Question 1

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

Accepted Answer

The disabled access credit is computed at the rate of 50% of the eligible access expenditures for the year that exceed $250 and do not exceed $10,250.

Question 2

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Accepted Answer

The tax credit for rehabilitation expenditures for certified historic structures is 20% of the qualified rehabilitation expenditures, while for qualifying structures that are not certified historic structures, it is only 10%.

Question 3

The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

Accepted Answer

The disabled access credit is a tax credit that was enacted to encourage small businesses to make their businesses more accessible to disabled individuals. It provides incentives for making improvements such as installing ramps or making bathrooms more accessible.

Question 4

A LIFO method is applied to general business credit carryovers,carrybacks,and utilization of credits earned during a particular year.

Accepted Answer

LIFO (Last In First Out) method is a method of inventory valuation and has no application to general business credit carryovers, carrybacks and utilization of credits earned during a particular year. These are usually accounted for using specific rules and regulations set by the tax authorities.

Question 5

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Accepted Answer

The statement accurately describes the calculation for the incremental research activities credit.

Question 6

All taxpayers are eligible to take the basic research credit.

Accepted Answer

The basic research credit, also known as the Research and Development (R&D) Tax Credit, is not available to all taxpayers. It is specifically designed for businesses that incur expenses for research and development activities in the United States. Eligibility is based on the nature of the expenses and the activities conducted, not all taxpayers engage in qualifying R&D activities.

Question 7

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

Accepted Answer

The work opportunity tax credit is specifically designed to incentivize employers to hire individuals from specific target groups such as veterans, long-term unemployed, ex-felons, and others facing barriers to employment. The goal is to reduce unemployment rates for these groups and promote diversity in the workforce.

Question 8

The tax benefit received from a tax credit is never affected by the tax rate of the taxpayer.

Accepted Answer

The tax benefit received from a tax credit is a fixed dollar amount that reduces the taxpayer's tax liability by that amount, and is not affected by the taxpayer's tax rate.

Question 9

The work opportunity tax credit is available only for wages paid to qualifying individuals during their first year of employment.

Accepted Answer

The work opportunity tax credit is available for wages paid to qualifying individuals during their first year of employment or their second year if they are part of certain targeted groups, such as veterans or ex-felons.

Question 10

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Accepted Answer

The work opportunity tax credit provides employers with a tax credit for hiring employees from certain targeted groups, so it may affect the amount of wages eligible for tax deductions.

Question 11

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older,economically distressed areas (i.e.,inner city)to newer locations.

Accepted Answer

The purpose of the tax credit for rehabilitation expenditures is to encourage the rehabilitation and preservation of historic buildings and structures. It is not specifically aimed at encouraging the relocation of businesses.

Question 12

Some (or all)of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

Accepted Answer

This is true according to the IRS regulations on the tax credit for rehabilitation expenditures. If the property is disposed of prematurely or ceases to be qualifying property, a portion or all of the tax credit may have to be recaptured.

Question 13

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit,but also can be expensed in the year incurred.

Accepted Answer

Qualified research and experimentation expenditures can be expensed in the year incurred under the Internal Revenue Code section 174, in addition to being eligible for the 20% tax credit under section 41.

Question 14

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Accepted Answer

The work opportunity tax credit is a federal tax credit that provides an incentive for employers to hire individuals from certain target groups, including long-term family assistance welfare recipients. This credit can provide significant financial benefits to employers who hire eligible workers.

Question 15

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp,the cost of the ramp qualifies for the disabled access credit.

Accepted Answer

The answer of If the cost of a building constructed...

Question 16

Any unused general business credit must be carried back 3 years and then forward for 20 years.

Accepted Answer

The answer of Any unused general business credit must be...

Question 17

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

Accepted Answer

The answer of The tax benefits resulting from tax credits...

Question 18

Qualified rehabilitation expenditures include the cost of acquiring the building,but not the cost of acquiring the land.

Accepted Answer

Qualified rehabilitation expenditures include the cost of acquiring the building and the cost of acquiring the land.

Question 19

If a taxpayer is required to recapture any tax credit for rehabilitation expenditures,the recapture amount need not be added to the adjusted basis of the rehabilitation expenditures.

Accepted Answer

The recapture amount does need to be added to the adjusted basis of the rehabilitation expenditures. This is because the recapture amount represents a reduction in the original credit that was claimed, which affects the overall tax basis of the property.

Question 20

A small employer incurs $1,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result,the employer may claim the credit for small employer pension plan startup costs for $750.

Accepted Answer

The answer of A small employer incurs $1,500 for consulting...

Quiz 14: Business Tax Credits and Corporate Alternative Minimum Tax