Question 1 of 20.

James owns a small business with two employees. Which form will James need to file to report wages, withholding and employment taxes?

Form 940.

Form 941.

Form 720.

Form 1099-NEC.

Question 2 of 20.

An employer identification number (EIN) is required for all of the following businesses EXCEPT:

JAM, a partnership with no employees.

SPA, a partnership with six employees.

James, a sole proprietor with no employees.

Shayla, a sole proprietor with two employees.

Question 3 of 20.

Each of the following taxpayers may be eligible for an adjustment to income for health insurance on Schedule 1 (Form 1040) EXCEPT:

Emily, a partner in a law firm, receives a Schedule K-1 (Form 1065) reporting her share of income and deductions.

Travis, a 3% owner in an S corporation, receives Form W-2 for his wages and Schedule K-1 (Form 1120-S) reporting his share of the S corporation's income and deductions.

Maria, a 1% owner in an S corporation, receives Form W-2 for her wages and Schedule K-1 (Form 1120-S) reporting her share of the S corporation's income and deductions.

Erik, a sole proprietor who owns a printing business. He reports the income and deductions on a Schedule C (Form 1040).

Question 4 of 20.

Which taxpayer would be allowed to deduct vehicle expenses on Form 1040 using the standard mileage rate?

Jerome is a working partner in CBA partnership. Jerome sometimes uses his personal vehicle to visit clients. CBA has an accountable reimbursement plan.

Allison owns a mobile dog grooming business. She drives the company van to her clients homes to provide her services. She is a sole proprietor and does not have an accountable reimbursement plan.

Meli owns 50% of NTH, an S corporation. She drives a company vehicle to meet with clients.

Roger owns 100% of RTBR, a C corporation. He sometimes uses his personal vehicle to visit with clients. RTBR does not have an accountable plan but reimburses Roger for his mileage.

Question 5 of 20.

Parker and Gina, a married couple, have decided to start an interior design business. They have fomed an LLC and do not live in a community property state. Which type of business entity is NOT available for their business?

C corporation.

Partnership.

Qualified Joint Venture.

S corporation.

Question 6 of 20.

Zoe is a 50% owner of Hats by Zoe, an S corporation. She receives wages for services to the S corporation. Which tax documents should she receive from Hats by Zoe?

Schedule K-1 (Form 1120-S) for her share of income and deductions and Form 1099-DIV for her wages.

Schedule K-1 (Form 1120-S) for her share of income and deductions and Form W-2 for her services.

Form W-2 for her wages and Form 1099-DIV for her share of income.

Form 1099-NEC for her wages and Form 1099-DIV for her share of income.

Question 7 of 20.

Which of these businesses would NOT be required to file a balance sheet with the tax return?

ORB, a C corporation, with $245,000 in gross receipts and $50,000 in assets.

DBS, a partnership, with $275,000 in gross receipts and $150,000 in assets.

JAS, an S corporation, with $175,000 in gross receipts and $260,000 in assets.

BLA, a C corporation, with $240,000 in gross receipts and $290,000 in assets.

Question 8 of 20.

Marty, Nathan, and Oliver form MNO Mechanics, LLC. They make no elections so the LLC will default to a partnership. They agree that Oliver will operate the business and receive a guaranteed payment of $50,000. Oliver's share of the income this year is $20,000. How is the guaranteed payment treated by the partnership and the partners?

The partnership would deduct the $50,000 but only Marty and Nathan's share of income is adjusted for the payment to Oliver.

The partnership would deduct the $50,000. Marty, Nathan, and Oliver's share of income would each be adjusted proportionally by the guaranteed payment.

The partnership would deduct the $50,000 and Oliver's share of income would be adjusted for the guaranteed payment.

The partnership would not be able to deduct the guaranteed payment if the partnership does not have enough income.

Question 9 of 20.

An employer is required to report wages and withholding at the end of the year. Which forms are used to report the wages to the employee and to the IRS?

Form W-2 and Form W-3.

Form 941, Form W-2 and Form W-3.

Form 941, Form 1096 and Form 1099-NEC.

Form 941, Form 1099-NEC and Form W-3.

Question 10 of 20.

Which of the following would be eligible to make the election to be treated as an S corporation?

A partnership with 110 partners.

A C corporation with 80 shareholders, two are non-resident aliens.

An LLC with 95 members.

A sole proprietor.

Question 11 of 20.

Bailey is a more than 2% owner of an S corporation. Bailey participates in the S corporation's health insurance plan. How is this reported to Bailey?

Reported as wages in box 1 of Form W-2 and subject to medicare and social security tax (boxes 3 and 5).

