Exam 11: The Corporate Income Tax

Which of the following items is not generally a schedule M-1 adjustment?

For its year ended December 31,2013,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 2013,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 2013,each shareholder should report:

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?

An S corporation files a Form 1120S.

During the current year,The Jupiter Company,which is an S corporation,had the following items of income and expenses: Gross income from operations \ 135,000 Gain on sale of business assets \ 5,000 Qualified dividend income from investments \ 100 Deductions: Salaries to employees \ 65,000 Payroll taxes \ 5,000 Rent \ 7,000 Depreciation \ 3,500 Contributions to United Way charity \ 2,000 Foreign tax paid on overseas business deals \ 3,000 Distributions to the shareholders \ 40,000 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?

A corporation must reconcile,to the IRS's satisfaction,the differences between net income as shown on the company's books and taxable income before special deductions and net operating losses)as shown on the tax return.

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

On July 1,2013,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?

For 2013,the Beech Corporation has net income on its books of $60,000,including the following items: Net capital losses $\quad$$\quad$$\quad$$\quad$$\$ 10,000$ Federal income tax expense $\quad \$ 25,000$ Federal tax depreciation exceeds the depreciation deducted on the books by $5,000.What is the corporation's taxable income?

A corporation owning 80 percent or more of the stock of another corporation has a dividends received deduction of 100 percent.

Choose the correct statement:

The Birch Corporation has regular taxable income of $85,000 and a regular tax liability of $17,150.The corporation also has $45,000 of tax preference items.Calculate Birch Corporation's alternative minimum tax liability.Assume that the Birch Corporation is not a "small corporation."

A regular corporation with excess charitable contributions may carry the excess forward to the 5 succeeding tax years.

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

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

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?

The Bay Fig Corporation has $350,000 of taxable income from operations for 2013,and dividends of $100,000 received from 30 percent-owned domestic corporations.How much is the Bay Fig Corporation's dividends received deduction for 2013?

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: Federal income tax expense deducted for books \4 ,400 Depreciation deducted on books \3 ,000 Depreciation deducted on tax return \1 4,000 50 percent of meals expense not allowed as an expense for taxes \2 ,000 Charitable contributions carried over from prior years and deducted on the current year tax return \2 ,300 Current year taxable gain on an installment sale which was reported on the books in a previous year \5 ,000 Prepaid interest not deductible in the current year for tax purposes but claimed as a deduction for book income purposes \1 0,000 Nondeductible club dues \1 ,000 Based on the above information,calculate the Cat Corporation's federal taxable income for the year.Show your calculations.

For 2013,what is the maximum tax rate for personal service corporations?

Fran,George,and Helen form FGH Corporation.In exchange for 300 shares of stock of the corporation,Fran contributes property with a basis of $15,000,fair market value of $50,000 and subject to a liability of $20,000 which the corporation assumed.George contributes property with a basis of $20,000,fair market value of $30,000 in exchange for 250 shares of stock of the corporation with a value of $25,000 plus $5,000 cash.Helen performs services for the corporation and receives $2,000 worth of stock 20 shares)in exchange for the services. a.What is the amount of Fran's recognized gain or loss on the transaction? b.What is Fran's basis in the stock of the corporation? c.What is the corporation's basis in the property received from Fran? d.What is the amount of George's recognized gain or loss on the transaction? e.What is George's basis in the stock of the corporation?