Exam 11: The Corporate Income Tax

The original due date for a tax return of a corporation with a calendar tax year-end falls before the original due date of a return for an individual taxpayer with the same tax year.

The income of an S corporation is computed in much the same manner as that of a partnership.

Roberta and Sally formed the Alder Corporation on October 1,2013.On the same date,Roberta paid $75,000 cash to Alder Corporation for 750 shares of the corporation's common stock.Simultaneously,Sally received 100 shares of Alder Corporation's stock for services rendered.How much should Sally include in her taxable income for 2013,and what will be the basis of her Alder Corporation stock? Taxable Income $\quad$ Basis of Stock

Which of the following is not an adjustment or tax preference item for the corporate alternative minimum tax?

Which of the following is true with respect to capital gains and losses of a corporation?

Corporations are granted favorable tax treatment for short-term capital losses.

Which of the following statements is true of corporations?

For the year ended December 31,2013,Prunus,Inc. ,reported net income before federal income tax expense of $900,000 per the corporation's books.This figure included the following items: Interest income on tax-exempt municipal securities \ 30,000 Loss on sale of 1 and acquired in 1985 as an investment \ 40,000 Interest expense on loan to purchase tax-exemptmunicipal securities \1 6,000 What is the taxable income of Prunus,Inc.for 2013?

To prevent triple taxation,a corporation is entitled to deduct 50 percent of the dividends received from other domestic corporations.

What is the purpose of Schedule M-1?

Is it correct to state that the maximum corporate tax rate is 35 percent? Please describe the structure of the corporate tax rate schedule in your answer.

Corporations are not allowed to amortize the costs of organizing the corporation.

During 2013,the Melaleuca Corporation received dividends from 50-percent-owned domestic corporations in the amount of $100,000. a.Assuming that in addition to the dividend income the corporation has gross income from operations of $250,000 and deductible operating expenses of $210,000,calculate the amount of the corporation's dividends received deduction for 2013. b.If,instead of $250,000 in gross income from operations,the corporation has $200,000 in gross income from operations and the same amount of dividends and expenses,calculate the amount of the corporation's dividends received deduction for 2013.

The Guava Corporation has book net income of $90,000 for 2013.Included in this figure are the following items which are reported on the corporation's Schedule M-1,Reconciliation of Income Loss)per Books with Income per Return. 1. Federal income tax expense \2 2,000 2. Depreciation deducted on books, not deductible for tax purposes \5 ,000 3. Deduction for 50 percent of meal s and entertainment expense not allowed for tax purposes \3 ,000 4. Deduction for payroll tax penalties not allowed for tax purposes \2 ,000 5. Tax exempt interest income included in book income but not in tax return income \1 0,000 Based on the above information,calculate the Guava Corporation's taxable income for the year.Show your calculations.

Terry forms the Camphor Corporation during 2013.She transfers property with a value of $700,000 to Camphor Corporation in exchange for 100 percent of the stock in the corporation.Terry's basis in the property transferred was $350,000 and the corporation assumed a $250,000 mortgage on the property.If the fair market value of the stock received by Terry is $450,000,what is the corporation's basis in the property received from Terry?

Capital losses of a corporation must be used to offset capital gains and net capital losses may not be deducted from the ordinary income of a corporation.

Which of the following is false in regards to filing requirements?

Which of the following statements is not true of S corporations?