Business Tax Final True Fal F1. If the IRS determines that an activity is a "hobby" and not will not be taxed. 2 Casualty losses of business property are not reduced by 10% of The election to deplete natural resources using cost or percentage dep made in the year the assets is acquired and can't be changed. 4. Sale of inventory more than five years old will result in long term capi F:5. The decision to file as a regular corp. (C-corp.) or sub-chapter S (112 year when tax returns are filed 6. Permanent differences do not require any tax accrual or deferral 7. Dividends paid by a corporation will lower its taxable income. 8. If a 60% shareholder sells all his shares back to the corporation and c necessary documents it will not be considered a partial dividend. 9. Apple corp. was bought by Birch corp. Birch issued shares of itselft shareholders in exchange for Apple stock. Apple shareholders do not recogni on transaction. -10. Shareholders will not recognize any gain during recapitalization of own. 11. A 25% shareholder who transfers appreciated assets to a corporatio gain currently on the assets 12. Outside basis represents the partner's basis in the partnership intere T-13, "Hot assets" in partnership accounting are assets witha basis below generate regular (not capital) income. 14. If one partner sells his/her share of partnership to another, the incor 15. On May 17, 2018 an owner of one share of a corporation that had e divided between the seller and buyer. treatment sold their share to a Canadian who lived in Toronto. The Sub-S sta and the corporation must file two tax returns for 2018, January 1-May 17 as S T 16. If a corporation was a Sub-S and it lost its Sub-S status it must wai T 17. "Use tax" is a tax paid on items purchased out of state on which n 18. Gifts up to $14,000 per person per year are tax free only to certain 19. Property inheried steps up to fair market value date of death. December 31 as a regular corporation. Both are due April 15, 201S9 it can elect to become a Sub-S corp related the limit is $7,000 20. A married couple can elect to treat gifts made by one as made one