Question 1

The corporate tax rates favor large corporations.

Accepted Answer

A) True 
 B)False

Question 2

Harry forms the Nectarine Corporation during the 2013 tax year.To form the corporation,Harry transfers assets having a fair market value of $650,000 to Nectarine Corporation for 100 percent of the corporation's stock.Harry's adjusted basis in the assets transferred was $350,000 and Nectarine Corporation assumed a $200,000 mortgage on the assets.If the fair market value of the stock received by Harry is $450,000,what is his basis in the stock received from the corporation?

Accepted Answer

A) $150,000 
B) $200,000 
C) $350,000 
D) $450,000 
E) None of the above 
A) $150,000 
B) $200,000 
C) $350,000 
D) $450,000 
E) None of the above

Question 3

For the year ended June 30,2013,the Rosaceae Corporation,a regular C corporation,has a long-term capital loss of $25,000.
a.Assuming that in addition to the capital loss,the corporation has taxable income,before capital gains and losses,of $20,000 for 2013,calculate the corporation's tax liability before any credits.
b.Assuming that in addition to the long-term capital loss of $25,000 the corporation has taxable income,before capital gains and losses,of $100,000 and a short-term capital gain of $10,000 for 2013,calculate the corporation's tax liability before any credits.

Accepted Answer

a. <

Question 4

In 2013,Apricot Corporation had taxable income of $120,000.Included in taxable income was a $10,000 capital gain.The $120,000 of taxable income does not include a $15,000 capital loss carryforward available from the previous year.What is Apricot Corporation's 2013 income tax liability before any tax credits?

Accepted Answer

A) $24,200 
B) $26,150 
C) $28,550 
D) $30,050 
E) None of the above 
A) $24,200 
B) $26,150 
C) $28,550 
D) $30,050 
E) None of the above

Question 5

Which of the following corporations is allowed to make an S corporation election?

Accepted Answer

A) A small U.S.owned and operated company with two individual owners. 
B) A U.S.corporation owned by a Brazilian corporation. 
C) A U.S.owned and operated corporation with 7,000 separate shareholders. 
D) None of the above could be an S corporation. 
A) A small U.S.owned and operated company with two individual owners. 
B) A U.S.corporation owned by a Brazilian corporation. 
C) A U.S.owned and operated corporation with 7,000 separate shareholders. 
D) None of the above could be an S corporation.

Question 6

Calculate the corporate tax liability in each of the following circumstances:
a.X Corporation has taxable income of $250,000 for its 2013 calendar tax year.
b.Y Corporation has $1,500,000 in taxable income for 2013.
c.Z Corporation has taxable income of $100,000,before capital gains and losses,a short-term capital loss of $30,000,and a long-term capital gain of $10,000 in 2013.

Accepted Answer

a. $80,7

Question 7

Ashwood Corporation has been in business for 20 years.For the previous 3 years,Ashwood Corporation had annual gross receipts of $3.3 million,$4.2 million and $5.4 million,respectively.For alternative minimum tax purposes,is Ashwood Corporation a small corporation? Give your reasoning and/or the calculation that you based your answer on.Also,why does it matter if they are a small corporation?

Accepted Answer

Yes,since their average gross receipts f

Question 8

Ficus,Inc.began business on April 1,2013,and elected to file its income tax return on a calendar-year basis.The corporation incurred $600 in organizational expenditures.Assuming the corporation does not elect to expense but chooses to amortize the costs over 180 months,the maximum allowable deduction for amortization of organizational expenditures in 2013 is:

Accepted Answer

A) $20 
B) $21.67 
C) $30 
D) $40 
E) None of the above 
A) $20 
B) $21.67 
C) $30 
D) $40 
E) None of the above

Question 9

Corporations may be subject to the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 10

Rob,Bill,and Steve form Big Company.Rob performs $45,000 of services for his shares of the company.Bill transferred property with a basis of $5,000 for $75,000 of stock.Steve contributes cash of $100,000 for his shares.Which of the three must recognize income in the year of the formation?

Accepted Answer

A) Rob 
B) Rob,Bill,Steve 
C) Bill 
D) Steve,Bill 
E) Steve,Rob 
A) Rob 
B) Rob,Bill,Steve 
C) Bill 
D) Steve,Bill 
E) Steve,Rob

Question 11

Schedule M-1 on Form 1120 shows the reconciliation of a corporation's tax liability to the tax expense on the corporation's books.

Accepted Answer

A) True 
 B)False

Question 12

The Heal Yourself Health Care Corporation,a service corporation,has accumulated earnings of
$375,000 and the corporation can establish a reasonable need for $125,000.Calculate the amount of the accumulated earnings tax,if any,that will be imposed on the corporation.

