Exam 11: The Corporate Income Tax

Roberta and Sally formed the Alder Corporation on October 1, 2015. On the same date, Roberta paid $75,000 cash to Alder Corporation for 1,500 shares of the corporation's common stock. Simultaneously, Sally received 100 shares of Alder Corporation's stock for services rendered. How much should Sally include in her taxable income for 2015, and what will be the basis of her Alder Corporation stock? ​ Taxable Income Basis of Stock

The Nandina Corporation was formed and began operations on July 1, 2015, and incurred the following expenses during the year: If the corporation chooses not to expense but rather amortizes organizational costs over 180 months, what is the amount of its amortization expense for 2015?

XYZ Corporation has a December 31 year-end. a.When is XYZ Corporation's tax return due? b.When does XYZ Corporation need to make its estimated tax payments? c.Assuming that XYZ Corporation owes $5,000 on the original tax return due date and it files for an extension and is granted an automatic extension to file tax returns, what is the extended tax return date and when should taxes be paid?

To prevent triple taxation, a corporation is entitled to deduct 50 percent of the dividends received from other domestic corporations.

If the shareholders of an S corporation voluntarily revoke the corporation's S corporation status in the sixth month of the tax year and the revocation does not specify a prospective revocation date, the corporation is a regular corporation for that tax year.

Which of the following is not a requirement for qualification as an S corporation?

S corporations pay taxes at a higher rate than do regular corporations.

The Sapote Corporation is a manufacturing corporation. The corporation has accumulated earnings of $450,000 and the corporation cannot establish a reasonable business need for any of that amount. What is the amount of the accumulated earnings tax, if any, that will be imposed on the corporation?

Which of the following companies is taxed at a flat rate of 35 percent?

The corporate alternative minimum tax rate is 28 percent.

The Cat Corporation had $20,000 of book income in the current year. The following is a list of differences between federal and book income and expenses: Based on the above information, calculate the Cat Corporation's federal taxable income for the year. Show your calculations.

What is the purpose of Schedule M-1?

Rex and Marsha each own 50 percent of the Grandiflora Corporation, an S corporation with a calendar tax year. At the beginning of the tax year, Marsha and Rex both have a basis in the stock of the corporation of $25,000. On June 30, 2015, Rex sells his interest in the corporation to George for $200,000, and for 2015 the Grandiflora Corporation has a loss of $90,000. a.Calculate the amount of the corporation's loss that may be deducted by Rex on his 2015 tax return. b.Calculate the amount of the corporation's loss that may be deducted by George on his 2015 tax return. c.Calculate the amount of the corporation's loss that may be deducted by Marsha on her 2015tax return.

In general, estimated payments for calendar-year corporations are due on:

Brokers' fees incurred in the issuance of a corporation's stock are considered organizational expenditures.

The Peach Corporation is a regular corporation that contributes $25,000 cash to qualified charitable organizations during the current year. The corporation has net taxable income of $190,000 before deducting the contributions. a.​ What is the amount of Peach Corporation's allowable deduction for charitable contributions for the current year? b.What may the corporation do with any excess amount of contributions?

The original due date for a tax return of a corporation with a calendar tax year-end falls before the original due date of a return for an individual taxpayer with the same tax year.

During 2015, the Squamata Corporation, a regular C corporation, has $30,000 in ordinary income, a long-term capital loss of $20,000, and a short-term capital gain of $10,000. a.Calculate the Squamata Corporation's tax liability for 2015. b.​ Explain the nature and amount of any carrybacks or carryforwards that the corporation is entitled to use.

What is the maximum amount of accumulated earnings that a corporation is allowed to accumulate, without regard to business needs, before the accumulated earnings tax is imposed?

Capital losses of a corporation must be used to offset capital gains and net capital losses may not be deducted from the ordinary income of a corporation.