Exam 3: The Corporate Income Tax

Island Corporation has the following income and expense items for the year: Gross receipts from sales \ 60,000 Dividends received from 15-\%owned domestic corporation 40,000 Expenses connected with sales 30,000 The taxable income of Island Corporation is

Joker Corporation owns 80% of Klue Corporation. Joker Corporation also owns 45% of Lion Corporation and 45% of Mark Corporation. Klue Corporation owns 40% of Lion Corporation and 10% of Mark Corporation. Which corporations are members of a controlled group?

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

Quality Corporation, a regular corporation, has an opportunity to realize $50,000 of additional income in either the current year or next year. What tax issues need to be considered in determining when to realize the income?

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?

Identify which of the following statements is false.

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

Blueboy Inc. contributes inventory to a qualified charity for use in feeding the needy. The inventory has a $70,000 FMV and a $30,000 adjusted basis. Blueboy Inc. can take a charitable contribution deduction of

If a controlling shareholder sells depreciable property to a controlled corporation and the property is depreciable by the purchaser, any gain on the sale is a 1231 gain.

Dreyfuss Corporation reports the following items: Unappropriated retained earnings, beginning of year: \8 00,000 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 $\text { The unappropriated retained earnings at year- end are }$ A) $\$ 2,050,030$ . B) $\$ 1,050,000$ . C) $\$ 1,500,000$ . D) $\$ 1,000,000$

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 ad basis on contribution date. • Computer software acquired two months ago at a cost of $10,000. The software will be used in a prekinderga 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?

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: Month Type Amount February Draft charter \ 2,000 March Stock commission 30,000 March Accounting fees to set up books 2,000 April Temporary director fees 2000 December Charter modification fee 1,000 What is the deduction for organizational expenses if Green chooses to deduct its costs as soon as pos

What are some of the advantages and disadvantages of filing a consolidated return?

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

Maxwell Corporation reports the following results: Gross income from operations \ 90,000 Dividen ds received from 18\%owned domestic corporation 70,000 Expenses 100,000 Maxwell's dividends- received deduction is

When computing corporate taxable income, what is the proper sequencing of deductions?

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?

Identify which of the following statements is true.

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.

Courtney Corporation had the following income and expenses for the tax year: Gross profit on sales \ 300,000 Expenses \ 600,000 Dividends received from less- than- 20 \% - owned domestic corporations 20,000 Courtney had taxable income for the past three years of: 2015 \ 100,000 2016 \ 120,000 2017 \ 80,000 Determine the corporation's NOL for the current year.