Highlight the correct answer for the questions in the attachment.

1 Marks: 1 A sole proprietor is ________. Choose one answer. a. a shareholder in an S-Corporation. b. one or more individuals who are owners in whole or part of an unincorporated business. c. someone who owns an unincorporated business by himself or herself. d. all of the above could be considered sole proprietors. Question 2 Marks: 1 Which of the following statements is true concerning an Independent Contractor? Choose one answer. a. An Independent Contractor is an individual who determines how the work they are to be paid to do, will be done. b. An Independent Contractor is any individual who receives a W-2 for compensation that they receive. c. An Independent Contractor is any taxpayer who decides that they want to record their income and expenses on Schedule C or C-EZ. d. An Independent Contractor does not offer their services to the general public. Question 3 Marks: 1 Payments of ___________ or more for services performed for your business by people not treated as your employees (such as independent contractors) should be issued a 1099-MISC. Recipients of 1099MISC may need to file Schedule C or C-EZ. Choose one answer. a. $10.00 b. $60.00 c. $600.00 d. $1,000.00 Question 4 Marks: 1 As a self-employed individual, generally you must file a U.S. Income Tax Return if your net earnings from self-employment were: Choose one answer. a. $500 or more b. $5,000 or more c. More than $100 d. $400. or more Question 5 Marks: 1 Which of the following statements is true concerning the accounting methods for a sole proprietorship? Choose one answer. a. Sole Proprietors can not use a fiscal tax year. b. If inventory is necessary to account for income, the sole proprietor must generally use the accrual method of accounting. c. Under the cash method of accounting, expenses generally are recognized by the sole proprietor in the tax year that they are actually paid. d. All of the above are true statements. Question 6 Marks: 1 Which of the following statements is false regarding the Self-Employment (SE) tax? Choose one answer. a. A self-employed individual may need to pay quarterly estimated SE tax, in addition to filing annually. b. When figuring self-employment tax owed, a self-employed individual will reduce selfemployment income by the amount paid in self-employment tax before applying the SE tax rate. c. You calculate your self-employment tax on IRS Schedule SE and report that amount in the "Other Taxes" section of Form 1040 as the IRS needs to differentiate the SE tax from the income tax. d. The self-employment tax is divided into two parts - the Social Security part and the Medicare part - and each part is calculated separately. Question 7 Marks: 1 Which of the following scenarios properly accounts for what will be considered taxable business income? Choose one answer. a. You are a bookkeeper and a client pays for your services in shares of stock in your client's company. You include in income the fair market of the stock you received. b. You are a woodworker and provided some of your furniture to your landlord in lieu of paying for your office rent. You include in income the value of your furniture as determined by you. c. You are a CPA and a client pays for your services in shares of stock in your client's company. You include in income the value of your services as if you had been paid in cash. d. You are an artist and provided some of your artwork to your landlord in lieu of paying for your office rent. You include in income the cost of the materials used in completing the artwork. Question 8 Marks: 1 Which of the following sole-proprietor business owners will not use Schedule C (or possibly C-EZ) to report business income? Choose one answer. a. The owner of a hotel which provides daily maid service to customers and pay for rooms nightly. b. The owner of a five unit, residential apartment building who collects rental income and only provides weekly gardening service for the common areas of the building. Cleaning of the individual units is the responsibility of the renters. c. A juggler who provides entertainment for at flat fee at birthday parties. for children. d. A motivational speaker who is hired at an hourly rate to give motivation speeches to employees of various companies. Question 9 Marks: 1 Which of the following scenarios does not include reportable business income? Choose one answer. a. Interest received on notes receivable that you have accepted in the ordinary course of business. b. Income derived from renting formal wear (gowns and tuxedos). c. Dividends received from business insurance premiums you deducted in an earlier year. d. The amount of a price reduction given to you by the seller, offsetting the amount of debt you owe on the property, for property you purchased earlier. Question 10 Marks: 1 When paying self-employment (SE) tax, which of the following accurately details some of the steps that you will follow? Choose one answer. a. When figuring self-employment tax you owe, you reduce self-employment income by one-half of the self-employment tax before applying the tax rate. b. 50% of what you pay in self-employment tax is deducted as an adjustment to income on page 1 of Form 1040. c. The Medicare portion of the tax is applied to the total amount of net self-employment income, regardless of the dollar amount. d. All of the above are accurate steps taken in the process. 