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Home / CPAUS-TCP · TCP: Tax Compliance and Planning
Updated for the 2024 CPA Evolution exam format

ModuleCPAUS-TCP

TCP: Tax Compliance and Planning

Prepare for TCP: Tax Compliance and Planning with practice questions covering 19 topics. Build your knowledge, track your progress, and study effectively with GoCPAus.

Questions
588
Units
4
Topics
19

What’s in it.

4 units

Sample questions

3 of many

A few questions from this module, with the answer and a full explanation. The complete bank is available when you start practising.

  1. For a calendar-year S corporation, when is Form 1120-S due?

    • March 15 (the 15th day of the 3rd month after the close of the tax year)
      Correct answer
    • May 15
    • June 15
    • April 15
    Explanation

    Under IRC § 6072(b), Form 1120-S is due on the 15th day of the 3rd month after the close of the S corporation's tax year. For a calendar-year S corporation (year ending December 31), that is March 15. This matches the partnership Form 1065 due date and is earlier than the C corporation Form 1120 due date (April 15, the 4th month). The March 15 date allows partners and S corporation shareholders to receive their Schedule K-1s in time to prepare their personal April 15 returns.

  2. A taxpayer sold investment real estate on December 20, 2024, and received the buyer's promissory note calling for equal annual payments over five years beginning December 20, 2025. No payment was received in 2024. Does the instalment method apply, and when is the first gain recognised?

    • Yes, the instalment method applies because a payment will be received after the close of 2024; the first gain is recognised in 2025 when the first payment is received
      Correct answer
    • Yes, but gain is deferred until the note is fully paid in 2029
    • Yes, but all gain must be recognised in 2024 because the sale occurred in 2024 regardless of when payments are received
    • Yes, but the taxpayer must elect the instalment method within 30 days of the sale date or it is unavailable
    Explanation

    Under §453(b)(1), an instalment sale is any disposition of property where at least one payment will be received after the close of the taxable year of the sale. The buyer's promissory note calls for the first payment in December 2025 — after the close of tax year 2024. The instalment method therefore applies automatically. The buyer's promissory note is NOT treated as a 'payment' received under §453(f)(6) unless it is a 'payment obligation' of a third party (e.g., a marketable note). A note given by the buyer of property is not itself a payment, so no gain is recognised in 2024. The first gain is recognised in 2025 when the first cash payment is received.

  3. What is a 'unitary business,' and why does it matter for combined reporting purposes?

    • A unitary business is a group of commonly controlled corporations that are functionally integrated and operate as a single economic enterprise; combined reporting pools their income and factors to prevent income shifting
      Correct answer
    • A unitary business is any corporation with subsidiaries in more than five states that collectively have more than \$500,000 of in-state receipts
    • A unitary business is defined by federal law as any affiliated group eligible for consolidated return filing under §1504
    • A unitary business is any group of corporations filing a federal consolidated return; they must also file a combined state return
    Explanation

    A unitary business is a group of commonly controlled corporations that are functionally integrated — sharing management, services, financing, or economies of scale — and operating as a single economic enterprise. The concept matters because states that require combined reporting for unitary businesses pool the income and apportionment factors of all members, preventing transfer pricing manipulation or artificial income shifting between members. Combined reporting is constitutional when a unitary business exists, as upheld in Container Corp. v. Franchise Tax Board (1983).