDIVIDUALS AND FIRMS! Save with ASCE pre-paid credits and earn CPE even faster! ASCE pre-paid credit blocks provide the perfect way for individuals, firms and groups to maximize their savings by reserving all their annual CPE credits now and then taking their courses at any time during the year! Credits are good for one year and can be shared firm-wide and used toward any of our ASCE quizzers*. 55Lock in your CPE costs NOW for the entire year there s nothing more to pay 55Share credits with as many colleagues and staff members as you want 55Use pre-paid credits only when you pass the ASCE quizzers a. From Start to Finish in 4 Easy Steps! 1. Select Choose from any of the quizzers in this catalog or visit asce.com for additional quizzers available online. 2. Read Handy references direct you to relevant information you can read and review before answering each question. Visit asce.com for links to online resources. 3. Answer Fill out the answer sheet(s) on page A-1 of this catalog to record your responses to the true/false questions. Or log on to asce.com for online quizzers with instant grading. 4. Submit To receive credits for your ASCE quizzer(s), submit your answers and payment via one of the following methods: Online: Complete all questions and required fields including your ASCE block credit number (available from your sales representative) or credit card number then click to submit your answers and receive your CPE credits. Mail: Send your answer sheet(s) and payment to: ASCE Harris Bank Treasury Center Chicago, IL Enjoy Flexibility and Convenience 55 Use credits at your convenience anytime for one year 55 Choose which ASCE quizzers to take whenever you re ready to complete them no need to decide now 55 Get immediate online grading ideal when you need to earn last-minute CPE credit ASCE pre-paid credit block discounts for individuals and firms: Credit Hours List Price $ Per Credit Cost 40 $263 $ $517 $ $750 $ $983 $ $1,208 $6.05 * Please see your order confirmation for pre-paid credit terms and conditions. Please call your sales representative to purchase pre-paid credit blocks. AS LOW AS $6.05 PER CREDIT! PHONE VISIT asce.com PHONE VISIT asce.com

3 CERTIFICATE OF COMPLETION ASCE will issue a certificate of completion when you achieve a passing score of 70% or better. To obtain CPE credit, you must submit a CPE reporting form to your state board of accountancy or professional organization indicating the amount of CPE for which you are applying. Contact your state board for complete information regarding status requirements. ASCE courses are written in accordance with various state boards of accountancy standards on formal self-study continuing professional education. States where we have entered into formal sponsor agreements with the State Board of Accountancy: Illinois New York Pennsylvania States that do not offer formal sponsor agreements: Alabama Iowa Montana Washington Alaska Kentucky Nevada Wisconsin Arizona Maine New Hampshire Wyoming Hawaii Massachusetts North Dakota Indiana Michigan Virginia Contact your state board or professional association for details on your specific requirements or appropriate use of our courses. For further assistance, please call our customer service department at This publication contains CPE quizzers for professional reference books: from CCH, Thomson Reuters, J.K. Lasser and the IRS. However, the American Society for Continuing Education (ASCE) is in no way affiliated with reference material publishers CCH, J.K. Lasser (Wiley Publishers) and the IRS, product and service names may be trademarks of their respective owners. Furthermore, this ASCE catalog is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. From a declaration of principles jointly adapted by a Committee of Publishers and Associates 2018 Thomson Reuters/Tax & Accounting. All Rights Reserved. Company, products, and service names may be trademarks of their respective owners. CALL OR VISIT asce.com i

4 ASCE 2018 TABLE OF CONTENTS Taxation Rcmd. CPE Credit Hours Quizzer Page # Available Online CCH Tax Cuts and Jobs Act New! 20 1 $ CCH 2018 U.S. Master Tax Guide New! 40 5 $ CCH 2018 U.S. Master Tax Guide New! $ RIA 2018 Federal Tax Handbook New! $ RIA 2018 Federal Tax Handbook New! $ JK Lasser s Your Income Tax 2018 New! $ IRS Publication 17: Your Federal Income Tax $93.75 IRS Publication 590A: Contributions to Individual Retirement Arrangements (IRAs) 4 39 $25.00 IRS Publication 590B: Distributions from Individual Retirement Arrangements (IRAs) 4 41 $25.00 IRS Publication 334: Tax Guide for Small Business 8 43 $50.00 IRS Publication 535: Business Expenses 8 Online only $62.50 IRS Publication 463: Travel, Entertainment, Gift and Car Expenses 5 Online only $31.25 IRS Publication 550: Investment Income & Expenses 12 Online only $75.00 IRS Publication 225: Farmer's Tax Guide 12 Online only $75.00 IRS Publication 970: Tax Benefits for Education 8 Online only $50.00 Accounting CCH 2018 GAAP Guide (Volumes I & II) New! $ PPC's Guide to Preparing Financial Statements $ CCH 2018 Revenue Recognition Guide New! $ PPC's Guide to Cash, Tax, and Other Bases of Accounting $ Auditing PPC's Guide to Compilation and Review Engagements $ PPC's Guide to Audits of Nonprofit Organizations $ PPC's Guide to Audits of Nonpublic Companies $ Governmental Accounting CCH 2018 U.S. Governmental GAAP Guide New! $ Special Topics Journal of Accountancy Articles (March 2017 February 2018) New! 4 86 $26.00 Quizzer Price See inside back cover for pre-paid credit block discounts Instant Grading Online at asce.com All of the ASCE quizzers listed here and many more are available online. Visit asce.com for a complete list. Prices and courses are subject to change without notice. ii