11 Marks: 1 The IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby. The general IRS rule is that if you have not turned a profit in at least_______, the IRS will categorize your business as a hobby. Choose one answer. a. two of the prior five years b. three of the prior five years c. three of the prior seven years d. two of the prior three years Question 12 Marks: 1 Tim Sol used the actual expense method for determining his car and truck expenses for the tax year. Tim deducts depreciation and actual expenses for gas, oil, repairs and insurance. The vehicle is used 85% for business purposes. Tim paid a total of $2,400 for oil and gas, $800 for vehicle repairs and $1,200 for insurance. Not including depreciation, Tim can take actual expenses of: Choose one answer. a. $4,400 b. $3,740 c. $3,470 d. $2,400 Question 13 Marks: 1 You may claim health insurance that you pay for yourself, _______ as an above the line tax deduction on page 1 of Form 1040, which means you benefit from the deduction whether or not you itemize your deductions. Choose one answer. a. your spouse b. your dependents c. your employees d. A and B e. All of the above Question 14 Marks: 1 When using the Standard Mileage Rate, you may also deduct the following vehicle expenses: Choose one answer. a. Oil Changes b. Auto Insurance. c. Replacement Tires. d. Parking and toll road charges. Question 15 Marks: 1 Which of the following statements is not true regarding the deduction of travel and entertainment business expenses? Choose one answer. a. Your travel must be primarily business-related in order to be deductible. Pleasure trips are never deductible. b. You can deduct travel expenses only if you are traveling away from home in connection with the pursuit of an existing business. Travel expenses you incur in connection with acquiring or starting a new business are not deductible as business expenses. c. A portion of your travel must be business-related in order to be deductible. Pleasure trips can be deductible if some business is also conducted on the trip. d. If your spouse travels with you, you usually cannot claim any deduction for your spouse's expenses, unless he or she is also directly involved with the business. Question 16 Marks: 1 To be deductible, a business expense must be both: Choose one answer. a. Necessary and Required b. Ordinary and Necessary c. Common and Current (The two \"Cs\") d. Fair and Necessary Question 17 Marks: 1 The formula for calculating Cost of Goods Sold is: Choose one answer. a. [Ending Inventory] + [Purchases] - [Beginning Inventory] b. [Beginning Inventory] + [Purchases] - [Ending Inventory] c. [Beginning Purchases] + [Ending Purchases] - [Ending Inventory] d. [Beginning Purchases] - [Ending Purchases] - [Beginning Inventory] Question 18 Marks: 1 Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. However, certain qualifying small business taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. A qualifying small business taxpayer is defined as: Choose one answer. a. A business that has annual revenues of less than $100,000 in the latest completed tax year. b. A business that employs fewer than 10 people. c. A business that has three year average annual gross receipts for each prior tax year ending on or after December 31, 2000, of more than $1 million but not more than $10 million. d. A business that has five year average annual gross receipts for each prior tax year ending on or after December 31, 2000, of less than $500,000. Question 19 Marks: 1 Which of the following are factors that will determine the deductibility of health insurance premiums for businesses? Choose one answer. a. You can only claim the health insurance premiums write-off for months when neither you nor your spouse was eligible to participate in an employer-subsidized health plan. b. The deduction cannot exceed the earned income you collect from your business. c. Eligibility to take the deduction is determined on an annual basis. d. Only A and B above are correct factors. Question 20 Marks: 1 Which of the following statements accurately defines the actual expense method for calculating deductible business vehicle expenses? Choose one answer. a. The actual expense method is calculated by taking the number of business use miles for a given period and multiplying by the standard mileage rate for the applicable tax. In addition to this calculated deduction, any expenses incurred throughout the year for parking fees and tolls (related to business use) can also be deducted. b. The actual expense method is based on the actual vehicle expenses incurred throughout the year. Expenses allowable as a deduction under this method include depreciation, licenses, tolls, lease payments, insurance, garage rent, parking fees, registration, repairs, and tires. Allowable expenses do not include fuel costs (gasoline, etc.). The percentage of business use is calculated by dividing business miles driven by the total miles drive which gives the percentage of business use, which is then applied to the actual expenses incurred to calculate the allowable deduction. c. The actual expense method is based on the actual vehicle expenses incurred throughout the year. Expenses allowable as a deduction under this method include depreciation, licenses, gasoline or other fuel, oil, tolls, lease payments, insurance, garage rent, parking fees, registration, repairs, and tires. The percentage of business use is calculated by dividing business miles driven by the total miles drive which gives the percentage of business use, which is then applied to the actual expenses incurred to calculate the allowable deduction. d. The actual expense method is calculated by taking the number of business use miles for a given period and multiplying by the standard mileage rate for the applicable tax. In addition to this calculated deduction, any expenses incurred throughout the year for fuel (gasoline, natural gas, etc. ), parking fees and tolls (related to business use) can also be deducted. 21 Marks: 1 Using page 2 of Schedule C, answer the following two questions. Mark Myers owns a manufacturing business. He purchases sheet metal and uses it to produce switch plates. He employs several individuals who spend all of their time producing the switch plates. Total sheet metal expense for the year was $65,000. Total direct labor costs for the production of the plates was $80,000. Additional purchases used in the manufacturing of the switch plates total $20,000 of which $5,000 was withdrawn for personal use. Beginning Inventory at the start of the tax year was $150,000. What was Mark's total purchases, cost of labor and materials and supplies, for the year? Choose one answer. a. $165,000 b. $65,000 c. $160,000 d. $140,000 Question 22 Marks: 1 Using the information from the prior question, if Mark's ending inventory was $180,000 what will his Cost of Goods for the year total? Choose one answer. a. $140,000. b. $130,000. c. $180,000. d. $160,000 Question 23 Marks: 1 Listed property is a special classification for assets (examples - cars and computers or tablets) that lend themselves to both personal and business use. The primary objective of the IRS is to ensure you only depreciate the business and investment-use portion of these assets and not the personal-use portion. Which of the following statements is accurate with regards to listed property? Choose one answer. a. According to the predominant-use test, if listed property does not have more than 60 percent qualified business use, the straight-line depreciation method (MACRS ADS) or Section 179 expensing is allowed. b. \"Qualified business use\" is any use of a listed asset in the taxpayer's trade or business that is simply held for the production of income or as an investment. c. Regarding depreciation recapture of a listed asset, if the asset is fully depreciated then you do not need to be concerned with any recapture of prior depreciation or Section 179 expense deduction taken. d. According to the predominant-use test, if listed property does not have more than 50 percent qualified business use, the straight-line depreciation method (MACRS ADS) must be used and no Section 179 expensing is allowed. e. All of the above can be factored into business car and truck expenses. Question 24 Marks: 1 If you use the Simplified Option for Home Office Deduction, you can take a deduction for home office business use of $5 per square foot of the home used for business, to a maximum of ____. Choose one answer. a. 300 square feet, or $1,500.00 b. 500 square feet, or $2,500.00 c. 100 square feet, or $1,000.00 d. 1,000 square feet, or $5,000.00 Question 25 Marks: 1 An ordinary expense is one that is: Choose one answer. a. Ordinary and necessary in your trade or business. b. Helpful and appropriate for your trade or business. c. Recurring and minimal for your trade or business. d. Significant and non-recurring for your trade or business. Question 26 Marks: 1 Which of the following property is property that would be typically depreciated by a business? Choose one answer. a. Stove b. Furniture c. Computers d. All of the above are possible depreciable assets. Question 27 Marks: 1 In order for a repair to be considered a depreciable tax deduction, it must meet the following requirements: Choose one answer. a. The repair must include the completion of regularly scheduled maintenance on the property. b. The repair can only be depreciated if it decreases the useful life of the property. c. The repair can only be depreciated if it decreases the value of the property. d. The repair must increase the value of the property, make it more useful, or lengthen its useful life. Question 28 Marks: 1 Read each of the following scenarios. Which of these scenarios may qualify as a business trip? Choose one answer. a. You attended a meeting approximately 200 miles from your tax home. Prior to driving back home on the same day, you got a few hours' sleep in a hotel room. b. You live in Los Angeles and attended a convention in Chicago. You spent all three days of the trip at the convention site and signed several new contracts for products that you produce, while at the convention. c. You attended a trade show for an association that