Exam 3: The Corporate Income Tax

During the year, Soup Corporation contributes some of its inventory to a qualified charity for use in feeding the needy. The inventory has an FMV of $85,000 and an adjusted basis of $25,000. What is the amount of Soup Corporation's charitable contribution deduction for the donation of the inventory as determined without regard to the overall charitable contribution limitation?

James Corporation purchased residential real estate in 2013 for $225,000, of which $25,000 was allocated to land and $200,000 was allocated to the building. James Corporation took straight-line MACRS deductions of $30,000 during the years 2013-2018. In 2019, James Corporation sold the property for $285,000, of which $60,000 is allocated to the land and $225,000 is allocated to the building. What are the amounts and character of James Corporation's recognized gain or loss on the sale?

Dreyfuss Corporation reports the following items: Unappropriated retained earnings, beginning of year: $800,000 Net income: 700,000 Federal income tax refund for last year taken directly to retained earnings: 50,000 Cash dividends paid this year: 500,000 The unappropriated retained earnings at year-end are

Francine Corporation reports the following income and expense items for the tax year ending December 31: Gross receipts from sales $50,000 Dividends received from 15%-owned domestic corporation 30,000 Expenses connected with sales 20,000 What is Francine Corporation's taxable income?

If a corporation's charitable contributions exceed the deduction limitation in a particular year, the excess

Westwind Corporation reports the following results for the current year: Gross profit on sales $250,000 Long-term capital gain 25,000 Long-term capital loss 10,000 Short-term capital gain 7,500 Short-term capital loss 12,500 Operating expenses 80,000 What are Westwind's taxable income and regular tax liability before credits for the current year?

Green Corporation is incorporated on March 1 and begins business on June 1. Green's first tax year ends on October 31, i.e., a short year. Green incurs the following expenses during the year: What is the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible?

You are the CPA who prepares the tax returns for Dudley, his wife Margo, and their two corporations. Dave owns 100% of Duright Corporation's stock. Duright's current-year taxable income is $100,000. Margo owns 100% of Northwest Corporation's stock. Northwest's current-year taxable income is $150,000. Dudley and Margo file a joint federal income tax return. What issues should be considered with respect to the calculation of the three tax return liabilities?

Corporations may deduct the adjusted basis of inventory plus one-half of the excess of the property's FMV over its adjusted basis if the inventory is used for the care of the ill, needy, or infants.

Dexter Corporation reports the following results for the current year: Gross income from operations $90,000 Dividends from less than 20%-owned corporations 50,000 Operating expenses 75,000 Charitable contributions 10,000 In addition, Dexter has a $25,000 NOL carryover from the preceding tax year. What is Dexter's taxable income for the current year?

Identify which of the following is false.

Gilbreath Corporation is a C corporation and has the following items of income and expense during the current year. Gross Income $100,000 Interest Income 5,000 COGS (70,000) Interest Expense (15,000) Depreciation (10,000) What is taxable income before limitation? What is the net business interest expense? What is adjusted taxable income for purposes of the net business income limitation? How much of the net business interest expense may Gilbreath deduct during the current year?

Woods and Tiger Corporations have only one class of stock outstanding, owned by the following individuals: Stock Ownership Percentages Shareholder Woods Corp. Tiger Corp. John 80% 25% Sarah 20% 75% Are Woods and Tiger members of a brother-sister controlled group? Why or why not?

Evans Corporation has a $15,000 net capital loss in 2017. The corporation reported the following capital gain netting in income during the past three years. Identify which of the following statements is true.

Access Corporation, a large manufacturer, has a taxable income of $16,000,000. Access Corporation's tax is

Walter, who owns all of the Ajax Corporation stock, purchases a truck from Ajax Corporation in January. The truck cost $12,000 and has a $10,000 adjusted basis. Walter pays the truck's $8,000 FMV. Later in the same year, Walter sells the truck to an unrelated party for $13,000. With respect to these transactions

Which of the following items is a temporary difference between tax income and financial accounting income?

Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $180,000. In addition, Trail has a net capital gain of $60,000. Trail's taxable income is

Identify which of the following statements is true.

Identify which of the following statements is true.