Exam 10: Taxation of Corporations

What are the minimum and maximum corporate tax rates excluding surtaxes for tax year 2017? How does your answer change for 2018?

A corporation can elect to carry a capital loss back first to the third preceding tax year before it is carried forward five years; alternatively, it can elect to only carry the capital loss forward.

In determining consolidated net income, each corporation first must compute separate taxable income.

What is the amount of the exemption an exempt organization is permitted for unrelated business income?

What is JJ Corporation's balance in accumulated earnings and profits at the beginning of year 2 if in year 1 it made a $40,000 distribution to its shareholders, its current earnings and profits was $35,000, and its accumulated earnings and profits was $25,000 at the beginning of year 1?

The Schedule L of Form 1120 is a corporate balance sheet as determined by the tax laws.

Indicate by I if the following is an increase in taxable income to determine current earnings and profits or D if it is a decrease in taxable income in determining current earnings and profits. -Corporate charitable contributions in excess of 10 percent limit. b. A fine for monopolistic practices c. Net operating loss carryovers d. Life insurance proceeds e. Expenses related to tax-exempt income f. Capital loss carryovers g. Dividends received deduction h. Federal income tax refunds i. Disallowed losses on sales to related parties j. Section 179 expense in excess of allowable depreciation

What is a corporate redemption?

Fernando was a one-third shareholder in Rodriguez, Inc. prior to its liquidation in March. Fernando's basis in his Rodriguez stock was $50,000. In March, Rodriguez distributed property worth $125,000 (basis $80,000) in complete liquidation of Fernando's Rodriguez shares. Fernando took the property subject to a $30,000 liability. How much taxable gain must Fernando recognize upon receipt of the property from Rodriguez?

What are the ownership requirements for filing a consolidated return?

An individual shareholder may receive sale treatment on a corporate redemption if the shareholder has all of his or her stock redeemed and no related parties own any of the same corporation's stock.

What type of organization is always a private foundation?

A corporate net operating loss incurred in 2017 can be carried forward for twenty years after being carried back two years.

What is JEB Corporation's taxable income and income tax if it has gross sales revenue of $3,000,000, cost of sales of $1,800,000, other expenses of $1,100,000, dividend income of $20,000 (10 percent ownership) and a charitable contribution of $25,000?

In 2017, the tax rate on corporate income from $100,000 to $335,000 is a rate higher than for any other increment of corporate income. In 2018, the corporate tax rate is a flat tax rate.

The following shareholders own the outstanding stock of Garcia Corporation: Ryan is a 25% partner in AG Partnership. Ryan also is a 55% shareholder in XYZ, Inc. and a 40% shareholder in RST, Inc. How many shares does Ryan constructively (directly and indirectly) own?

Why is preferred stock so named?

A corporation that only has accumulated earnings and profits cannot make a dividend distribution.

A controlled corporate group can consist of a parent and subsidiary or two corporations owned by the same individual.

What is a major advantage of the corporate form for owner-employees?