Reported as wages in box 1 of Form W-2 but not in boxes 3 and 5.

Reported with code DD in box 12 of her Form W-2.

Reported on her Schedule K-1 (Form 1120-S) in box 12, Other Deductions.

Question 12 of 20.

Business income eligible for the qualified business income (QBI) deduction includes income from all of the following EXCEPT:

C corporations.

Partnerships.

S corporations.

Sole proprietors.

Question 13 of 20.

Which is NOT reported on Form 941?

Medicare tax.

Wages.

Federal income tax withheld.

Federal unemployment tax.

Question 14 of 20.

Which of the following taxpayers will NOT be subject to SE tax?

Jackson, a partner in JKL partnership, receives a guaranteed payment for services he performs. Jackson receives Schedule K-1 (Form 1065) reporting his guaranteed payment.

Jonas and Jackie, a married couple, who own and operate a business jointly.

Janet, a 10% owner of an S corporation, who works for the S corporation. Janet receives Form W-2 for her wages and Schedule K-1 (Form 1120-S) for her share of income from the S corporation.

Jerome, who works for LOP corporation and receives Form W-2. He also receives Form 1099-NEC for landscaping he does for LOP.

Question 15 of 20.

Form 941 reports payroll information. Which is the most accurate list of what Form 941 reports?

Wages, social security tax withheld, and federal income tax withheld.

Wages, social security tax withheld, medicare tax withheld, and federal income tax withheld.

Wages, social security tax, medicare tax, and federal income tax withheld.

Social security tax, medicare tax, and federal income tax withheld.

Question 16 of 20.

When are payroll taxes and withholding remitted and reported to the IRS using Form 941?

Payroll taxes are remitted and reported on the same schedule that the employer uses to pay his employees.

Payroll taxes are remitted semi-monthly and reported quarterly.

Payroll taxes are remitted monthly and reported quarterly.

Payroll taxes are remitted monthly or semi-weekly and reported quarterly.

Question 17 of 20.

MOT, an S corporation, is 100% owned by Tyrone. MOT has two other employees, Jack and Jill. How is the compensation for Tyrone, Jack, and Jill treated?

Jack and Jill will receive Form W-2 for their wages. MOT will deduct their wages and its share of payroll taxes on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income and his wages.

Jack, Jill, and Tyrone will each receive Form W-2 reporting their wages. MOT will deduct the wages and its share of payroll taxes on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income.

Jack, Jill, and Tyrone will each receive Form W-2 reporting their wages. MOT will deduct the wages and its share of payroll taxes for Jack and Jill on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income.

Jack, Jill, and Tyrone will each receive Form W-2 reporting their wages. MOT will deduct Jack and Jill's wages and its share of payroll taxes for Jack and Jill on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income.

Question 18 of 20.

Victor is a more than 2% owner of an S corporation and an employee. The S corporation pays his health insurance. How would this be treated by the S corporation and by Victor?

The S corporation would deduct Victor's wages as either wages or officer compensation and the health insurance on line 18, Employee benefit programs. Victor would receive Form W-2 with his wages reported.

The S corporation would deduct Victor's wages as either wages or officer compensation and the health insurance on line 18, Employee benefit programs. Victor would receive Form W-2 with his wages reported and take an adjustment on Schedule 1 (Form 1040) for health insurance.

The S corporation would deduct Victor's wages as either wages or officer compensation and the health insurance on line 18, Employee benefit programs. Victor would receive Form W-2 with his wages and the amount paid for Victor's health insurance reported on it and take an adjustment on Schedule 1 (Form 1040) for health insurance.

The S corporation would include in Victor's wages the amount it paid for health insurance and deduct the total as either wages or officer compensation. Victor would receive Form W-2 with his wages reported and take an adjustment on Schedule 1 (Form 1040) for health insurance.

Question 19 of 20.

Marty, Nathan, and Oliver form MNO Mechanics, LLC. They make no elections so the LLC will default to a partnership. They agree that Oliver will operate the business and receive a guaranteed payment of $50,000. Oliver's share of the income this year is $20,000. How much of the $70,000 will be subject to SE tax for Oliver?

$0. Limited partners are not subject to SE tax.

$20,000. Only the income portion of the $70,000 is subject to SE tax.

$50,000. Only the guaranteed payment is subject to SE tax. As a limited partner, the income would not be subject to SE tax.

$70,000. Both the guaranteed payment and Oliver's share of income are subject to SE tax.

Question 20 of 20.

What are the two most common financial statements that a business may provide for tax preparation?

A profit and loss statement and balance sheet.

A cash flow statement and balance sheet.

A profit and loss statement and a cash flow statement.

A statement of change in equity and a profit and loss statement.