5 Course No. ASC Credit Hours $ CPE Quizzer for CCH TAX CUTS AND JOBS ACT LAW, EXPLANATION, AND ANALYSIS Recommended CPE Credit: 20 Hours (Taxes) Recommended Study Time: 40 Hours Prerequisite: None Knowledge Level: Overview Directions: Review the explanation portion of the reference materials. Answer the 100 true/false questions below, using the combination registration form/answer sheet. Mail your completed registration form/answer sheet, along with your payment to ASCE. A Certificate of Completion will be mailed back to you, in accordance with AICPA and your State Board's Standards on Formal Self-Study CPE, when you achieve a passing grade of 70% or better. Earning CPE with ASCE is really that simple! Learning Objective: Identify areas of change related to the recent Tax Cuts and Jobs Act 1. The Tax Cuts and Jobs Act was approved by the House of Representatives and the Senate on December 20, [ 6] 2. The Act is the largest overhaul of the Internal Revenue Code in over 50 years affecting only a few taxpayers within the United States. [ 6] 3. Effective for months beginning after December 31, 2018, the amount owed by any taxpayer under the individual health insurance mandate shared responsibility payment for lack of minimum essential health insurance for themselves and their dependents is zero. [ 10] 4. The deduction for personal exemptions is repealed for tax years 2018 through [ 10] 5. The itemized deduction for personal casualty and theft losses is limited to those attributable to a federally declared disaster. [ 10] 6. New tax credit bonds can be issued after December 31, [ 19] 7. The child tax credit is temporarily expanded after 2017 by increasing the credit per qualifying child to $2,000 and increasing the phase out threshold. [ 21] 8. For tax years beginning after December 31, 2017, the graduated corporate rate structure is eliminated. [ 28] 9. The alternative minimum tax for individuals has been repealed beginning after [ 28] 10. S corporations that convert to C corporations should take any resulting Section 481(a) adjustments into account over a 5-year period. [ 29] 11. The 10% additional tax under IRS 72(t) for distributions from retirement plans is waived for any qualified disaster distribution. [ 36] 12. The Section 179 dollar limitation is increased to $1 million for tax years beginning after [ 38] 13. The $25,000 Section 179 expensing limit on certain heavy vehicles is inflation-adjusted after [ 38] 14. The bonus depreciation rate is increased to 100% for property acquired and place in service after September 27, 2017 and before January 1, [ 38] 15. Noncorporate taxpayers may deduct up to 40% of domestic qualified business income from a partnership, S corporation, or sole proprietorship. [ 39] 16. Income from cross-border sales of inventory is sourced on the basis of the production activities. [ 41] 17. Applicable taxpayers are required to pay tax equal to the base erosion minimum tax amount for the year. [ 41] 18. The deductibility of miscellaneous itemized deductions for small businesses continues until [ 42] CCH Tax Cuts and Jobs Act Law, Explanation, and Analysis 1

6 19. The cash method of accounting and other simpler accounting methods have been made available to more taxpayers. [ 42] 20. The excise tax on beer is raised to $16 per barrel on the first 6 million barrels brewed by the brewer, but not for those imported by an importer during a calendar year. [ 49] 21. The income tax rates and bracket amounts for estates and trusts are modified for tax years 2018 through [ 53] 22. The small life insurance company deduction is repealed for tax years beginning after [ 54] 23. A new 3.5% excise tax applies to the net investment income of certain private colleges and universities. [ 68] 24. New rules have been enacted to establish the tax treatment of payments received by Alaska Native Corporations. [ 75] 25. The special provision allowing Members of Congress a deduction of up to $3,000 per year of living expenses incurred while on official business in the District of Columbia continues to exist. [ 84] 26. The individual income tax rates and bracket amounts are modified for tax years 2018 through [ 105] 27. In some instances, a parent may elect to report a child s unearned income on the parent s return. [ 105] 28. The individual income tax rate structure is temporarily replaced with a new rate structure for tax years beginning after December 31, [ 105] 29. The filing thresholds for an individual to file an income tax return for 2018 are modified as a result of the increase in the standard deduction and the repeal of certain exemptions. [ 105] 30. Taxable income attributable to net unearned income is taxed according to the brackets applicable to trusts and estates. [ 105] 31. A child s kiddie tax is affected by the tax situation of his/her parent or the unearned income of any and all siblings. [ 105] 32. The maximum rates on net capital gain and qualified dividends are generally eliminated after [ 105] 33. The alternative minimum tax is imposed on an individual, but not an estate or trust. [ 110] 34. A certain amount of a taxpayer s alternative minimum taxable income is exempt from the alternative minimum tax. [ 110] 35. Under the Tax Cuts and Jobs Act, the basic exclusion amount for purposes of federal estate and gift taxes is increased to $10 million for estate of decedents dying and gifts made after 2017 and before [ 115] 36. Federal estate tax, gift tax, and a generation-skipping transfer tax are commonly known as federal transfer taxes. [ 115] 37. A 65-year old single individual with gross income below $11,950 does not need to file a federal income tax return for [ 120] 38. A 65-year old, blind qualifying widow needs to file a tax return only if her income is in excess of $25,800. [ 120] 39. The IRS typically announces the inflation-adjusted amounts applicable to a particular tax-year in two major releases in the October prior to year impacted. [ 125] 40. Some self-created intangible assets cannot be capital assets for certain taxpayers. [ 130] 41. Letters may be capital assets in the hands of the person who created them. [ 130] 42. Patents and inventions are not capital assets, while designs and secret formulas are. [ 130] 43. The Sinai Peninsula is treated the same as a combat zone for purposes of certain tax benefits for members of the U.S. Armed Forces. [ 135] 44. Members of the U.S. Armed Forces serving in a combat zone are entitled to virtually no tax benefits. [ 135] 45. Combat pay is included in both earned income and gross income for purposes of calculating the earned income tax credit. [ 135] 46. The tax liability of a member of the U.S. Armed Forces is forgiven in the year the individual dies while in active service in a combat zone. [ 135] 2 CCH Tax Cuts and Jobs Act Law, Explanation, and Analysis