your business is a member of. The trade show was in Germany, where over 40% of the membership is located. You spent over 80% of your time on the trip at the trade show, engaged in business activities. d. All of the above scenarios can be reasonable qualified as business trips. Question 29 Marks: 1 Which of the following statements concerning the Self-Employment Tax is true? Choose one answer. a. Independent contractors do not need to pay SE Tax. b. The SE Tax is based on a fixed dollar amount for all self-employed taxpayers. c. When calculating SE Tax, spouses can combine income and losses from their individually owned businesses, to arrive at the amount of SE Tax owed. d. The Medicare portion of the SE Tax has no income cap. Question 30 Marks: 1 Concerning the business use of the home business tax deduction, which of the following statements are true? Choose one answer. a. Business owner uses the living room of their home to write training manuals and also for personal purposes, The square footage of the living room can be deducted as a business-use-of-yourhome expense. b. You are an attorney and use the kitchen table in your home to write legal briefs and also to eat your meals. You may deduct business-use-of-your-home expenses for the portion of the kitchen you use for business purposes. c. Business use of the home expense deductions may not be taken for regular use of a residence for the provision of day care services to children. d. All of the above are true statements. e. None of the above are true statements. 31 Marks: 1 Use Schedule C to help answer the following two questions. Frank Botti owns a construction management company. His income and expenses for the year are as follows: Gross receipts: $250,000.00 Refunds to Clients: $25,000.00 Other Income related to recovery of bad debt, (deducted from taxes in previous years): $10,000.00 Advertising: $4,000.00 Total Business Car and Truck Expense (Actual Expenses used): $20,000.00 Business Liability Insurance: $12,000.00 Office Expenses: $14,500.00 Rent: $22,000.00 Business Related Meals & Entertainment Expenses: $1,000.00 Total Wages: $78,000.00 What will be Frank's total gross income for the year? Choose one answer. a. $235,000.00 b. $245,000.00 c. $220,000.00 d. $60,000.00 Question 32 Marks: 1 Using information from the previous question, what will Frank's Total Expenses total on Schedule C? Choose one answer. a. $149,000.00 b. $151,000.00 c. $151,500.00 d. $150,000.00 Question 33 Marks: 1 Concerning a qualified joint venture, which of the following are true? Choose one answer. a. Spouses electing qualified joint venture status are treated as sole proprietors for Federal tax purposes. When reporting as a sole proprietor under a qualified joint venture, an EIN is required for each spouse's share of the sole proprietorship b. When an EIN already exists previously for the partnership, one spouse can continue to use that EIN for the qualified joint venture. c. Once the election is made as a qualified joint venture, it can be revoked only with the permission of the IRS. d. All of the above are true. Question 34 Marks: 1 Certain partnerships must have a general partner who is also designated as a ___ ______ ______ or \"TMP\". Choose one answer. a. Tax Matters Partner b. Tax Materials Partner c. Tax Mediation Person d. Tax Mediation Partner Question 35 Marks: 1 Which of the following is a correct statement regarding an LLC, (classified as a partnership), that is converted into a partnership for federal tax purposes? Choose one answer. a. The formation of the partnership terminates the LLC. The conversion is treated as a sale, exchange, or liquidation of any member's interest; the LLC's tax year closes; and the partnership becomes a new legal entity. b. The formation of the partnership does not terminate the LLC. The conversion is not a sale, exchange, or liquidation of any member's interest; the LLC's tax year does not close; however the partnership must apply for it's own taxpayer identification number. c. The formation of the partnership does not terminate the LLC. The conversion is not a sale, exchange, or liquidation of any member's interest; the LLC's tax year does not close; and the partnership can continue to use the LLC's taxpayer identification number. d. The formation of the partnership terminates the LLC; however the partnership can continue to use the LLC's taxpayer identification number. Question 36 Marks: 1 Certain partnerships that do not actively conduct a business can choose to be completely or partially excluded from being treated as partnerships for federal income tax purposes. For this to happen, which of the following must be true? Choose one answer. a. All the partners must agree to make the choice. b. One or more partners must be considered a foreign national. c. The partners must be able to compute their own taxable income without computing the partnership's income. d. A and C only must be true e. All of the above must be true. Question 37 Marks: 1 Which of the following is true concerning the filing of a Partnership return, Form 1065? Choose one answer. a. Every partnership that engages in a trade or business or has gross income must file an information return on