Chapter 13
CHAPTER 13--TAX CREDITS AND PAYMENT PROCEDURES Key 1. The tax benefit received from a tax credit is affected by the tax rate of the taxpayer.
FALSE
2. The tax benefits resulting from tax credits and tax deductions are never affected by the tax rate bracket of the taxpayer.
FALSE
3. Nonrefundable credits are those that reduce the taxpayer’s tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer’s tax liability.
TRUE
4. The credit for child and dependent care expenses is an example of a refundable credit.
FALSE
5. Any unused general business credit must be carried back 1 year and then forward for 20 years.
TRUE
6. A FIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.
TRUE
7. 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.
FALSE
8. Qualified rehabilitation expenditures include the cost of acquiring the building, but not the cost of acquiring the land.
FALSE
9. The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.
TRUE
10. 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.
TRUE
11. 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.
FALSE
12. 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.
TRUE
13. Employers are encouraged by the
FALSE
2. The tax benefits resulting from tax credits and tax deductions are never affected by the tax rate bracket of the taxpayer.
FALSE
3. Nonrefundable credits are those that reduce the taxpayer’s tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer’s tax liability.
TRUE
4. The credit for child and dependent care expenses is an example of a refundable credit.
FALSE
5. Any unused general business credit must be carried back 1 year and then forward for 20 years.
TRUE
6. A FIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.
TRUE
7. 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.
FALSE
8. Qualified rehabilitation expenditures include the cost of acquiring the building, but not the cost of acquiring the land.
FALSE
9. The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.
TRUE
10. 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.
TRUE
11. 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.
FALSE
12. 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.
TRUE
13. Employers are encouraged by the