Exam 10: Taxation of Corporations

Solvay Corporation owns 15 percent of Wooster Corporation. Wooster pays Solvay a $20,000 dividend. Wooster's taxable income, including the dividend but before the dividend received deduction, is $18,000. What is Solvay's income tax liability?

What is meant by attribution of stock ownership?

In 2018, the corporate tax rate is:

Jude received a $25,000 distribution from BC Corporation that the corporation identified as $15,000 dividend and $10,000 return of capital. What effect does this distribution have on Jude's taxable income if his basis in the stock of BC is $8,000?

BarBRanch has had taxable income of $450,000, $570,000, $760,000 and $680,000 in years 2015 through 2018, respectively. What were the equal minimum quarterly estimated tax payments for 2018 that BarBRanch should have made in 2018 to avoid any penalty?

Walker Corporation issues one right to purchase one share of preferred stock at $90 for each ten shares of common stock owned by a shareholder. Seth owns 200 shares of common stock and receives 20 rights. The rights can be exercised anytime during the next 6 months. On the date of issuance of the stock rights, the common stock is selling for $14 per share and the rights are selling for $10 each. Seth has a total basis in the 200 common shares of $600 and elects to allocate basis to the rights. If Seth sells the 20 rights for $600 five months after they are received, what is his realized gain?

If property is distributed to a shareholder as a dividend, the dividend is equal to the property's fair market value.

Vista Corporation, which has current earnings and profits (CE&P) of $10,000 and accumulated earnings and profits (AE&P) of $30,000, makes a $43,000 distribution to its sole shareholder, Julie, at the end of the current year. Julie has a basis in her Vista stock of $2,000. What is the amount of taxable income Julie must report from the Vista distribution?

Corporation P owns 85 percent of Corporation S1; Corporation S1 owns 60 percent of Corporation S2; Corporation S2 owns 90 percent of S3; Corporation S3 owns 60 percent of Corporation S4 and 15 percent of Corporation S2; Corporation S4 owns 100 percent of Corporation S5. Identify the consolidated group(s) of corporations.

Alpha Corporation's adjusted taxable income is $100,000 for 2017 and $200,000 for 2018. Alpha makes charitable contributions of $15,000 in 2017 and $19,000 in 2018. How much can Alpha carry forward for its charitable contributions in computing its 2019 taxable income?

Which of the following is an indication of the accumulation of earnings and profits beyond the reasonable needs of the business?

A partial liquidation occurs when only a few of a corporation's shareholders have their stock redeemed by a corporation.

The outstanding stock of Riccardo Corporation is owned as follows: Robert owns 50% of RMD, Inc. stock. The rest of RMD, Inc. stock is owned by unrelated parties. Riccardo Corporation redeems 90 of Robert's shares of stock for $9,000 in the only redemption transaction this year. Robert's basis for his stock is $10 per share (100 shares @ $10 = $1,000). Riccardo Corporation has $300,000 in E&P. What is Robert's total basis in his remaining 10 shares of stock after the redemption?

The unextended due date for a corporate tax return is the 15^th day of the fourth month after the close of its tax year.

A corporation that owns 72 percent of all the outstanding stock of another corporation:

A corporation has a July 30 year end. What is the last date it can file its return due for its July 30, 2018 year end if it files an extension?

Cloud Corporation has a taxable income of $100,000 in 2018 along with a $30,000 general business credit. What is the amount of its credit carryover and the last year to which the carryover could be used?

The GGH Corporation, a calendar-year, accrual-basis corporation, has $400,000 of gross receipts and $320,000 of expenses from its service business. In addition, it has $5,000 of tax-exempt interest income, $20,000 of dividends from an affiliated corporation, a $10,000 short-term capital loss, and authorized a charitable contribution of $15,000 on December 15, which it paid on March 31 of the next tax year. What is GGH's taxable income and income tax liability for the current tax year?

The outstanding stock of Riccardo Corporation is owned as follows: Robert owns 50% of RMD, Inc. stock. The rest of RMD, Inc. stock is owned by unrelated parties. Riccardo Corporation redeems 90 of Kyle's shares of stock for $9,000 in the only redemption transaction this year. Kyle's basis for his stock is $10 per share. Riccardo Corporation has $300,000 in E&P. How much capital gain or dividend income does Kyle recognize as a result of this redemption?

Monroe Corporation reported the following results for the current year: In addition to the above, Monroe Corporation has a $5,000 NOL carryforward from last year. How much can Monroe Corporation take as a dividend received deduction for the current year?