7 47. A population census tract that is a low-income community may be designated as a qualified opportunity zone by a State. [ 145] 48. A qualified opportunity zone business is a trade or business in which substantially all of the tangible property owned or leased by the taxpayer is qualified opportunity zone business property. [ 145] 49. The additional standard deduction for a net disaster loss in tax years beginning in 2016 and 2017 is permitted in calculation alternative minimum tax liability. [ 205] 50. A taxpayer may not claim an itemized deduction for foreign income taxes subject to the $10,000/$5,000 limit. [ 215] 51. Personal interest is generally deductible. [ 220] 52. Medical expenses include premiums paid for insurance that covers the expense of medical care and amounts paid for transportation to receive medical care, to the extent that the premiums have not been excluded from taxable income through the employer exclusion or self-insured deduction. [ 225] 53. Limited amounts paid for qualified long-term care insurance contracts are medical expenses. [ 225] 54. Unreimbursed employee expenses can include continuing education. [ 245] 55. The deduction for alimony and separate maintenance payments is repealed effective for divorce or separation instruments executed after [ 255] 56. Student loan debt discharge exclusion is expanded due to death or disability. [ 265] 57. An individual may claim the child tax credit of up to $1,500 for each qualifying child he or she supports during the tax year. [ 280] 58. For tax years beginning after December 31, 2017, the corporate tax rate is a flat 21%. [ 305] 59. Generally, real estate investment trusts are subject to a tax on net capital gain. [ 305] 60. The new law provides a special rate for personal service corporations. [ 305] 61. The alternative tax for net capital gains is repealed. [ 305] 62. Any unused minimum tax credit of a corporation may only be used to offset regular tax liability for tax years going forward. [ 310] 63. A portion of unused minimum tax credit for a corporation is refundable in 2018 through [ 310] 64. For tax years beginning after December 31, 2017, the dividends-received deduction is reduced. [ 315] 65. The Tax Cuts and Jobs Act modified the definition of contribution to capital to exclude contributions by any governmental entity or civic group that are not made by a shareholder in its capacity as a shareholder. [ 320] 66. For individual taxpayers, the Section 199A deduction is allowed in determining adjusted gross income under the Tax Cuts and Jobs Act. [ 330] 67. For purposes of calculating the Section199A deduction, qualified business income includes qualified REIT dividends. [ 330] 68. Trusts are eligible for the Section 199A deduction. [ 330] 69. A qualified REIT dividend is a patronage dividend under IRC Sec. 1388(c). [ 330] 70. The IRC Sec. 743 definition of a substantial built-in loss is modified under the Tax Cuts and Jobs Act. [ 345] 71. Under the Tax Cuts and Jobs Act, the transferee of a partnership interest must withhold 25% of the amount realized on the sale or exchange unless the transferor certifies that it is not a nonresident alien or foreign corporation. [ 350] 72. Technical termination of partnerships is no longer permitted for tax years beginning after December 31, [ 355] 73. Under the Tax Cuts and Jobs Act, the charitable contribution deduction of an Electing Small Business Trust is generally determined by the rules generally applicable to trusts. [ 365] 74. The investment limitation related to the Section 179 deduction is increased to $2.5 million for tax years beginning after [ 405] CCH Tax Cuts and Jobs Act Law, Explanation, and Analysis 3

8 75. The definition of qualified real property eligible for expensing under IRC Sec. 179 was amended under the Tax Cuts and Jobs Act to include roofs, heating, ventilation, and air-conditioning. [ 405] 76. Under the Tax Cuts and Jobs Act, used property is now eligible for bonus depreciation. [ 410] 77. Under the Tax Cuts and Jobs Act, for property placed in service after 2022, the 100% bonus depreciation is phased down by 20% per year. [ 410] 78. Under the Tax Cuts and Jobs Act, the annual depreciation caps for passenger automobiles are increased. [ 415] 79. Computers are no longer listed property for property placed in service post December 31, 2017, under the Tax Cuts and Jobs Act. [ 420] 80. Under the Tax Cuts and Jobs Act, new farming equipment placed in service after December 31, 2017, is classified as 5-year MACRS property. [ 435] 81. Grain bins and fences are classified as 5-year MACRS property under the Tax Cuts and Jobs Act. [ 435] 82. Like-kind exchanges continue to be permitted for both real and personal property after [ 505] 83. Real property that is held for sale is still eligible for like-kind exchange treatment. [ 505] 84. Net operating losses (NOLs) arising in a tax year ended after 2017 may generally only permitted to be carried forward indefinitely. [ 515] 85. NOLs arising in tax years after 2017 may only reduce a taxpayer s taxable income by 80%. [ 515] 86. The domestic production activities deduction under IRC Sec. 199 is eliminated for tax years beginning after [ 530] 87. Most entertainment costs are eliminated as a business expense deduction after 2017 under the Tax Cuts and Jobs Act. [ 535] 88. Under the Tax Cuts and Jobs Act, deductions are eliminated after 2025 for employer-provided meals that are excludable from an employee s income. [ 535] 89. An employer cannot deduct expenses paid or incurred after December 31, 2017, for any qualified