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E Corporation is a subchapter
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- Because the owners of E Corporation have tax years ending in December, E Corporation must also choose a December year-end.
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E Corporation may choose a tax year ending in September, October, or November, but only if the corporation also makes an annual cash deposit and adjusts the amount every year depending on the income deferred.
Concept Introduction:
Gross income is the first step for calculating a taxpayer’s liability. It includes all the income from any sources except those that come under the exception of law. The incomes excluded from the taxationare known as exclusions. These exclusions are available from income such as life insurance, meals, entertainment, gifts and inheritance etc.
To identify: The appropriate tax year option
Answer to Problem 1MCQ
The answer is option “D”
Explanation of Solution
Explanation for correct option:
Option “D” is correct because as per the qualified business income deduction, many individual taxpayers reporting business income from a pass-through entity such as sole proprietorship, partnership, S Corporation, or Limited Liability Company.
Thus, E Corporation may choose a tax year ending in September, October, or November, but only if the corporation also makes an annual cash deposit and adjusts the amount every year depending on the income.
Explanation for incorrect options:
- Option A is incorrect because the taxpayer does not choose any month-end for the tax year as per the law.
- Option B is incorrect because the taxpayer does not choose the same month-end for the tax year as owners.
- Option C is incorrect because there must be a certain limitation.
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