Accepted Answer

$33,750 =

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A corporation may carry forward capital losses for an indefinite period.

Accepted Answer

A) True 
 B)False

Question 15

The accumulated earnings tax will not be imposed on accumulations that can be shown to be necessary to meet the reasonable needs of the business.

Accepted Answer

A) True 
 B)False

Question 16

The accumulated earnings tax is designed to prevent shareholders from avoiding the individual income tax.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) An auto parts manufacturing corporation with taxable income of $73,000. 
B) A consulting corporation of owner-employee CPAs with taxable income of $1,000,000. 
C) A family-owned shoe store with earnings of $224,000 in 2013. 
D) All of the above are taxed at a flat rate of 35 percent. 
A) An auto parts manufacturing corporation with taxable income of $73,000. 
B) A consulting corporation of owner-employee CPAs with taxable income of $1,000,000. 
C) A family-owned shoe store with earnings of $224,000 in 2013. 
D) All of the above are taxed at a flat rate of 35 percent.

Question 18

ABC Company owns 40 percent of JMT Company and 95 percent of DEM Company.JMT pays a $100,000 dividend to ABC and DEM pays a $40,000 dividend to ABC in 2013.Assuming that ABC has
$1,000,000 of taxable income,calculate ABC's dividends received deduction for 2013.

Accepted Answer

A) $120,000 
B) $132,000 
C) $140,000 
D) $112,000 
E) None of the above is correct 
A) $120,000 
B) $132,000 
C) $140,000 
D) $112,000 
E) None of the above is correct

Question 19

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business,assuming their total organizational expenses do not exceed $50,000.

Accepted Answer

A) True 
 B)False

Question 20

Corporations pay a flat 30 percent federal income tax.

Accepted Answer

A) True 
 B)False

The corporate tax rates favor large corporations.

Which of the following corporations is allowed to make an S corporation election?

Corporations may be subject to the alternative minimum tax.

Rob,Bill,and Steve form Big Company.Rob performs $45,000 of services for his shares of the company.Bill transferred property with a basis of $5,000 for $75,000 of stock.Steve contributes cash of $100,000 for his shares.Which of the three must recognize income in the year of the formation?

Schedule M-1 on Form 1120 shows the reconciliation of a corporation's tax liability to the tax expense on the corporation's books.

The Heal Yourself Health Care Corporation,a service corporation,has accumulated earnings of $375,000 and the corporation can establish a reasonable need for $125,000.Calculate the amount of the accumulated earnings tax,if any,that will be imposed on the corporation.

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

A corporation may carry forward capital losses for an indefinite period.

The accumulated earnings tax will not be imposed on accumulations that can be shown to be necessary to meet the reasonable needs of the business.

The accumulated earnings tax is designed to prevent shareholders from avoiding the individual income tax.

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

ABC Company owns 40 percent of JMT Company and 95 percent of DEM Company.JMT pays a $100,000 dividend to ABC and DEM pays a $40,000 dividend to ABC in 2013.Assuming that ABC has $1,000,000 of taxable income,calculate ABC's dividends received deduction for 2013.

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business,assuming their total organizational expenses do not exceed $50,000.

Corporations pay a flat 30 percent federal income tax.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

Tax Administration and Tax Planning

Filters

Exam 11: The Corporate Income Tax

The corporate tax rates favor large corporations.

Which of the following corporations is allowed to make an S corporation election?

Corporations may be subject to the alternative minimum tax.

Rob,Bill,and Steve form Big Company.Rob performs $45,000 of services for his shares of the company.Bill transferred property with a basis of $5,000 for $75,000 of stock.Steve contributes cash of $100,000 for his shares.Which of the three must recognize income in the year of the formation?

Schedule M-1 on Form 1120 shows the reconciliation of a corporation's tax liability to the tax expense on the corporation's books.

The Heal Yourself Health Care Corporation,a service corporation,has accumulated earnings of $375,000 and the corporation can establish a reasonable need for $125,000.Calculate the amount of the accumulated earnings tax,if any,that will be imposed on the corporation.

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

A corporation may carry forward capital losses for an indefinite period.

The accumulated earnings tax will not be imposed on accumulations that can be shown to be necessary to meet the reasonable needs of the business.

The accumulated earnings tax is designed to prevent shareholders from avoiding the individual income tax.

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

ABC Company owns 40 percent of JMT Company and 95 percent of DEM Company.JMT pays a $100,000 dividend to ABC and DEM pays a $40,000 dividend to ABC in 2013.Assuming that ABC has $1,000,000 of taxable income,calculate ABC's dividends received deduction for 2013.

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business,assuming their total organizational expenses do not exceed $50,000.

Corporations pay a flat 30 percent federal income tax.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

Tax Administration and Tax Planning

Filters