transportation fringe like van pools or transit passes under the Tax Cuts and Jobs Act. [ 535] 90. Under the Tax Cuts and Jobs Act, employers are prohibited from deducting awards given in gift cards, vacations, meals, lodging, or stocks. [ 537] 91. Under the Tax Cuts and Jobs Act, businesses generally may not deduct fines and penalties paid or incurred after December 21, 2017, due to a violation of the law (or an investigation) if a government (or similar entity) is a complainant or an investigator. [ 545] 92. The deduction for local lobbying expense by a taxpayer as an ordinary and necessary business expense is permitted for expenses paid after December 22, [ 555] 93. Under the Tax Cuts and Jobs Act, most taxpayers who meet a $25 million average annual gross receipts test will not be required to apply the inventory or UNICAP rules. [ 570] 94. A tax credit is permitted under the Tax Cuts and Jobs Act for employers for paid leave provided under the Family Medical Leave Act after [ 585] 95. The contribution amount to ABLE account is permanently increased in most circumstances. [ 645] 96. The Section 902 deemed-paid foreign tax credit is modified so that it is determined on a current year basis. [ 720] 97. Income generated by cross-border sales of inventory is sourced on the basis of the production activities. [ 730] 98. Foreign based company oil related income continues to be a category of foreign based company income and is subject to subpart F income. [ 737] 99. Foreign oil related income excludes dividends and interest from a foreign corporation for which taxes are deemed paid under IRC Sec [ 737] 100. Under the Tax Cuts and Jobs Act, applicable taxpayers are required to pay tax equal to the base erosion minimum tax amount for the tax year. [ 750] 4 CCH Tax Cuts and Jobs Act Law, Explanation, and Analysis

9 Course No. ASC Credit Hours $ CPE Quizzer for CCH 2018 U.S. MASTER TAX GUIDE Recommended CPE Credit: 40 Hours (Tax) Recommended Study Time: 80 Hours Prerequisite: None Knowledge Level: Basic Directions: Review the reference book. Answer the 200 true/questions below, using the combination registration form/answer sheet. Mail your completed registration form/answer sheet, along with your payment to ASCE. A Certificate of Completion will be mailed back to you, in accordance with AICPA and your State Board s Standards on Formal Self-Study CPE, when you achieve a passing grade of 70% or better. Earning CPE with ASCE is really that simple! Learning Objectives: Identify federal taxation changes that affect 2017 and 2018 individual and corporate income tax returns, Identify changes affecting income taxes for partnerships and estates and trusts. 1. For 2017, a tax rate of 15.3% is imposed on self-employment net earnings. [ 47] 2. An item includible in income decreases tax liability. [ 55] 3. For 2017, an individual with $100,000 or more of taxable income must use Form [ 105] 4. A taxpayer may obtain an automatic 12-month extension for filing taxes by filing Form 4868 and paying an estimate of taxes due. [ 109] 5. The net investment income tax does not apply to nonresident aliens. [ 129] 6. If a married individual files a joint return with his or her spouse, that individual cannot be claimed as a dependent by a parent. [ 138] 7. Same-sex couples in registered domestic partnerships, civil unions, and formal relationships other than marriage do not qualify to file a joint return. [ 152] 8. A corporation s shareholders cannot be trusts. [ 203] 9. Corporations that fail to pay estimated taxes will not be penalized. [ 215] 10. %Generally, corporations must use the accrual method of accounting to determine when income and expenses are reported. [ 221] 11. Dividends paid by real estate investment trusts are not deductible in determining accumulated taxable income. [ 259] 12. A personal holding company is subject to a 20% tax on its undistributed personal holding company income in addition to regular income taxes. [ 275] 13. Only one set of graduated income tax brackets is allowed for a controlled group of corporations. [ 289] 14. S corporations may not file consolidated returns. [ 295] 15. The deferral of losses on intercompany transactions is an advantage of a consolidated return. [ 297] 16. Generally, an S corporation does not pay income taxes. [ 301] 17. C corporations are not eligible to hold stock in an S corporation. [ 304] 18. An S election that has terminated may not be reestablished without IRS consent until the fifth year following the year of revocation. [ 307] 19. Shareholders of an S Corporation separately account for their pro rata share of corporate items in the tax year in which the corporation s tax year ends. [ 309] 20. S corporation shareholders may not claim the domestic production activities deduction. [ 312] CCH 2018 U.S. Master Tax Guide (40 hours) 5

10 21. Each S corporation shareholders stock basis is decreased by the income of the corporation that is not separately computed. [ 317] 22. An S corporation cannot carry forward a net operating loss from a year in which it was not an S corporation. [ 319] 23. The itemized deductions of an S corporation are separately stated items that are not subject to the 2% floor at the shareholder level. [ 321] 24. Cash or property distributions received by a shareholder from an S Corporation are not taxable. [ 323] 25. S corporations are not required to file Form 1120S if there is no taxable income for the year. [ 351] 26. Limited partners are responsible for partnership liabilities beyond the amount of their investment. [ 401A] 27. An unincorporated organization may choose not to be treated as a partnership if the entity is used only for investment purposes. [ 402] 28. For federal income tax purposes, a state-registered limited liability company can be taxed as a partnership. [ 402B] 29. A partnership filing an incomplete return is liable for a $500 penalty per month unless reasonable cause is shown. [ 406] 30. A partnership is considered technically terminated if within a 12-month period 50% or more of the total interests in partnership capital and profits is sold or exchanged. [ 410] 31. Innocent spouse relief is not available to partnership-level proceedings. [ 415] 32. Deductions for charitable contributions are not allowed when computing taxable income for a partnership. [ 417] 33. Any guaranteed payments made to a partner without regard to partnership income are treated as a return of capital that is not taxable to the partner. [ 421] 34. Only one allocation method is permitted when allocating tax items to property contributed to a partnership. [ 428] 35. Partnership contributions and distributions made within two years of each other are presumed to be a sale. [ 432] 36. A partnership must file an information return describing any exchanges of partnership interests involving unrealized receivables or inventory. [ 435] 37. Payments made to the successor of a deceased partner are not considered income in respect of a decedent. [ 440] 38. A limited partner generally may not be allocated recourse liabilities in excess of her/his capital contributions. [ 448] 39. Generally, no gain or loss is recognized by a partnership on a distribution of property to a partner. [ 453] 40. Guaranteed payments made to partners for partnership organization services are deductible by the partnership. [ 477] 41. Trusts and decedents estates are separate taxable entities for federal income tax purposes. [ 501] 42. The income from a unit investment trust set up to hold mutual fund shares for investors is taxed directly to the investors. [ 502] 43. A liquidating trust formed to liquidate and distribute assets is taxed as an association. [ 503] 44. Property held under Chapter 7 bankruptcy for an individual by a trustee is considered the estate of the debtor. [ 505] 45. An estate is only recognized as a taxable entity during the period of administration or settlement. [ 507] 46. Estates and trusts generally are required to make estimated quarterly tax payments. [ 511] 47. Discharge of a fiduciary terminates the fiduciary s personal liability for payment of debts of the estate without satisfying prior tax claims. [ 512] 48. Income from a trust or estate is reported on Form [ 514] 49. Alternative minimum tax does not apply to estates or trusts. [ 516] 50. An estate s gross income is generally determined in a manner similar to that of an individual. [ 520] 51. The estate of a nonresident alien is taxed on its U.S. income, but excludes dividends and capital gains. [ 527] 52. Generally, an estate or trust may deduct reasonable amounts paid for fiduciary fees and litigation expenses only if it is engaged in a trade or business. [ 529] 53. An estate or trust cannot deduct losses from a trade or business. [ 531] 6 CCH 2018 U.S. Master Tax Guide (40 hours)

11 54. Interest paid or accrued in a tax year is deductible by an estate or trust. [ 533] 55. An estate can claim a personal exemption of $600. [ 534] 56. Complex trusts and estates are generally allowed an unlimited charitable deduction for payments to recognized charities from gross income. [ 537] 57. The fiduciary of a complex trust can elect to treat distributions to a beneficiary made within the first 100 days of a tax year as having been distributed in the previous tax year. [ 546] 58. Unused loss carryovers and excess deductions of an estate or trust are allowed to certain beneficiaries when the estate or trust terminates. [ 556] 59. The treatment of separate shares as separate estates or trusts cannot be applied to obtain more than one deduction for the personal exception. [ 557] 60. Upon termination of an estate, unused capital loss carryover of the estate is available to the beneficiaries. [ 562] 61. A grantor trust is subject to the 3.8% net investment income tax. [ 571] 62. Retaining the power to revoke a trust will cause the trust income to be taxed to the grantor. [ 582] 63. Form 3520 must be filed by U.S. persons who are treated as owners of foreign trusts under the grantor rules. [ 588] 64. Form 1023 is used to apply for recognition of Section 501 (c)(3) federal tax-exempt status. [ 602] 65. If an organization fails to file a notice with the IRS about its intention to claim public charity status, it will be considered a private foundation. [ 623] 66. An organization that fails the public support test for three consecutive years will be treated as a private foundation as of the beginning of the third year of failure. [ 631] 67. Net investment income of private foundations is subject to a two% excise tax. [ 633] 68. A private foundation generally must distribute 3% of its net investment assets annually. [ 637] 69. Private foundations are subject to a termination tax. [ 649] 70. Generally, a social club is tax-exempt only if it is supported entirely by membership fees, dues, and assessments. [ 692] 71. Severance pay is considered taxable compensation. [ 713] 72. Interest on U.S. savings bonds is tax-exempt income. [ 730] 73. In order for a dividend to be taxable income to a shareholder, the distribution must be made from the distributing corporation s earnings and profits. [ 747] 74. Alimony is deductible only if the taxpayer itemizes her/his deductions. [ 771] 75. Income earned from a hobby is taxable, and related expenses are generally unlimited. [ 785] 76. Income flow from property acquired by bequest, devise, or inheritance is excludable from gross income. [ 847] 77. Qualified disaster relief payments must be included in the victim s gross income. [ 887] 78. Pension amounts received for personal injuries resulting from combat-related armed forces service are excludable from gross income. [ 891] 79. Capital expenditures are deductible business expenses. [ 903] 80. A length of service award given to an employee within her/his first five years is not deductible by the employer. [ 919] 81. A $10 million limit generally applies to the deduction of interest incurred annually on debt used by a corporation to acquire stock or two-thirds of another corporation s operating assets. [ 937] 82. A taxpayer who works in two places in one day may not deduct the commuting expenses for getting from the first place to the second. [ 945] 83. The standard mileage rate for business travel is 53.5 per mile for [ 947] 84. If an ordinary and necessary expense of a business, a premium paid for insurance against storm losses is a deductible business expense. [ 968] CCH 2018 U.S. Master Tax Guide (40 hours) 7

