Question 1

The dividends received deduction cannot cause a net operating loss.The deduction can reduce income to zero but not below zero.

Accepted Answer

A) True 
 B)False

Question 2

Netgate Corporation's gross regular tax liability for the year was $95,375.What was its taxable income? Note: New Corporate income tax rate has been mentioned as "21% on all taxable income" as per the recent change.

Accepted Answer

$454,167=

Question 3

Jazz Corporation owns 50 percent of Williams Corp.'s stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Accepted Answer

A) $0. 
B) $5,000. 
C) $6,500. 
D) $10,000. 
A) $0. 
B) $5,000. 
C) $6,500. 
D) $10,000.

Question 4

Inez transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under section 351.The corporation assumed a liability of $50 on the property transferred.What is the corporation's tax basis in the property received in the exchange?

Accepted Answer

A) $150. 
B) $200. 
C) $250. 
D) $300. 
A) $150. 
B) $200. 
C) $250. 
D) $300.

Question 5

BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year.What is the nature of the book-tax difference created by the net operating loss carryover deduction in the current year?

Accepted Answer

A) Permanent; favorable. 
B) Permanent; unfavorable. 
C) Temporary; favorable. 
D) Temporary; unfavorable. 
A) Permanent; favorable. 
B) Permanent; unfavorable. 
C) Temporary; favorable. 
D) Temporary; unfavorable.

Question 6

Which of the following statements regarding capital gains and losses is false?

Accepted Answer

A) In terms of tax treatment, corporations generally prefer capital gains to ordinary income. 
B) Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year. 
C) Corporations can carry back net capital losses three years and they can carry them forward for five years. 
D) Corporations must apply capital loss carrybacks and carryovers in a particular order. 
A) In terms of tax treatment, corporations generally prefer capital gains to ordinary income. 
B) Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year. 
C) Corporations can carry back net capital losses three years and they can carry them forward for five years. 
D) Corporations must apply capital loss carrybacks and carryovers in a particular order.

Question 7

US Sys Corporation received $250,000 in death benefits after its CEO (a key employee)died (it included this amount in book income).For book purposes, US Sys also expensed life insurance premiums for other key employees in the amount of $20,000.In addition, for book purposes, it expensed $10,000 of meal expense.What is the total book-tax difference associated with these items? Is it favorable or unfavorable? What amount of the book-tax difference is temporary and what amount is permanent?

Accepted Answer

$225,000 favorable,

Question 8

Maria defers $100 of gain realized in a section 351 transaction.The stock she receives in the exchange has a fair market value of $500.Maria's tax basis in the stock will be $400.

Accepted Answer

A) True 
 B)False

Question 9

In contrast to an individual, a corporation may deduct the entire amount of a net capital loss.

Accepted Answer

A) True 
 B)False

Question 10

Jazz Corporation owns 10 percent of Favors Corp.'s stock.Favors distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss)before the dividend was ($6,000).What is the amount of Jazz's dividends received deduction on the dividend it received from Favors Corp.?

Accepted Answer

A) $0. 
B) $4,000. 
C) $5,000. 
D) $6,500. 
E) None of the choices are correct. 
A) $0. 
B) $4,000. 
C) $5,000. 
D) $6,500. 
E) None of the choices are correct.

Question 11

Which of the following statements best describes the tax results to a shareholder in a section 351 transaction when liabilities on property transferred to the corporation are assumed by the corporation?

Accepted Answer

A) Liabilities assumed by a corporation on a section 351 transfer are always treated as boot. 
B) Liabilities assumed by a corporation on a section 351 transfer are never treated as boot. 
C) Liabilities assumed by a corporation on a section 351 transfer are treated as boot if the total liabilities assumed exceed the total basis of the assets transferred. 
D) Liabilities assumed by a corporation on a section 351 transfer are treated as boot if there is no business purpose for the assumption of the liabilities by the corporation. 
A) Liabilities assumed by a corporation on a section 351 transfer are always treated as boot. 
B) Liabilities assumed by a corporation on a section 351 transfer are never treated as boot. 
C) Liabilities assumed by a corporation on a section 351 transfer are treated as boot if the total liabilities assumed exceed the total basis of the assets transferred. 
D) Liabilities assumed by a corporation on a section 351 transfer are treated as boot if there is no business purpose for the assumption of the liabilities by the corporation.

Question 12

The definition of property as it relates to a section 351 transaction includes money.

Accepted Answer

A) True 
 B)False

Question 13

A corporation generally will report a favorable, temporary book-tax difference when it deducts a charitable contribution carryover.

Accepted Answer

A) True 
 B)False

Question 14

Corporations have a larger standard deduction than individual taxpayers because they generally have higher revenues.

Accepted Answer

A) True 
 B)False

Question 15

Bingo Corporation incurred a net operating loss in 2017.A portion of the loss carried over to 2019.Bingo can offset up to 100 percent of the corporation's taxable income in 2019.

Accepted Answer

A) True 
 B)False

Question 16

Pure Action Cycles Inc., a bicycle manufacturer, has a net capital loss in 2019 of $64,000.It had net capital gains of $21,500 in 2018, $45,000 in 2017, $0 in 2016, and $8,000 of net capital gain in 2015.What is the net capital gain in 2018 after the carryback is applied?

