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 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 restoration and preservation of historic buildings, not the relocation of businesses.

Question 3

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, as defined by the IRS, can be both eligible for a 20% tax credit and expensed in the year they are incurred. This is outlined in section 174 of the Internal Revenue Code.

Question 4

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

Accepted Answer

The LIFO method (last-in, first-out) is a method of inventory valuation, not a method for handling general business credits. Business credits are generally carried forward or carried back, and are used in a FIFO (first-in, first-out) manner.

Question 5

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 6

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

When recapturing a tax credit for rehabilitation expenditures, the recapture amount must be added to the adjusted basis of the rehabilitation expenditures.

Question 7

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 individuals who are part of a target group, such as veterans or individuals receiving government assistance. This credit can reduce an employer's tax liability and therefore increase their tax deductions for wages.

Question 8

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 9

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 10

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, and is not affected by the taxpayer's tax rate.

Question 11

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 the tax credit for qualifying structures that are not certified historic structures is typically 10% of the qualified rehabilitation expenditures. Additionally, certified historic structures must meet certain historic preservation standards to qualify for the tax credit.

Question 12

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 13

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 statement accurately describes the purpose of the work opportunity tax credit.

Question 14

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 offered by the IRS to small businesses that make their premises more accessible to individuals with disabilities. Its purpose is to encourage such businesses to do so by giving them a financial incentive in the form of a tax credit.

Question 15

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 (WOTC) is a federal tax credit available to employers who hire and retain individuals from certain targeted groups. One of the targeted groups is referred to as "long-term family assistance recipients," which includes individuals who have received welfare benefits for at least 18 consecutive months. Employers can claim a tax credit of up to $9,600 for hiring individuals from this group.

Question 16

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 or second year of employment, depending on their target group.

Question 17

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

Accepted Answer

The statement is true. The incremental research activities credit, also known as the regular research credit, is calculated as 20% of the qualified research expenses that exceed the base amount.

Question 18

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 as per the rules of the rehabilitation tax credit. If the rehabilitated property is disposed of before the end of the recapture period or it no longer qualifies for the tax credit, some or all of the credit will have to be recaptured by the IRS.

Question 19

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 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 17: Business Tax Credits and Corporate Alternative Minimum Tax