Regulation

Peters Co. repairs computers. On February 9, 19X1, Stark Electronics Corp. sold Peters a circuit tester on credit. Peters executed an installment note for the purchase price, a security agreement covering the tester, and a financing statement that Stark filed on February 11, 19X1. On April 13, 19X1, creditors other than Stark filed an involuntary petition in bankruptcy against Peters. What is Stark's status in Peters' bankruptcy?

A. Stark will be treated as an unsecured creditor because Stark did not join in the filing against Peters.

B. Stark's security interest constitutes a voidable preference because the financing statement was not filed until February 11.

C. Stark's security interest constitutes a voidable preference because the financing statement was filed within ninety days before the bankruptcy proceeding was filed.

D. Stark is a secured creditor and can assert a claim to the circuit tester that will be superior to the claims of Peters' other creditors.

Regulation

In 1992, Cape Company recorded book income of $140,000. Included in that amount was $50,000 for meal and entertainment expenses and $40,000 for federal income tax expenses. In Cape's schedule M-1 of Form 1120, which reconciles book income and taxable income, what amount should be reported as taxable income.

A. $205,000
B. $190,000
C. $180,000
D. $140,000

Regulation

A tax return preparer is subject to a penalty for knowingly or recklessly disclosing corporate tax return information, if the disclosure is made

A. To enable a third party to solicit business from the taxpayer.

B. To enable the tax processor to electronically compute the taxpayer's liability.

C. For peer review.

D. Under an administrative order by a state agency that registers tax return preparers.