Question

which of the following statements is a correct computation of interest for the look-back method?

a) interest is computed by recalculating the original tax liability using the section 6621 overpayment rate.

b) interest is computed on the difference in the original tax amount and the recomputed tax liability from the prior year's tax return.

c) interest is computed on the difference in the recomputed tax liability and the original tax amount using section 6621 overpayment rate.

d) interest is computed by recalculating the original tax liability using the prior year's tax return.

Answer #1

Solution: interest is computed on the difference in the recomputed tax liability and the original tax amount using section 6621 overpayment rate

Explanation: The look-back computes the additional interest that is required to be paid to (or refunded by) the IRS on taxes paid on contract revenue which have been recognized in prior years using the method of percentage of completion. Firstly determines the taxable amount; and then comparing what would have been the tax liability under percentage of completion. Afterwards applying the interest rate on overpayments designated under section 6621

Indicate whether each of the following statements is true or
false.
a. The government never pays a taxpayer interest on an
overpayment of tax.
b. The IRS can compromise on the amount of tax liability if
there is doubt as to the taxpayer’s ability to pay.
c. The IRS is required to accept Colin’s application for an
installment plan that delays the payment of $6,000 outstanding tax
liability.
d. The offer in compromise program attempts to allow
upper-income taxpayers additional...

1. Which of the following statements is CORRECT?
A. One problem of the IRR method is that it does not consider
all cash flows of a project.
B. One problem of the IRR method is that it does not take into
account the time value of money.
C. One problem of the IRR method is that it does not consider
the reinvestment of cash inflows.
D. One problem of the IRR method is that a dollar received today
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Using the Double Declining Balance method to calculate
depreciation, which of the following statements is true:
a. Depreciation is calculated
taking the cost excluding salvage value, divided by the number of
years of anticipated service, and multiplying by 2.
b. Depreciation is calculated
using the cost divided by the number of estimated years of service,
multiplying by 2, posting this amount, and recalculating the
depreciation annually based on the balance left each year until the
only balance is the salvage...

Which of the following statements is not correct?
a.
The sales budget is the starting point in preparing the master
budget.
b.
The sales budget is constructed by multiplying the expected
sales in units by the sales price.
c.
The sales budget generally is accompanied by a computation of
expected cash receipts for the forthcoming budget period.
d.
The cash budget must be prepared prior to the sales budget
because managers want to know the expected cash collections on
sales...

iven your computation and conclusions, which of the following
statements is true?
A) When the coupon rate is greater than Noah’s required return,
the bond should trade at a premium.
B) When the coupon rate is greater than Noah’s required return,
the bond’s intrinsic value will be less than its par value.
C) When the coupon rate is greater than Noah’s required return,
the bond should trade at a discount.
D) A bond should trade at a par when the...

Which of the following statements about interest rate risk is
correct?
Select one:
a. all of these statements are correct.
b. it is the magnitude of the yield change for a given movement
in market interest rates.
c. it is the magnitude of the price change for a given movement
in coupon rates.
d. it is the magnitude of the price change for a given movement
in market interest rates.

Which of the following statements is NOT
CORRECT?
a.
The IRR method takes into account the time value of money
b.
The IRR method values a dollar received today greater than a
dollar that will be received until sometime in the future
c.
The IRR method takes into account the cash flows over a
project’s full life
d.
The IRR method assumes that the cash flows to be received from a
project are to be reinvested at the WACC

Which of the following statements is CORRECT?
a. Corporate shareholders are exposed to unlimited
liability.
b. Corporate shareholders are exposed to unlimited liability,
but this factor is offset by the tax advantages of
incorporation.
c. It is usually easier to transfer ownership in a corporation
than in a partnership.
d. Corporations generally face fewer regulations than
proprietorships.
e. There is a tax disadvantage to incorporation, and there is
no way any corporation can escape this disadvantage, even if it is...

____ 17. Which of the following statements is CORRECT?
a. It is usually easier to transfer ownership in a corporation
than it is to transfer ownership in a sole proprietorship.
b. Corporate shareholders are exposed to unlimited
liability.
c. Corporations generally face fewer regulations than sole
proprietorships.
d. Corporate shareholders are exposed to unlimited liability,
and this factor may be compounded by the tax disadvantages of
incorporation.
e. There is a tax disadvantage to incorporation, and there is
no way...

1. Which of the following statements is correct?
a. A project with conventional cash flows is one with an initial
cash outflow followed by one or more cash inflows.
b. The NPV method determines how much the future value of cash
inflows exceeds the present value of costs.
c. All the answers are correct.
d. When two projects are independent, accepting one project
implicitly eliminates the other.
e. Conventional cash flow patterns could lead to conflicting
decisions by NPV and...

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