Question 1

Choose the correct statement:

Accepted Answer

A) The corporate alternative minimum tax applies to all corporations including S corporations. 
B) The exemption amount is phased out at a rate of $1.00 for every $1.00 by which the corporation's alternative minimum taxable base exceeds $210,000. 
C) The alternative minimum tax is imposed at 26 percent on the alternative minimum tax base up to $150,000 and 28 percent on the AMT base that is greater than $150,000. 
D) The alternative minimum tax base is equal to the corporation's regular taxable income increased or decreased for certain adjustments, increased by tax preference items, and decreased by the exemption amount. 
A) The corporate alternative minimum tax applies to all corporations including S corporations. 
B) The exemption amount is phased out at a rate of $1.00 for every $1.00 by which the corporation's alternative minimum taxable base exceeds $210,000. 
C) The alternative minimum tax is imposed at 26 percent on the alternative minimum tax base up to $150,000 and 28 percent on the AMT base that is greater than $150,000. 
D) The alternative minimum tax base is equal to the corporation's regular taxable income increased or decreased for certain adjustments, increased by tax preference items, and decreased by the exemption amount. D

Question 2

A corporation may elect to take a credit for dividends paid in lieu of claiming a dividends received deduction.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following statements is not true of S corporations?

Accepted Answer

A) S corporations are corporations that receive tax treatment similar to that given partnerships. 
B) Section 1231 gains and losses pass through separately to stockholders of an S corporation. 
C) The amount of S corporation losses that a shareholder of an S corporation may report on his or her tax return is limited to the basis of the stock plus any loans made by the shareholder to the corporation. 
D) If a taxpayer purchases stock in an S corporation from another shareholder during the year, the new shareholder may report the entire amount of any loss for the year attributable to the shares purchased. 
E) If a shareholder acquires 40 percent of the stock of an S corporation, the new shareholder cannot cause the corporation to lose its S corporation election. 
A) S corporations are corporations that receive tax treatment similar to that given partnerships. 
B) Section 1231 gains and losses pass through separately to stockholders of an S corporation. 
C) The amount of S corporation losses that a shareholder of an S corporation may report on his or her tax return is limited to the basis of the stock plus any loans made by the shareholder to the corporation. 
D) If a taxpayer purchases stock in an S corporation from another shareholder during the year, the new shareholder may report the entire amount of any loss for the year attributable to the shares purchased. 
E) If a shareholder acquires 40 percent of the stock of an S corporation, the new shareholder cannot cause the corporation to lose its S corporation election. D

Question 4

In 2015, Apricot Corporation had taxable income of $120,000. Included in taxable income was a $10,000 capital gain. The $120,000 of taxable income does not include a $15,000 capital loss carryforward available from the previous year. What is Apricot Corporation's 2015 income tax liability before any tax credits?

Accepted Answer

A) $24,200 
B) $26,150 
C) $28,550 
D) $30,050 
E) None of the above 
A) $24,200 
B) $26,150 
C) $28,550 
D) $30,050 
E) None of the above

Question 5

A corporation must reconcile, to the IRS's satisfaction, the differences between net income as shown on the company's books and taxable income (before special deductions and net operating losses) as shown on the tax return.

Accepted Answer

A) True 
 B)False

Question 6

An S corporation files a Form 1120S.

Accepted Answer

A) True 
 B)False

Question 7

Corporations are not allowed to amortize the costs of organizing the corporation.

Accepted Answer

A) True 
 B)False

Question 8

Corporations pay a flat 30 percent federal income tax.

Accepted Answer

A) True 
 B)False

Question 9

A regular corporation with excess charitable contributions may carry the excess forward to the 5 succeeding tax years.

Accepted Answer

A) True 
 B)False

Question 10

The accumulated earnings tax, which is imposed on corporations for the accumulation of earnings in excess of reasonable business needs, does not apply to:

Accepted Answer

A)  Closely-held corporations. 
B)  Widely-held corporations. 
C)  Corporations subject to the personal holding company tax. 
D)  Both b. and c. 
E)  All of the above. 
A)  Closely-held corporations. 
B)  Widely-held corporations. 
C)  Corporations subject to the personal holding company tax. 
D)  Both b. and c. 
E)  All of the above.

Question 11

Calculate the corporate tax liability in each of the following circumstances:
a.X Corporation has taxable income of $250,000 for its 2015 calendar tax year.
b.Y Corporation has $1,600,000 in taxable income for 2015.
c.​
Z Corporation has taxable income of $100,000, before capital gains and losses, a short-term capital loss of $30,000, and a long-term capital gain of $10,000 in 2015.

Accepted Answer

The answer of Calculate the corporate tax liability in each...

Question 12

For the year ended June 30, 2015, the Rosaceae Corporation, a regular C corporation, has a long-term capital loss of $25,000.
a.​
Assuming that in addition to the capital loss, the corporation has taxable income, before capital gains and losses, of $25,000 for 2015, calculate the corporation's tax liability before any credits.
b.​
​
Assuming that in addition to the long-term capital loss of $25,000 the corporation has taxable income, before capital gains and losses, of $90,000 and a short-term capital gain of $10,000 for 2015, calculate the corporation's tax liability before any credits.

