Exam 3: The Corporate Income Tax

Zerotech Corporation donates the following property to an elementary school: • Computer printer purchased three years ago for $1,000. The printer has a $500 FMV and $0 adjusted basis on contribution date. • Computer equipment acquired one year ago at a cost of $5,000. The equipment has an $8,000 FMV and $0 adjusted basis on contribution date. • Computer software acquired two months ago at a cost of $10,000. The software will be used in a prekindergarten program. Its FMV on the contribution date is $10,000 and it has an adjusted basis of $0. a) Identify any donation qualifying for special treatment. b) What is Zerotech's charitable contribution deduction?

Money Corporation has the following income and expenses for the tax year: What is Money's net operating loss?

Identify which of the following statements is false.

Dallas Corporation, not a dealer in securities, realizes taxable income of $60,000 from the operation of its business. Additionally, in the same year, Dallas realizes a long-term capital loss of $10,000 from the sale of marketable securities. If the corporation realizes no other capital gains or losses, what is the proper treatment for the $10,000 long-term capital loss on the tax return?

Identify which of the following statements is true.

The dividends-received deduction is designed to reduce double taxation of corporate dividends payable to individual shareholders.

Corporate estimated tax payments are due April 15, June 15, September 15, and January 15.

NOLs arising in tax years ending after 2017 carry over to subsequent tax years indefinitely.

In February of the current year, Brent Corporation donates computer equipment that it purchased six months ago to Eastside High School for use in its educational program. The donated property had a $20,000 adjusted basis to Brent and a $40,000 FMV. What is the amount of the gift?

Cricket Corporation has a $50,000 NOL in the current year. Cricket does not have pre 2018 NOLs. Cricket expects its taxable income for next year to exceed $40,000. What issues should be considered with respect to the use of the NOL?

Discuss the estimated tax filing requirements for a C corporation.

Maxwell Corporation reports the following results: Maxwell's dividends-received deduction is

Corporations are permitted to deduct $3,000 in net capital losses annually.

Jackson Corporation, not a dealer in securities, realizes taxable income of $80,000 from the operation of its business. Additionally, Jackson Corporation realizes a $10,000 long-term capital loss from the sale of marketable securities. Explain the treatment of the loss on the corporate return for this and any other years.

How does the use of an NOL differ for individual and corporate taxpayers?

How does the use of a net capital loss differ for individual and corporate taxpayers?

Bright Corporation purchased residential real estate five years ago for $450,000, of which $50,000 was allocated to the land and $400,000 was allocated to the building. Bright booked straight-line MACRS deductions of $55,000 during the past five years. This year, Bright sells the property for $550,000, of which $100,000 is allocated to the land and $450,000 is allocated to the building. What is the amount and character of Bright's recognized gain or loss on the sale?

Vanda Corporation sold a truck with an adjusted basis of $50,000 to Barbara for $30,000. Vanessa owns 25% of the Vanda stock. What tax issues should Vanda and Vanessa consider with respect to the sale/purchase?

West Corporation purchases 50 shares (less than 1%) of Perch Corporation common stock on April 3. The ex-dividend date is April 4. West Corporation pays $50,000 for the stock and receives a dividend of $5,000 on the Perch stock. On May 1, West Corporation sells the Perch stock for $45,000. West's taxable income before the dividends-received deduction is $4,000. West's dividends-received deduction is

Deferred tax liabilities occur when expenses are deductible for book purposes before tax purposes.