Accepted Answer

$2,500 net capital g

Question 17

Large corporations are allowed to use the cash method of accounting for at least the first two years of their existence.

Accepted Answer

A) True 
 B)False

Question 18

Keegan incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock.The property transferred to the corporation had the following fair market values and tax bases.
 
$\begin{array}{c}
\begin{array}{lll}
\
 \text {Inveritory}\
 \text {Building}\
 \text {Land}\
 \text {Total}
\end{array}
\begin{array}{l}
\text { FMV } \
\$ \quad 20,000 \
70,000 \
\underline{150,000}\
\$ \quad 240,000 
\end{array}
\begin{array}{rr}
\text { Tax Basis } \
\$ \quad 14,00 \
50,000 \
\underline{100,000} \
 \$ 164,00 
\end{array}
\end{array}$
 The fair market value of the corporation's stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Keegan.
What amount of gain or loss does Keegan realize on the transfer of the property to his corporation?

Accepted Answer

Gain reali

Question 19

The City of Boston made a capital contribution of land to Fenway Company as an inducement to the company to build a manufacturing plant in the city.The land was valued at $500,000 at the time of the contribution.What gain, if any, does Fenway recognize on the contribution and what is Fenway's basis in the land?

Accepted Answer

$500,000 income.$500,000 basis

Question 20

Corporations may carry excess charitable contributions forward five years, but they may not carry them back.

Accepted Answer

A) True 
 B)False

The dividends received deduction cannot cause a net operating loss.The deduction can reduce income to zero but not below zero.

Netgate Corporation's gross regular tax liability for the year was $95,375.What was its taxable income? Note: New Corporate income tax rate has been mentioned as "21% on all taxable income" as per the recent change.

Jazz Corporation owns 50 percent of Williams Corp.'s stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year.What is the nature of the book-tax difference created by the net operating loss carryover deduction in the current year?

Which of the following statements regarding capital gains and losses is false?

Maria defers $100 of gain realized in a section 351 transaction.The stock she receives in the exchange has a fair market value of $500.Maria's tax basis in the stock will be $400.

In contrast to an individual, a corporation may deduct the entire amount of a net capital loss.

Jazz Corporation owns 10 percent of Favors Corp.'s stock.Favors distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss)before the dividend was ($6,000).What is the amount of Jazz's dividends received deduction on the dividend it received from Favors Corp.?

Which of the following statements best describes the tax results to a shareholder in a section 351 transaction when liabilities on property transferred to the corporation are assumed by the corporation?

The definition of property as it relates to a section 351 transaction includes money.

A corporation generally will report a favorable, temporary book-tax difference when it deducts a charitable contribution carryover.

Corporations have a larger standard deduction than individual taxpayers because they generally have higher revenues.

Bingo Corporation incurred a net operating loss in 2017.A portion of the loss carried over to 2019.Bingo can offset up to 100 percent of the corporation's taxable income in 2019.

Pure Action Cycles Inc., a bicycle manufacturer, has a net capital loss in 2019 of $64,000.It had net capital gains of $21,500 in 2018, $45,000 in 2017, $0 in 2016, and $8,000 of net capital gain in 2015.What is the net capital gain in 2018 after the carryback is applied?

Large corporations are allowed to use the cash method of accounting for at least the first two years of their existence.

Corporations may carry excess charitable contributions forward five years, but they may not carry them back.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters

Exam 13: Corporate Formations and Operations

The dividends received deduction cannot cause a net operating loss.The deduction can reduce income to zero but not below zero.

Netgate Corporation's gross regular tax liability for the year was $95,375.What was its taxable income? Note: New Corporate income tax rate has been mentioned as "21% on all taxable income" as per the recent change.

Jazz Corporation owns 50 percent of Williams Corp.'s stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year.What is the nature of the book-tax difference created by the net operating loss carryover deduction in the current year?

Which of the following statements regarding capital gains and losses is false?

Maria defers $100 of gain realized in a section 351 transaction.The stock she receives in the exchange has a fair market value of $500.Maria's tax basis in the stock will be $400.

In contrast to an individual, a corporation may deduct the entire amount of a net capital loss.

Jazz Corporation owns 10 percent of Favors Corp.'s stock.Favors distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss)before the dividend was ($6,000).What is the amount of Jazz's dividends received deduction on the dividend it received from Favors Corp.?

Which of the following statements best describes the tax results to a shareholder in a section 351 transaction when liabilities on property transferred to the corporation are assumed by the corporation?

The definition of property as it relates to a section 351 transaction includes money.

A corporation generally will report a favorable, temporary book-tax difference when it deducts a charitable contribution carryover.

Corporations have a larger standard deduction than individual taxpayers because they generally have higher revenues.

Bingo Corporation incurred a net operating loss in 2017.A portion of the loss carried over to 2019.Bingo can offset up to 100 percent of the corporation's taxable income in 2019.

Pure Action Cycles Inc., a bicycle manufacturer, has a net capital loss in 2019 of $64,000.It had net capital gains of $21,500 in 2018, $45,000 in 2017, $0 in 2016, and $8,000 of net capital gain in 2015.What is the net capital gain in 2018 after the carryback is applied?

Large corporations are allowed to use the cash method of accounting for at least the first two years of their existence.

Corporations may carry excess charitable contributions forward five years, but they may not carry them back.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters