Question 1

For purposes of the accumulated earnings tax,reasonable needs of the business include providing working capital for the business.

Accepted Answer

A) True 
 B)False

Question 2

Partnerships,limited liability partnerships,limited liability companies,and C corporations are considered flow-through entities for tax purposes.

Accepted Answer

A) True 
 B)False

Question 3

Corporations must divide their deductions between deductions for and deductions from AGI.

Accepted Answer

A) True 
 B)False

Question 4

A corporation is classified as a personal holding company.Its taxable income is $300,000 and its regular federal income tax liability is $63,000.The company claims a $40,000 dividends-received deduction and pays $30,000 dividends to its shareholders.The personal holding company tax is

Accepted Answer

A) $49,400. 
B) $62,000. 
C) $41,400. 
D) $61,400. 
A) $49,400. 
B) $62,000. 
C) $41,400. 
D) $61,400.

Question 5

A corporation realizes a NLTCL this year.The loss cannot be deducted in the current year.It must be carried back two years and then carried forward 20 years.

Accepted Answer

A) True 
 B)False

Question 6

Corporate charitable contributions are limited in any given year to 50% of taxable income.

Accepted Answer

A) True 
 B)False

Question 7

If a corporation has no E&P,a distribution is ordinary income to the extent of the shareholder's basis with any excess treated as capital gain.

Accepted Answer

A) True 
 B)False

Question 8

Income of a C corporation is subject to an initial tax at the corporate level and the shareholders are subject to a second tax if the corporation pays dividends from its earnings and profits.

Accepted Answer

A) True 
 B)False

Question 9

Which corporations are required to file a Schedule M-3?

Accepted Answer

A) S corporations with assets of $10,000,000 or more 
B) C corporations with assets of $1,000,000 or more 
C) publicly held C corporations with assets of $5,000,000 or more 
D) C corporations with assets of $10,000,000 or more 
A) S corporations with assets of $10,000,000 or more 
B) C corporations with assets of $1,000,000 or more 
C) publicly held C corporations with assets of $5,000,000 or more 
D) C corporations with assets of $10,000,000 or more

Question 10

A shareholder receives a distribution from a corporation in complete liquidation.The distribution will be taxed as a dividend to the extent of current or accumulated E&P.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements regarding corporate tax return schedules is correct?

Accepted Answer

A) Schedule M-3 reconciles taxable income with earnings and profits. 
B) Schedule M-1 reconciles retained earnings at the beginning of the year to the end of the year amount. 
C) Schedule M-2 reconciles book-tax differences. 
D) Schedule M-3 reconciles book-tax differences. 
A) Schedule M-3 reconciles taxable income with earnings and profits. 
B) Schedule M-1 reconciles retained earnings at the beginning of the year to the end of the year amount. 
C) Schedule M-2 reconciles book-tax differences. 
D) Schedule M-3 reconciles book-tax differences.

Question 12

Louisiana Land Corporation reported the following results for the current year: $\begin{array}{|l|l|}
\hline\text { Taxable income before the dividends-received deduction }\ \text { and before the charitable contributions deduction } & 320,000 \
\hline \text { Charitable contributions } & 60,000 \
\hline \text { Dividends-received deduction } & 20,000\\hline
\end{array}$ What is the amount of the taxable income for the current year?

Accepted Answer

A) $240,000 
B) $268,000 
C) $294,000 
D) $300,000 
A) $240,000 
B) $268,000 
C) $294,000 
D) $300,000

Question 13

Small Corporation,a new start-up small business corporation,is owned by Samantha and Dave.Additional funding is needed from the two shareholders,and they are weighing equity versus debt financing.One consideration is the tax consequences to the owners if the company fails and goes through bankruptcy,with both the stock and debt becoming worthless.In such case,the owners would be able to deduct the losses,and achieve tax savings,sooner if the company finances through additional equity.

Accepted Answer

A) True 
 B)False

Question 14

Corporations may deduct 65% of dividends received from a domestic corporation if the recipient corporation owns 20% or more and less than 80% of the voting power and value of the stock of the issuing corporation.

Accepted Answer

A) True 
 B)False

Question 15

Nora owns 20 shares of Yulp Inc.The remaining 80 outstanding shares are held as follows: 50 shares by her son,Omar,and 30 by her friend,Delainie.Nora is planning to retire,and the corporation will redeem her shares.Which of the following tests will allow her to treat the redemption as an exchange?

