Author: admin

1.
a. Define the term constructive receipt. Explain its
importance.
b. Explain three restrictions on the concept of constructive
receipt.
2. What recent change was made to the tax treat – ment of
dividends received by U. S. corporations from foreign subsidiaries?
3. When is income considered to be earned by an
accrual-basis taxpayer?

1.
a. Explain the difference between the treatment of prepaid
income under the tax law and under financia l accounting.
b. Why are the two treatments so different?
c. What problem does this treatment create for taxpayers?
2. Under what conditions is an accrual-basis tax – payer
allowed to defer reporting amounts re – ceived in the advance of the delivery
of goods?

1. Corporations are taxed on the income they earn, and
shareholders are taxed on the dividends they receive. What provisions in the
tax law reduce this “double tax” burden?
2. Explain the relationship between dividends and earnings
and profits.
3. On what basis did the Supreme Court in Eisner v. Macomber
decide that stock dividends are nontaxable?

Taxpayers who deduct an expense one year bur recover it the
next year are required ro include the recovered amount in gross income. The tax
benefit rule provides relief if the original deduction did nor result in any
tax savings. Does this rule provide relief to taxpayers who are in a higher tax
bracket in the year they recover the previously deducted expense?

Noncash Compensation. For each of the following items,
indicate whether the individual taxpayer must include any amount in gross
income.
a. Employees of Easrside Bookstore are given their birthdays
off with pay.
b. Westside Hardware, Inc., gave each employee 10 shares of
Westside stock worth $100 per share in lieu of a cash bonus.
c. Employees of Northside Manufacturing were allowed to rake
home the company’s old computers when the company purchased new ones.