CPA 2026 REG Tax Regulation Corporate Tax Free Quiz 2

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CPA 2026 REG Tax Regulation Corporate Tax Free Quiz 2

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CPA 2026 REG Tax Regulation Corporate Tax Free Quiz 2

Practice CPA 2026 REG Tax Regulation MCQs from Corporate Tax. Get instant results with Explanation.

General10 MCQs

1. How is taxable income computed for a corporation?

A. Taxable income = Gross income - DeductionsB. Taxable income = Gross income + DeductionsC. Taxable income = Gross income onlyD. Taxable income = Deductions only

2. What are the criteria for a personal holding company?

A. PHC status requires that more than 50% of stock is owned by individuals and at least 60% of income is passiveB. PHC status is based only on income, not ownershipC. PHC status is based only on ownership, not incomeD. PHC status applies only to S corporations

3. When is the accumulated earnings tax imposed?

A. The AET is automatically imposed on all corporationsB. The AET is imposed if the corporation cannot justify accumulations as reasonable business needsC. The AET is 10%D. The AET does not apply to C corporations

4. How are corporate liquidations taxed?

A. Corporate liquidations are generally tax-freeB. Liquidating distributions are treated as dividendsC. Corporate liquidations are generally taxable, with gain or loss recognized by the corporation and shareholdersD. Liquidations are not taxable events

5. What is a Section 338 election?

A. A Section 338 election treats a stock purchase as an asset purchase, allowing a step-up in basisB. Section 338 is for tax-free reorganizationsC. Section 338 is only for S corporationsD. Section 338 is not available to C corporations

General10 MCQs

6. What is a tax-free reorganization?

A. All corporate reorganizations are tax-freeB. Tax-free reorganizations require cash considerationC. Tax-free reorganizations are not subject to any requirementsD. Tax-free reorganizations must meet specific requirements, including continuity of interest and business purpose

7. Are S corporations subject to corporate income tax?

A. S corporations are always subject to corporate income taxB. S corporations are generally not subject to corporate income tax, but may be taxed on built-in gainsC. S corporations are taxed at the corporate rate of 21%D. S corporations are not subject to any tax

8. How is shareholder basis in S corporation stock determined?

A. Shareholder basis in S corporation stock is not adjusted for income or lossesB. Shareholder basis is increased by distributionsC. Shareholder basis is increased by income and decreased by distributions and lossesD. Shareholder basis is the same as the initial cost regardless of subsequent events

9. How are S corporation shareholders taxed on income?

A. S corporation shareholders are taxed on their share of income, whether or not distributedB. S corporation shareholders are only taxed on distributions receivedC. S corporation shareholders are not taxed on S corporation incomeD. S corporation shareholders are taxed at the corporate rate

10. What is the taxable income limitation for Section 179?

A. The Section 179 deduction is unlimitedB. The Section 179 deduction is limited only by the cost of assetsC. The Section 179 deduction is limited by taxable income and can be carried forwardD. The Section 179 deduction is not available for C corporations

📋 CPA - Test Online Practice Quizzes

CPA

Conducting Body: AICPA

Frequency: Exam Frequency Year Round | Time: 960 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 250 MCQs):

Auditing and Attestation: 78 MCQs
Financial Accounting and Reporting: 50 MCQs
Taxation and Regulation: 72 MCQs
Business Analysis and Reporting: 50 MCQs
Information Systems and Controls: 82 MCQs
Tax Compliance and Planning: 68 MCQs

Merit Formula: -

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