Form 1065 showing its income, deductions, and other required information. b. The partnership return must show the names and addresses of each partner and each partner's distributive share of taxable income. c. The return must be signed by a general partner. If a limited liability company is treated as a partnership, it must file Form 1065 and one of its members must sign the return. d. All of the above are true. Question 38 Marks: 1 Recognizing gain on a partnership distribution. The adjusted basis of a partners partnership interest was $24,000. The partner receives a distribution of $10,000 cash and land that has an adjusted basis of $4,000 and a fair market value of $6,000. Which of the following correctly summarizes the effects of this transaction as it relates to the partner? Choose one answer. a. Because the cash received does not exceed the basis of the partner's partnership interest, the partner does not recognize any gain on the distribution. Any gain on the land will be recognized when she/he sells or otherwise disposes of it. The distribution decreases the adjusted basis of the partner's partnership interest to $10,000 [$24,000 ($10,000 + $4,000)]. b. Because the cash received does not exceed the basis of the partner's partnership interest, the partner must recognize any gain on the distribution. The gain on the land is recognized as $2,000 ($6,000 - $4,000). The distribution decreases the adjusted basis of the partner's partnership interest to $10,000 [$24,000 ($10,000 + $4,000)]. c. Even though the cash received does not exceed the basis of the partner's partnership interest, the partner is recognized to have gained according to the value of cash received from the distribution. The distribution decreases the adjusted basis of the partner's partnership interest to $10,000 [$24,000 ($10,000 + $4,000)] d. The cash received + the fair market value of the land represents a gain to the individual partner. The total gain is therefore $$16,000. The distribution decreases the adjusted basis of the partner's partnership interest to $8,000 [$24,000 ($10,000 + $6,000)]. Question 39 Marks: 1 A partner or related person is considered to assume a partnership liability only to the extent that (which or the following statements is complete and accurate?): Choose one answer. a. He or she is not personally liable for it; the creditor knows that the liability was assumed by the partner or related person; the creditor can demand payment from the partner or related person; and no other partner or person related to another partner will bear the economic risk of loss on that liability immediately after the assumption. b. He or she is personally liable for it; the creditor does not need to be informed of the fact that the liability was assumed by the partner or related person; the creditor can demand payment from the partner or related person; and no other partner or person related to another partner will bear the economic risk of loss on that liability immediately after the assumption. c. He or she is personally liable for it; the creditor knows that the liability was assumed by the partner or related person; the creditor can not demand payment from the partner or related person; and no other partner or person related to another partner will bear the economic risk of loss on that liability immediately after the assumption. d. He or she is personally liable for it; the creditor knows that the liability was assumed by the partner or related person; the creditor can demand payment from the partner or related person; and no other partner or person related to another partner will bear the economic risk of loss on that liability immediately after the assumption. Question 40 Marks: 1 The sale or exchange of a partner's interest in a partnership usually results in capital gain or loss. Gain or loss is the difference between the amount realized and the adjusted basis of the partner's interest in the partnership. If the selling partner is relieved of any partnership liabilities, that partner must include the liability relief as part of the amount realized for his or her interest. Kelly became a limited partner in the ABC Partnership by contributing $10,000 in cash on the formation of the partnership. The adjusted basis of his partnership interest at the end of the current year is $20,000, which includes his $15,000 share of partnership liabilities. The partnership has no unrealized receivables or inventory items. Kelly sells his interest in the partnership for $10,000 in cash. He had been paid his share of the partnership income for the tax year. Which of the following scenarios is correct? Choose one answer. a. Kelly realizes $25,000 from the sale of his partnership interest ($10,000 cash payment + $15,000 liability relief). He reports all $25,000 as a capital gain. b. Kelly realizes $5,000 from the sale of his partnership interest ($25,000 adjusted basis $20,000 basis). He reports $25,000 ($10,000 cash realized + $15,000 liability relief) as a capital gain. c. Kelly realizes $25,000 from the sale of his partnership interest ($10,000 cash payment + $15,000 liability relief). He reports $5,000 ($25,000 realized $20,000 basis) as a capital gain. d. Kelly realizes $5,000 from the sale of his partnership interest ($25,000 adjusted basis $20,000 basis). He reports $5,000 ($25,000 realized $20,000 basis) as a capital gain. 41 Marks: 1 Seaside Bakery operates as a calendar year partnership. Seaside's two partners, Kalla and Henry share profits and losses 60% and 40%, respectively. For fiscal tax year ended January 31st, Seaside had the following income and expenses: Gross sales $270,000 Cost of goods sold $80,000 Interest income from bank $2,500 Wages $50,000 Short-term capital loss $5,000 Compute the partnership's ordinary income and flow through amounts to the partners. Choose one answer. a. Kalla- ordinary income $85,500 and short-term capital loss $3,000; Henry- ordinary income $57,000 and short -term capital loss $2,000 b. Kalla- ordinary income $82,500; Henry- ordinary income $55,000 c. Kalla- ordinary income $81,000, interest income 1,500 and short term capital loss $3,000; Henry- ordinary income $54,000, interest income 1,000 and short term capital loss $2,000 d. Kalla- ordinary income $84,000, interest income $1,500 and short-term capital loss $3,000; Henry ordinary income $56,000, interest income $1,000 and short term capital loss $2,000 Question 42 Marks: 1 Under a partnership agreement, Fred is to receive 30% of the partnership income, but not less than $8,000. In the current tax year, the partnership has net income of $20,000. What is the amount of guaranteed payment that can be deducted by the partnership for the tax year? Choose one answer. a. $8,000 b. $6,000 c. $0 d. $2,000 Question 43 Marks: 1 Sharon provides services to a partnership during the tax year in exchange for a capital interest of 30%, worth $25,000. Sharon's basis in the partnership is: Choose one answer. a. Zero since she exchanged services for her interest. b. $25,000, which must be reported by her as income in the year of receipt if the interest is vested. c. The present value of $25,000, computed over the lesser of Sharon's remaining life or the average remaining life of the other partners. d. Considered a profits interest and has a zero basis. Question 44 Marks: 1 Which of the following qualify as personal services and therefore could help to define a corporation as a Personal Service Corporation? Choose one answer. a. Accounting or actuarial sciences b. Manufacturing of household goods c. Preparation of food stuffs for human consumption d. All of the above qualify Question 45 Marks: 1 A corporation is closely held if : Choose one answer. a. It is a C corporation. b. At any time during the last half of the tax year, more than 50% of the value of its outstanding stock is, directly or indirectly, owned by or for five or fewer individuals. \"Individual\" includes certain trusts and private foundations. c. Each employee-owners owns more than 10% of the fair market value of the outstanding stock on the last day of the testing period. d. All of the above are requirements. Question 46 Marks: 1 Which of the following corporations generally may not need to file a corporate tax return? Choose one answer. a. A corporation currently undergoing reorganization in bankruptcy court. b. A corporation exempt under section 501 of the Internal Revenue Code, c. A corporation that has no taxable income for the year. d. All of the above may be exempt from filing a tax return. Question 47 Marks: 1 For tax years beginning after December 31, 2015, the due date for S corporation tax returns is: Choose one answer. a. 15th day of the third month after the close of the fiscal year for fiscal year S-Corps. b. 30th day of the third month after the close of the fiscal year for fiscal year S-Corps. c. 15th day of the sixth month after the close of the fiscal year for fiscal year S-Corps. d. 30th day of the fourth month after the close of the fiscal year for fiscal year S-Corps. Question 48 Marks: 1 When you go into business, treat all costs you incur to get your business started as capital expenses. However, a corporation can elect to deduct as expenses a limited amount of start-up or organizational costs. Any cost not deducted can be Choose one answer. a. Charged-off in the tax year incurred. b. Depreciated c. Amortized d. None of the above. Question 49 Marks: 1 Generally, a qualified personal service corporation is taxed _____________ Choose one answer. a. Like most corporations, by figuring their tax using the tax rate schedule in Publication 542. b. at a flat rate of 35% on taxable income. c. at a flat rate of 33% on taxable income d. at a stepped up rate capping at 35% of taxable income. Question 50 Marks: 1 What is the IRS trying to accomplish with the use of the Accumulated Earnings Tax? Choose one answer. a. It uses the Accumulated Earnings Tax as a Disincentive to accumulate earnings in the corporation instead of paying excess earnings out to the shareholders and avoiding personal taxes at the individual owner level. b. It uses the Accumulated Earnings Tax as an incentive to help corporations create more jobs. c. It uses the Accumulated Earnings Tax to close loopholes created by the Alternative Minimum Tax (AMT). d. There is no clear-cut explanation for the creation of the Accumulated Earnings Tax other than to increase federal tax revenues