Question 1

Which of the following statements regarding a corporation's overall accounting method is true?

Accepted Answer

A) If a corporation's average gross receipts for 2016-2018 are $26,500,000, the corporation is required to use the accrual method of accounting in 2019. 
B) If a corporation's first year of existence is 2018 and the corporation's gross receipts in 2018 are $29 million, the corporation is required to use the accrual method of accounting in 2019. 
C) Both of these are true statements. 
D) Neither of these are true statements. 
A) If a corporation's average gross receipts for 2016-2018 are $26,500,000, the corporation is required to use the accrual method of accounting in 2019. 
B) If a corporation's first year of existence is 2018 and the corporation's gross receipts in 2018 are $29 million, the corporation is required to use the accrual method of accounting in 2019. 
C) Both of these are true statements. 
D) Neither of these are true statements.

Question 2

Webtel Corporation donated $50,000 to a qualifying charity.For the year, it reported taxable income of $310,000, which included the following: the $50,000 charitable contribution (before limitation), a $100,000 dividends received deduction, and a $20,000 net operating loss carryover.What is Webtel Corp's charitable contribution deduction?

Accepted Answer

$46,000, c

Question 3

Calendar-year corporations that request an extension for filing their tax returns will have an extended tax return due date of October 15.

Accepted Answer

A) True 
 B)False

Question 4

A taxpayer always will have a tax basis in boot received in a section 351 transaction equal to its fair market value.

Accepted Answer

A) True 
 B)False

Question 5

Francine incorporated her 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.
 $\begin{array}{c}
\begin{array}{lll}
\
\text {Inventory}\
\text {Building}\
\text {Land}\
\text {Total}
\end{array}
\begin{array}{rr}
\text {FMV }\
\$ \quad 30,000 \
130,000 \
\underline{50,000}\
\underline{\$\quad 210,000} 
\end{array}
\begin{array}{cc}
 \text { Tax Basis } \
\$ \quad 10,000 \
80,000 \
 \underline{100,00 }\
\underline{\$ \quad 190,000} 
\end{array}
\end{array}$
 The corporation also assumed a mortgage of $60,000 attached to the building and land.The fair market value of the corporation's stock received in the exchange was $150,000.
a.What amount of gain or loss does Francine realize on the transfer of the property to her corporation?
b.What amount of gain or loss does Francine recognize on the transfer of the property to her corporation?
c.What is Francine's basis in the stock she receives in her corporation?

Accepted Answer

a.$20,000
 @#IMG-DLM& b.Francine does not recogniz

Question 6

During the year, AutoUSA Inc.received $4,600,000 of book income, including $20,000 of interest income from tax-exempt municipal bonds.AutoUSA reported $3,600,000 of regular business expenses.If it made $200,000 of estimated tax payments (prepayments)throughout the tax year, what is its tax due or tax refund when it files its return?

Accepted Answer

The answer of During the year, AutoUSA Inc.received $4,600,000 of...

Question 7

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior-year tax liability (which was very low but above zero)to determine its quarterly estimated payments this year.Which of the following statements is true?

Accepted Answer

A) Rapidpro may use the prior-year tax liability to determine its first- and second-quarter estimated tax payments only since it is a large corporation. 
B) To avoid penalty, the second-quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first-quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
C) To avoid penalty, the third-quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third-quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
D) None of these choices are true. 
A) Rapidpro may use the prior-year tax liability to determine its first- and second-quarter estimated tax payments only since it is a large corporation. 
B) To avoid penalty, the second-quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first-quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
C) To avoid penalty, the third-quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third-quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
D) None of these choices are true.

Question 8

Which of the following does NOT create a permanent book-tax difference?

Accepted Answer

A) Organizational and start-up expenses. 
B) Entertainment expenses. 
C) Fines and penalties expenses. 
D) Municipal bond interest income. 
A) Organizational and start-up expenses. 
B) Entertainment expenses. 
C) Fines and penalties expenses. 
D) Municipal bond interest income.

Question 9

Which of the following statements regarding net operating losses is true?

Accepted Answer

A) A corporation can carry a net operating loss incurred in 2017 forward indefinitely. 
B) A corporation can carry forward a net operating loss incurred in 2019 to 2020 but it may offset only 80 percent of taxable income (before the NOL deduction)in 2020. 
C) When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover. 
D) None of these is a true statement. 
A) A corporation can carry a net operating loss incurred in 2017 forward indefinitely. 
B) A corporation can carry forward a net operating loss incurred in 2019 to 2020 but it may offset only 80 percent of taxable income (before the NOL deduction)in 2020. 
C) When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover. 
D) None of these is a true statement.

Question 10

For corporations, which of the following regarding net capital losses is true?

Accepted Answer

A) A corporation that experiences a net capital loss has a favorable book-tax difference in the year of the loss. 
B) A corporation that experiences a net capital loss in year 4 first carries the loss back to year 3, then year 2, and then year 1 before carrying it forward. 
C) Net capital loss carrybacks are deductible in determining a corporation's net operating loss. 
D) Net capital loss carrybacks and carryovers create temporary book-tax differences if they are used before they expire. 
A) A corporation that experiences a net capital loss has a favorable book-tax difference in the year of the loss. 
B) A corporation that experiences a net capital loss in year 4 first carries the loss back to year 3, then year 2, and then year 1 before carrying it forward. 
C) Net capital loss carrybacks are deductible in determining a corporation's net operating loss. 
D) Net capital loss carrybacks and carryovers create temporary book-tax differences if they are used before they expire.

Question 11

For tax purposes, companies using nonqualified stock options deduct expenses in the year the options are exercised.

Accepted Answer

A) True 
 B)False

Question 12

In 2019, Smith Traders Inc.reported a net operating loss of $100,000.In 2020, before the NOL deduction, it reported taxable income of $50,000.What is Smith Traders' 2020 taxable income after the NOL deduction and what is its NOL carryover to 2021?

Accepted Answer

$40,000 taxable income; $60,000 carryove

Question 13

Net capital loss carryovers, but not carrybacks, are deductible against capital gains in determining a corporation's net operating loss for the year.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation)by corporations is true?

Accepted Answer

A) Corporations may not carry over or carry back excess charitable contributions. 
B) Corporations can carry excess charitable contributions over to a future year or back to a prior year. 
C) Corporations can carry excess charitable contributions over to a future year but not back to a prior year. 
D) Corporations can carry excess charitable contributions back to a prior year but not over to a future year. 
A) Corporations may not carry over or carry back excess charitable contributions. 
B) Corporations can carry excess charitable contributions over to a future year or back to a prior year. 
C) Corporations can carry excess charitable contributions over to a future year but not back to a prior year. 
D) Corporations can carry excess charitable contributions back to a prior year but not over to a future year.

Question 15

AR Systems Inc.(AR)had $120,000 of tax liability last year.It anticipates a current-year tax liability of $500,000.Assuming AR is considered a large corporation for purposes of estimating tax liability, what are the minimum estimated tax payments it should make to avoid underpayment penalties? Ignore the annualized income method.

Accepted Answer

Q1: $30,000, Q2: $220,000, Q3: $125,000,

Which of the following statements regarding a corporation's overall accounting method is true?

Calendar-year corporations that request an extension for filing their tax returns will have an extended tax return due date of October 15.

A taxpayer always will have a tax basis in boot received in a section 351 transaction equal to its fair market value.

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior-year tax liability (which was very low but above zero)to determine its quarterly estimated payments this year.Which of the following statements is true?

Which of the following does NOT create a permanent book-tax difference?

Which of the following statements regarding net operating losses is true?

For corporations, which of the following regarding net capital losses is true?

For tax purposes, companies using nonqualified stock options deduct expenses in the year the options are exercised.

In 2019, Smith Traders Inc.reported a net operating loss of $100,000.In 2020, before the NOL deduction, it reported taxable income of $50,000.What is Smith Traders' 2020 taxable income after the NOL deduction and what is its NOL carryover to 2021?

Net capital loss carryovers, but not carrybacks, are deductible against capital gains in determining a corporation's net operating loss for the year.

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation)by corporations is true?

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

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Exam 13: Corporate Formations and Operations

Which of the following statements regarding a corporation's overall accounting method is true?

Calendar-year corporations that request an extension for filing their tax returns will have an extended tax return due date of October 15.

A taxpayer always will have a tax basis in boot received in a section 351 transaction equal to its fair market value.

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior-year tax liability (which was very low but above zero)to determine its quarterly estimated payments this year.Which of the following statements is true?

Which of the following does NOT create a permanent book-tax difference?

Which of the following statements regarding net operating losses is true?

For corporations, which of the following regarding net capital losses is true?

For tax purposes, companies using nonqualified stock options deduct expenses in the year the options are exercised.

In 2019, Smith Traders Inc.reported a net operating loss of $100,000.In 2020, before the NOL deduction, it reported taxable income of $50,000.What is Smith Traders' 2020 taxable income after the NOL deduction and what is its NOL carryover to 2021?

Net capital loss carryovers, but not carrybacks, are deductible against capital gains in determining a corporation's net operating loss for the year.

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation)by corporations is true?

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