Exam 11: The Corporate Income Tax

During the current year, The Jupiter Company, which is an S corporation, had the following items of income and expenses: ​ a.Calculate the net ordinary income. b.List all the other items which must be separately reported. c.If the S corporation is on a calendar year, when is the corporation's tax return due?

Which of the following is not an adjustment or tax preference item for the corporate alternative minimum tax?

Which of the following is false in regards to filing requirements?

For its year ended December 31, 2015, Cupressa Corporation, an S corporation, had net income of $216,000 which included $180,000 of ordinary income from operations and a $36,000 net long-term capital gain. During 2015, a total of $90,000 was distributed to the corporation's nine equal shareholders, all of whom are on a calendar-year tax basis. For 2015, each shareholder should report:

A corporation may be subject to both the accumulated earnings tax and the personal holding company tax in the same year.

Which of the following corporations is allowed to make an S corporation election?

If a corporation's status as an S corporation is involuntarily terminated in the middle of the tax year, the corporation must file as an S corporation for the first half of the tax year and a regular corporation for the second half of the tax year.

Harry forms the Nectarine Corporation during the 2015 tax year. To form the corporation, Harry transfers assets having a fair market value of $650,000 to Nectarine Corporation for 100 percent of the corporation's stock. Harry's adjusted basis in the assets transferred was $375,000 and Nectarine Corporation assumed a $200,000 mortgage on the assets. If the fair market value of the stock received by Harry is $450,000, what is his basis in the stock received from the corporation?

Schedule M-1 on Form 1120 shows the reconciliation of a corporation's tax liability to the tax expense on the corporation's books.

Ficus, Inc. began business on March 1, 2015, and elected to file its income tax return on a calendar-year basis. The corporation incurred $800 in organizational expenditures. Assuming the corporation does not elect to expense but chooses to amortize the costs over 180 months, the maximum allowable deduction for amortization of organizational expenditures in 2015 is:

Charitable contributions made by an S corporation are not deductible by the corporation; therefore, the shareholders receive no tax benefit from the contributions as itemized deductions.

Robert, Kim, Tony, and Sharon decided to form the Cash Cow Corporation. In exchange for 40 percent of the stock, Robert contributed an apartment building with a fair market value of $700,000 and subject to a liability of $300,000. Robert's basis in the apartment building is $225,000. Kim contributed warehouse storage units worth $450,000 in exchange for 40 percent of the stock plus $50,000 in cash from the corporation. Her basis in the warehouse is $125,000. Tony contributed $100,000 cash for 10 percent of the stock. Sharon is performing services worth $100,000 for 10 percent of the stock. a.What is the recognized gain or recognized income for: 1.Robert 2.Kim 3.Tony 4.Sharon b.What is the basis in the stock for: 1.Robert 2.Kim 3.Tony 4.Sharon c.What is the corporation's basis in: 1.The apartment building 2.The warehouse

The accumulated earnings tax will not be imposed on accumulations that can be shown to be necessary to meet the reasonable needs of the business.

A corporation may carry forward capital losses for an indefinite period.

On July 1, 2015, Grey formed Arucaria Corporation. On that same date, Grey contributed $100,000 cash and transferred property with an adjusted basis of $60,000 to Arucaria in exchange for 3,000 shares of the corporation's common stock. The property transferred had a fair market value of $75,000 on the date of the transfer. Arucaria Corporation had no other shares of common stock outstanding on July 1, 2015. As a result of this transaction, Grey's basis in the stock and Arucaria Corporation's basis in the property (other than the cash), respectively, are:

Which of the following is true with respect to capital gains and losses of a corporation?

The income of an S corporation is computed in much the same manner as that of a partnership.

The Bay Fig Corporation has $350,000 of taxable income from operations for the current year, and dividends of $50,000 received from 10 percent-owned domestic corporations. How much is the Bay Fig Corporation's dividends received deduction for the current year?

Which of the following statements is true of corporations?

On July 1, 2015, Robert forms the Yew Corporation. In exchange for 100 percent of the corporation's stock, Robert contributes land with a fair market value of $100,000. Robert acquired the land 5 years ago at a cost of $30,000. At the date of the contribution, the land is subject to a $10,000 mortgage which the corporation assumes. What is the basis of the land to Yew Corporation?