12 85. Medical expenses paid by credit card qualify as medical expenses in the year the expenses were charged. [ 1015] 86. Gift taxes can be deducted as an itemized deduction by an individual taxpayer. [ 1025] 87. Employees and self-employed individuals who move to start work in a new location may deduct the reasonable expenses of moving as an above-the-line deduction. [ 1073] 88. Taxpayers who are union members may not deduct membership costs such as union dues. [ 1080] 89. Losses sustained during demolition of buildings may be deducted by the taxpayer. [ 1105] 90. Professional gamblers may deduct gambling losses as an adjustment to gross income. [ 1113] 91. Losses from the theft of items not compensated for by insurance are generally deductible for the tax year the losses were discovered. [ 1123] 92. A three-year net operating loss carryback period applies to both farming and qualified disaster losses. [ 1151] 93. The passive activity loss rules do not apply to closely held C corporations. [ 1173] 94. If more than 25% of a closely held corporation s annual gross receipts are from real property trades or businesses in which it materially participates, it qualifies as a real estate professional for purposes of the passive activity loss rules. [ 1185] 95. The maximum amount that may be expensed under IRC 179 for the cost of a new SUV is $25,000. [ 1214] 96. The Modified Accelerated Cost Recovery System must be used for depreciation for most tangible property placed into service after [ 1216] 97. A taxpayer can deduct the cost of some energy efficiency improvements installed in a depreciable building located outside the United States and placed in service before January 1, [ 1286] 98. Patents and copyrights are Section 197 intangible assets and will be amortized over a 15-year period. [ 1288] 99. Form 8880 is used to calculate the retirement savings contributions credit. [ 1304] 100. A taxpayer may deduct foreign income taxes paid or accrued as an itemized deduction, or he or she may claim them as a credit against her/his U.S. income tax liability. [ 1361] 101. Partnerships and S corporations are not subject to the Alternative Minimum Tax Liability. [ 1401] 102. A taxpayer is subject to the alternative minimum tax to the extent that regular tax liability exceeds the tentative minimum tax. [ 1420] 103. An individual taxpayer is not allowed to claim personal exemption deductions for AMT purposes. [ 1435] 104. Individuals of a partnership generally compute their AMT liability by taking into account their share of partnership items. [ 1455] 105. Bank maintained common trust funds must use the calendar year as their tax year. [ 1501] 106. A short period return is a tax return for a period of less than six months. [ 1505] 107. A change in the accounting period will generally not be approved when the sole purpose of the change to is to maintain preferential tax status. [ 1513] 108. Any change in the method of inventory valuation is considered a change in accounting method. [ 1529] 109. Taxable income from a long-term contract generally must be accounted for under the percentage-of-completion method of accounting. [ 1551] 110. A taxpayer is required to obtain advance permission from the IRS to use the LIFO method. [ 1565] 111. Taxes paid on the acquisition of property are treated as part of the cost of the property. [ 1611] 112. The basis of property inherited from a decedent is generally the property s fair market value on the date of death or the alternate valuation or special use valuation date. [ 1633] 113. A taxpayer takes a fair market value basis in property acquired in a tax-free exchange. [ 1651] 114. For a transfer of property to a former spouse, no gain or loss is recognized if the transfer is incident to the divorce of the parties. [ 1693] 8 CCH 2018 U.S. Master Tax Guide (40 hours)

13 115. Married taxpayers filing jointly may exclude from gross income up to $500,000 of gain realized on the sale of a principal residence. [ 1705] 116. Under IRC 1035, the exchange of one life insurance contract for another life insurance contract does not trigger gain or loss. [ 1724] 117. If a person transfers property to a corporation solely in exchange for stock and, immediately after the transfer, is in control of the transferee corporation, gain or loss must be recognized. [ 1731] 118. %Only the sale or exchange of a capital asset can create capital gain or loss. [ 1735] 119. S corporations are treated as real estate dealers if they subdivide a tract of land for sale. [ 1762] 120. Amounts paid for the transfer of a franchise, trademark, or trade name are amortized over 20 years. [ 1774] 121. Depreciation recapture is never required when depreciable property is involuntarily converted. [ 1779] 122. Property placed in service after 1980 and before 1987 is generally subject to MACRS. [ 1780] 123. The installment method is a way of reporting losses from sales of property when at least one payment is received in a tax year after the year of sale. [ 1801] 124. The installment method of accounting cannot be used for sales of personal property under a revolving credit plan. [ 1805] 125. A special interest charge applies to certain nondealer installment sales of property over $75,000. [ 1813] 126. The installment method generally may not be used for a sale of depreciable property to a related person. [ 1835] 127. The mark-to-market rules generally apply to all securities held as inventory by a broker/dealer. [ 1903] 128. A security that becomes worthless during the tax year will be treated as exchanged or sold on the first day of the tax year. [ 1916] 129. Stock options used as an employee incentive plan must be