Accepted Answer

The answer of For the year ended June 30, 2015,...

Question 13

Avocado Corporation paid $3,000 in estimated tax payments for the calendar year ended December 31, 2015. The corporation has an actual tax liability of $4,000 for the year.
a.If no extension is requested, when is the tax return due?
b.If an extension of time to file is requested and approved, when is the tax return due?
c.If an extension of time to file is requested and approved, when is the additional $1,000 of the 2015 tax due?

Accepted Answer

The answer of Avocado Corporation paid $3,000 in estimated tax...

Question 14

The Guava Corporation has book net income of $90,000 for the current year. Included in this figure are the following items which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return.
1. Federal income tax expense $25,000
2. Depreciation deducted on books, not deductible for tax purposes 4,000
3. Deduction for 50 percent of meals and entertainment expense not allowed for tax purposes 3,000
4. Deduction for payroll tax penalties not allowed for tax purposes 2,000
5. Tax exempt interest income included in book income but not in tax return income 12,000
Based on the above information, calculate the Guava Corporation's taxable income for the year. Show your calculations.

Accepted Answer

$112,000 = $90,000 +

Question 15

For the year ended December 31, 2015, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items: What is the taxable income of Prunus, Inc. for 2015?

Accepted Answer

A) $800,000 
B) $820,000 
C) $830,000 
D) $870,000 
E) None of the above 
A) $800,000 
B) $820,000 
C) $830,000 
D) $870,000 
E) None of the above

Question 16

As a general rule, the transfer of property to a corporation in exchange for stock does not result in a taxable transaction.

Accepted Answer

A) True 
 B)False

Question 17

Is it correct to state that the maximum corporate tax rate is 35 percent? Please describe the structure of the corporate tax rate schedule in your answer.

Accepted Answer

For income between $100,000 and $335,000

Question 18

Corporations are granted favorable tax treatment for short-term capital losses.

Accepted Answer

A) True 
 B)False

Question 19

The Great Gumball Corporation is a gumball producer. The corporation has accumulated earnings of $425,000 and it can establish a reasonable need for $360,000. Calculate the amount of the accumulated earnings tax, if any, that will be imposed on the corporation.

Accepted Answer

$9,750 = 1

Question 20

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business, assuming their total organizational expenses do not exceed $50,000.

Accepted Answer

A) True 
 B)False

Choose the correct statement:

A corporation may elect to take a credit for dividends paid in lieu of claiming a dividends received deduction.

Which of the following statements is not true of S corporations?

A corporation must reconcile, to the IRS's satisfaction, the differences between net income as shown on the company's books and taxable income (before special deductions and net operating losses) as shown on the tax return.

An S corporation files a Form 1120S.

Corporations are not allowed to amortize the costs of organizing the corporation.

Corporations pay a flat 30 percent federal income tax.

A regular corporation with excess charitable contributions may carry the excess forward to the 5 succeeding tax years.

The accumulated earnings tax, which is imposed on corporations for the accumulation of earnings in excess of reasonable business needs, does not apply to:

For the year ended December 31, 2015, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items: What is the taxable income of Prunus, Inc. for 2015?

As a general rule, the transfer of property to a corporation in exchange for stock does not result in a taxable transaction.

Is it correct to state that the maximum corporate tax rate is 35 percent? Please describe the structure of the corporate tax rate schedule in your answer.

Corporations are granted favorable tax treatment for short-term capital losses.

The Great Gumball Corporation is a gumball producer. The corporation has accumulated earnings of $425,000 and it can establish a reasonable need for $360,000. Calculate the amount of the accumulated earnings tax, if any, that will be imposed on the corporation.

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business, assuming their total organizational expenses do not exceed $50,000.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

Tax Administration and Tax Planning

Filters

Exam 11: The Corporate Income Tax

Choose the correct statement:

A corporation may elect to take a credit for dividends paid in lieu of claiming a dividends received deduction.

Which of the following statements is not true of S corporations?

A corporation must reconcile, to the IRS's satisfaction, the differences between net income as shown on the company's books and taxable income (before special deductions and net operating losses) as shown on the tax return.

An S corporation files a Form 1120S.

Corporations are not allowed to amortize the costs of organizing the corporation.

Corporations pay a flat 30 percent federal income tax.

A regular corporation with excess charitable contributions may carry the excess forward to the 5 succeeding tax years.

The accumulated earnings tax, which is imposed on corporations for the accumulation of earnings in excess of reasonable business needs, does not apply to:

For the year ended December 31, 2015, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items: What is the taxable income of Prunus, Inc. for 2015?

As a general rule, the transfer of property to a corporation in exchange for stock does not result in a taxable transaction.

Is it correct to state that the maximum corporate tax rate is 35 percent? Please describe the structure of the corporate tax rate schedule in your answer.

Corporations are granted favorable tax treatment for short-term capital losses.

The Great Gumball Corporation is a gumball producer. The corporation has accumulated earnings of $425,000 and it can establish a reasonable need for $360,000. Calculate the amount of the accumulated earnings tax, if any, that will be imposed on the corporation.

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business, assuming their total organizational expenses do not exceed $50,000.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

Tax Administration and Tax Planning

Filters