Exam 10: Taxation of Corporations

Maui Corporation makes two distributions during the current tax year-the first for $20,000 on February 1 and the second for $30,000 on August 1. Before consideration of the distributions, the corporation has $18,000 in current earnings and profits and $21,000 of accumulated earnings and profits. How much of the second distribution is taxable as a dividend?

A sole shareholder receives a piece of land from a corporation as a dividend distribution. The land has a basis of $40,000 and a fair market value of $80,000; the shareholder's basis in his stock is $20,000, and this distribution is the only corporate activity for the year except for paying any tax owed on the land distribution. At the beginning of the year, the corporation had only $5,000 in accumulated earnings and profits. How will this distribution be treated for tax purposes by the shareholder?

Regular corporations are free to choose any fiscal or calendar year as their tax year.

All corporations whose income tax liability is less than $1,000,000 in the current year can avoid an underpayment penalty if each of their estimated tax payments is 25 percent or more of their immediately preceding tax year's tax liability.

An exempt organization will not be assessed an unrelated business income tax if:

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. What is Kyle's total basis in his remaining 10 shares of stock after the redemption?

Borneo Corporation has $21,000 in current earnings and profits and $5,000 of accumulated earnings and profits. Borneo distributes $20,000 of income to its shareholders on June 15 and another $10,000 on December 15. How much of the December 15 distribution is taxable as a dividend?

Which of the following is not a characteristic of a corporation?

A large corporation had a net long-term capital loss in 2018 and net operating loss in 2018. What are the earliest year(s) to which these losses can be carried?

How does a corporation treat a net short-term capital loss realized in the current year?

What is the result of a corporation's distribution of appreciated or depreciated property as a dividend?

A corporation has $400,000 of before-tax book income. In determining this, the corporation included $50,000 from an insurance policy paid because of the controller's death, $4,000 of premiums on other key-person life insurance policies, $10,000 interest on State of Nevada bonds, an addition of $15,000 to its bad debt reserves (bad debt expense was $20,000), and book depreciation of $34,000. The corporation's tax depreciation is $29,000. Calculate the corporation's taxable income.

Monroe Corporation reported the following results for the current year: Included in the above is $5,000 of qualified production activities income. In addition, Monroe Corporation has a $5,000 NOL carryforward from last year. How much can Monroe Corporation take as a charitable contribution deduction in the current year?

Joe owns 40 percent of the stock of AD Corporation's 2,000 outstanding shares. If Joe sells some stock back to the corporation, what is the maximum percentage of ownership that Joe can have of the outstanding stock after the sale to qualify for capital gain treatment rather than having dividend income?

What is the minimum number of individuals who must own a corporation for it to avoid meeting the personal holding company designation?

The accumulated earnings tax and the personal holding company tax can both apply to a corporation in place of the regular corporate income tax.

For 2017, the corporate alternative minimum tax was paid in addition to the regular corporate income tax.

Molokai Corporation distributed a building valued at $45,000 (basis of $20,000) to its sole shareholder. What is the effect of this distribution on the corporation's taxable income?

What is Gigantic Corporation's net tax liability if its taxable income is $325,000 and it has a general business credit of $125,000?

Corporation A owns 50 percent of the voting stock of Corporation B. What is the minimum amount of stock that Corporation A must acquire in Corporation B to allow the two corporations to file a consolidated return.