granted within five years of the date the plan was adopted. [ 1927] 130. A wash sale of stock occurs if a taxpayer sells stock, and within 90 days before or after the disposition date the taxpayer acquires substantially identical stock. [ 1935] 131. A short sale is a transaction in which the taxpayer sells property at a loss. [ 1944] 132. Mark-to-market rules do not apply to hedging transactions that are part of a mixed straddle if an election is made to exclude them from such treatment. [ 1948] 133. Hedging transactions generally result in capital gain or loss. [ 1949] 134. Dealers in tax-exempt obligations must amortize premiums as if the interest had been taxable. [ 1970] 135. In an established stock exchange transaction, a cash-basis taxpayer realizes gain or loss on the settlement date, not on the trade date. [ 1973] 136. Commissions paid to facilitate security sales usually must be capitalized. [ 1983] 137. A full-time employee for purposes of the employer health insurance mandate is an employee who works on average at least 30 hours of service per week or 130 hours in a calendar month. [ 2001] 138. An assessable payment (shared responsibility payment) paid by an employer offering health care coverage is deductible as a business expense. [ 2005] 139. Group health plans provided by employers with 10 or more employees must offer COBRA continuation coverage. [ 2021] 140. The maximum amount allowed to be contributed to a health flexible spending account for 2018 is $3,650. [ 2041] 141. Elections for cafeteria plans must be made before the beginning of the plan year. [ 2045] 142. No-additional-cost services provided to employees free of charge are excludable from the employee s income if the services are available to employees on a nondiscriminatory basis. [ 2087] 143. An employer with 5,000 or fewer employees may combine a defined benefit plan with a 401(k) plan. [ 2105] 144. The maximum catch-up contribution to Section 401(k), 403(b), and 457 plans is $5,000 for [ 2121] CCH 2018 U.S. Master Tax Guide (40 hours) 9

14 145. Generally, all types of qualified retirement plans must satisfy a minimum distribution requirement by April 1st of the calendar year following the calendar year in which the participant retires or reaches age 70½, whichever is later. [ 2127] 146. %A 401(k) plan can allow unlimited hardship distributions which are excluded from employee income. [ 2129] 147. A qualified retirement plan generally must provide detailed information on Form 5500 every year. [ 2137] 148. A penalty of 10% additional tax generally applies to early distributions from a retirement plan. [ 2151] 149. Retirement plan loans cannot be excluded from the participant s gross income. [ 2152] 150. Calendar year taxpayers generally have until April 15 of the following year to make contributions to their IRAs for the tax year. [ 2155] 151. Excess contributions to an IRA are subject to a cumulative 6% excise tax. [ 2161] 152. IRA distributions up to $100,000 may be made to certain charitable organizations tax-free if the participant is 70½ or older. [ 2165] 153. Losses on investments in Roth IRAs are not deductible. [ 2171] 154. Qualified distributions from a Roth IRA are not subject to income tax or the additional tax for early withdrawal. [ 2173] 155. Form 5329 is used to report both the distributions and the 10% additional tax for Roth IRAs. [ 2173] 156. An individual can recharacterize a contribution originally made to a traditional IRA as a Roth IRA contribution, or vice versa, if certain conditions are met. [ 2177] 157. Employee contributions to a SIMPLE IRA under a salary reduction agreement are limited to $12,500 for [ 2183] 158. In order for an employer to deduct SEP contributions for a year, contributions must be made by the due date (including extensions) of its tax return for that year. [ 2189] 159. Under a Section 403(b) annuity plan, the employee s rights in the annuity must generally be nonforfeitable. [ 2191] 160. A Type G reorganization is a change in the identity, form, or place of the organization of one corporation. [ 2209] 161. To qualify as a recapitalization, a transaction must include a reshuffling of the capital structure of the corporation. [ 2225] 162. In a complete corporate liquidation, the shareholder s gain or loss is capital assuming the stock is a capital asset. [ 2253] 163. Carrybacks of net operating losses and net capital losses are permitted in any type of reorganization. [ 2277] 164. Mutual funds may avoid corporate taxation because they are entitled to a deduction for dividends paid. [ 2301] 165. Tax-exempt interest cannot be paid to the shareholders of mutual funds. [ 2307] 166. Foreign corporations are eligible to be real estate investment trusts (REITs). [ 2326] 167. Net operating losses of a real estate investment trust (REIT) may only be carried back. [ 2329] 168. A real estate mortgage investment conduit (REMIC) is treated like a corporation for federal tax purposes. [ 2343] 169. A taxable mortgage pool may not file a consolidated return with any other corporation. [ 2368] 170. Net capital gains of a life insurance company generally are taxed at a rate of 35%. [ 2370] 171. A life insurance company cannot claim an operations loss deduction when calculating taxable income. [ 2377] 172. Banks are not subject to the capital loss limitations with respect to the worthlessness of debt securities; they may treat them as bad debts. [ 2383] 173. For 2018, a qualifying U.S. citizen who works abroad generally may exclude up to $14,574 of foreign housing expenses. [ 2403] 174. A person cannot be both a resident alien and a nonresident alien during a tax year. [ 2411] 175. A 30% branch profits tax may apply to a foreign corporation that operates a trade or business in the United States. [ 2433] 10 CCH 2018 U.S. Master Tax Guide (40 hours)