Accepted Answer

A) The redemption meets the criteria of a substantially disproportionate redemption. 
B) The redemption qualifies as a complete termination of interest. 
C) The redemption qualifies as a complete termination of interest only if Nora files an agreement with the IRS to waive family attribution. 
D) None of the above.The redemption will be treated as a dividend. 
A) The redemption meets the criteria of a substantially disproportionate redemption. 
B) The redemption qualifies as a complete termination of interest. 
C) The redemption qualifies as a complete termination of interest only if Nora files an agreement with the IRS to waive family attribution. 
D) None of the above.The redemption will be treated as a dividend.

Question 16

Concepts Corporation reported the following results for the current year:
Taxable income from operations $500,000
Dividend income 120,000
Charitable contributions 100,000
Taxable income from operations does not include the dividend income or the contributions.The dividend income is from minor investments in U.S.publicly traded stocks.Calculate Concept Corporation's taxable income and any carryovers that may be generated.

Accepted Answer

@#IMG-DLM& There is a charitab

Question 17

All of the following business forms offer limited liability except the

Accepted Answer

A) partnership. 
B) corporation. 
C) S corporation. 
D) limited liability company. 
A) partnership. 
B) corporation. 
C) S corporation. 
D) limited liability company.

Question 18

Accrual-basis corporations may accrue a charitable contribution deduction in the year preceding payment if the payment is authorized by the board of directors prior to year-end and the contribution is made within 2 1/2 months following year-end.

Accepted Answer

A) True 
 B)False

Question 19

Charades Corporation is a publicly held company listed on the New York Stock Exchange.During the current year,its chief executive officer,Samantha Chen,receives the following compensation from the corporation: salary,$1,500,000; commissions based on sales generated by Samantha,$200,000; payments to a qualified pension plan,$30,000; and tax-free fringe benefits,$20,000.What is the total amount taxable to Samantha?

Accepted Answer

A) $1,000,000 
B) $1,200,000 
C) $1,500,000 
D) $1,700,000 
A) $1,000,000 
B) $1,200,000 
C) $1,500,000 
D) $1,700,000

Question 20

If a corporation receives dividends from an 80% or more owned affiliated corporation,the dividends-received deduction is 100%.

Accepted Answer

A) True 
 B)False

Exam 32: Corporations

For purposes of the accumulated earnings tax,reasonable needs of the business include providing working capital for the business.

Partnerships,limited liability partnerships,limited liability companies,and C corporations are considered flow-through entities for tax purposes.

Corporations must divide their deductions between deductions for and deductions from AGI.

A corporation is classified as a personal holding company.Its taxable income is $300,000 and its regular federal income tax liability is $63,000.The company claims a $40,000 dividends-received deduction and pays $30,000 dividends to its shareholders.The personal holding company tax is

A corporation realizes a NLTCL this year.The loss cannot be deducted in the current year.It must be carried back two years and then carried forward 20 years.

Corporate charitable contributions are limited in any given year to 50% of taxable income.

If a corporation has no E&P,a distribution is ordinary income to the extent of the shareholder's basis with any excess treated as capital gain.

Income of a C corporation is subject to an initial tax at the corporate level and the shareholders are subject to a second tax if the corporation pays dividends from its earnings and profits.

Which corporations are required to file a Schedule M-3?

A shareholder receives a distribution from a corporation in complete liquidation.The distribution will be taxed as a dividend to the extent of current or accumulated E&P.

Which of the following statements regarding corporate tax return schedules is correct?

Corporations may deduct 65% of dividends received from a domestic corporation if the recipient corporation owns 20% or more and less than 80% of the voting power and value of the stock of the issuing corporation.

Nora owns 20 shares of Yulp Inc.The remaining 80 outstanding shares are held as follows: 50 shares by her son,Omar,and 30 by her friend,Delainie.Nora is planning to retire,and the corporation will redeem her shares.Which of the following tests will allow her to treat the redemption as an exchange?

All of the following business forms offer limited liability except the

Accrual-basis corporations may accrue a charitable contribution deduction in the year preceding payment if the payment is authorized by the board of directors prior to year-end and the contribution is made within 2 1/2 months following year-end.

If a corporation receives dividends from an 80% or more owned affiliated corporation,the dividends-received deduction is 100%.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

an Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Business Expenses and Deferred Compensation

Itemized Deductions

Losses and Bad Debts

Depreciation,cost Recovery,amortization,and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods,tax Credits,and Payment of Tax

Tax Research

Partnerships and S Corporations

Taxes and Investment Planning

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