15 176. A non-resident alien is subject to U.S. income tax on income connected effectively with a U.S. trade or business. [ 2446] 177. All U.S. source income paid to a foreign individual is subject to a 40% withholding rate. [ 2455] 178. A U.S. person must disclose any financial interest in a foreign bank account, securities account, or other financial account electronically on FinCEN Form 114 if the aggregate value of the accounts exceeds $20,000 at any time during the calendar year. [ 2465] 179. Generally it is a disadvantage for a U.S. taxpayer to elect the foreign tax credit over the deduction for foreign taxes. [ 2476] 180. An individual with up to $300 of creditable foreign taxes is exempt from the overall foreign tax credit limitation if he or she has no foreign source income other than qualified passive income and he or she elects the de minimis exemption directly on Form [ 2479] 181. Generally, employers who withhold taxes from their employees must file Form 941 on a quarterly basis. [ 2501] 182. A trust is required to file a tax return by the fifteenth day of the fourth month following the close of the tax year. [ 2505] 183. A corporation can obtain a nine-month extension of the time to file its tax return by filing Form [ 2509] 184. A tax return preparer is subject to a $520 penalty for 2018 if he or she endorses or negotiates a taxpayer s refund check. [ 2518] 185. An individual should use Form 1040-V to pay the balance due on her/his Form [ 2525] 186. The IRS does not accept income tax payments made with American Express credit cards. [ 2545] 187. Form 1098 is filed with the IRS if $600 or more in mortgage interest is received from an individual in the course of a trade or business. [ 2565] 188. If an employer fails to withhold income taxes from an employee s wages, the employer will be held liable for the amount not withheld. [ 2601] 189. Tips and other gratuities are exempt from income tax withholding. [ 2604] 190. Wages paid to household employees are exempt from income tax withholding. [ 2609] 191. An individual may be subject to a $500 civil penalty for claiming excess withholding allowances on Form W-4. [ 2634] 192. Form 945 is used to report back-up withholding. [ 2645] 193. The additional 0.9% Medicare tax applies to wages in excess of $250,000 for a single individual. [ 2648] 194. Employers are required to withhold and pay FICA taxes on any wages paid to domestic workers. [ 2652] 195. No self-employment tax is due if net earnings from self-employment are less than $400. [ 2664] 196. A taxpayer generally has 90 days after a notice of deficiency is mailed to file a petition with the Tax Court for a redetermination of her/his tax deficiency. [ 2711] 197. A $5,000 penalty is imposed on a person who files a frivolous return. [ 2811] 198. The IRS is not required to abate penalties that result from a taxpayer s reliance on incorrect advice provided by the Service. [ 2813] 199. A 30% accuracy-related penalty applies to the portion of an underpayment of tax attributable to negligence. [ 2854] 200. The transfer of intangible property is not subject to gift tax. [ 2903] CCH 2018 U.S. Master Tax Guide (40 hours) 11

16 Course No. ASC Credit Hours $ CPE Quizzer for CCH 2018 U.S. MASTER TAX GUIDE Recommended CPE Credit: 24 Hours (Tax) Recommended Study Time: 48 Hours Prerequisite: None Knowledge Level: Basic Directions: Review the reference book. Answer the 120 true/false questions below, using the combination registration form/answer sheet. Mail your completed registration form/answer sheet, along with your payment to ASCE. A Certificate of Completion will be mailed back to you, in accordance with AICPA and your State Board s Standards on Formal Self-Study CPE, when you achieve a passing grade of 70% or better. Earning CPE with ASCE is really that simple! Learning Objectives: Identify federal taxation changes that affect 2017 and 2018 individual and corporate income tax returns, Identify changes affecting income taxes for partnerships and estates and trusts. 1. For 2017, a tax rate of 15.3% is imposed on self-employment net earnings. [ 47] 2. An item includible in income decreases tax liability. [ 55] 3. For 2017, an individual with $100,000 or more of taxable income must use Form [ 105] 4. The net investment income tax does not apply to nonresident aliens. [ 129] 5. Same-sex couples in registered domestic partnerships, civil unions, and formal relationships other than marriage do not qualify to file a joint return. [ 152] 6. A corporation s shareholders cannot be trusts. [ 203] 7. Dividends paid by real estate investment trusts are not deductible in determining accumulated taxable income. [ 259] 8. Only one set of graduated income tax brackets is allowed for a controlled group of corporations. [ 289] 9. Generally, an S corporation does not pay income taxes. [ 301]] 10. An S election that has terminated may not be reestablished without IRS consent until the fifth year following the year of revocation. [ 307] 11. Shareholders of an S Corporation separately account for their pro rata share of corporate items in the tax year in which the corporation s tax year ends. [ 309] 12. S corporation shareholders may not claim the domestic production activities deduction. [ 312] 13. An S corporation cannot carry forward a net operating loss from a year in which it was not an S corporation. [ 319] 14. Cash or property distributions received by a shareholder from an S Corporation are not taxable. [ 323] 15. Limited partners are responsible for partnership liabilities beyond the amount of their investment. [ 401A] 16. An unincorporated organization may choose not to be treated as a partnership if the entity is used only for investment purposes. [ 402] 17. For federal income tax purposes, a state-registered limited liability company can be taxed as a partnership. [ 402B] 18. Innocent spouse relief is not available to partnership-level proceedings. [ 415] 19. Any guaranteed payments made to a partner without regard to partnership income are treated as a return of capital that is not taxable to the partner. [ 421] 20. Only one allocation method is permitted when allocating tax items to property contributed to a partnership. [ 428] 12 CCH 2018 U.S. Master Tax Guide (24 hours)