Exam 10: Taxation of Corporations

Avalanche Corporation has $70,000 of net income from operations during the current year.In addition it received $180,000 of dividend income from another corporation in which it has a 10% ownership interest.What is Avalanche's dividends received deduction for this year?

Tom owns 60 percent of CDF Corporation.CDF rents a building from Tom for $4,500 per month.Fair rental value for the building is only $3,000 per month.In addition, CDF employs Tom's son as the general manager at a salary of $350,000 annually.Similar positions in similar businesses pay $200,000 annually.How much rental and dividend income should Tom report on his tax return for the year?

The following shareholders own the outstanding stock of Garcia Corporation: Ryan 100 shares Kayla (Ryan's wrife) 100 shares Nick (Ryan's brother) 100 shares XYZ Inc. 100 shares RST. Inc. 100 shares AG Partnership Total shares autstanding 600 shares Ryan is a 25% partner in AG Partnership.Ryan also is a 55% shareholder in XYZ, Inc.and a 40% shareholder in RST, Inc.How many shares does Ryan constructively (directly and indirectly) own?

The Schedule L of Form 1120 is a corporate balance sheet as determined by the tax laws.

Vista Corporation, which has current earnings and profits (CE&P) of $10,000 and accumulated earnings and profits (AE&P) of $30,000, makes a $43,000 distribution to its sole shareholder, Julie, at the end of the current year.Julie has a basis in her Vista stock of $2,000.What is the amount of taxable income Julie must report from the Vista distribution?

The outstanding stock of Riccardo Corporation is owned as follows: Robert 100 shares Megan (Robert's daughter) 100 shares Kyle (Robert's cousin) 100 shares RMD, Inc. Total shares autstanding 400 shares Robert owns 50% of RMD, Inc.stock.The rest of RMD, Inc.stock is owned by unrelated parties.Riccardo Corporation redeems 90 of Kyle's shares of stock for $9,000 in the only redemption transaction this year.Kyle's basis for his stock is $10 per share.Riccardo Corporation has $300,000 in E&P.What is Kyle's total basis in his remaining 10 shares of stock after the redemption?

What is JJ Corporation's balance in accumulated earnings and profits at the beginning of year 2 if in year 1 it made a $40,000 distribution to its shareholders, its current earnings and profits was $35,000, and its accumulated earnings and profits was $25,000 at the beginning of year 1?

Joe owns 40 percent of the stock of AD Corporation's 2,000 outstanding shares.If Joe sells some stock back to the corporation, what is the maximum percentage of ownership that Joe can have of the outstanding stock after the sale to qualify for capital gain treatment rather than having dividend income?

In 2018 and 2019, the corporate tax rate is a flat tax rate.

Monroe Corporation reported the following results for the current year: Gross income from operations \1 50,000 Operating expenses 154,000 Dividends from 30 \% owned domestic corporation 100,000 Long-term capital gain 2,000 Short-term capital loss (3,000) Charitable contributions 15,000 In addition to the above, Monroe Corporation has a $5,000 NOL carryforward available from last year.What is Monroe Corporation's taxable income for the current year?

Jude received a $25,000 distribution from BC Corporation that the corporation identified as $15,000 dividend and $10,000 return of capital.What effect does this distribution have on Jude's taxable income if his basis in the stock of BC is $8,000?

Alpha Corporation's adjusted taxable income is $100,000 for 2018 and $200,000 for 2019.Alpha makes charitable contributions of $15,000 in 2018 and $19,000 in 2019.How much and from which tac year is Alpha's carry forward for its charitable contributions in computing its 2020 taxable income?

In 2019, a corporation with unused alternative minimum tax credits can offset them against its regular corporate income tax.

M&E Corporation has two shareholders, Marco and Edward.M&E Corporation has current E&P of $50,000 and a deficit in accumulated E&P of $40,000.M&E Corporation is in the 25% marginal tax bracket.M&E Corporation distributes investment land to these shareholders.The land distributed to Marco has a FMV of $30,000 and a basis to M&E Corporation of $24,000.The land distributed to Edward has a FMV of $30,000 and a basis to M&E Corporation of $26,000.Marco's basis for his stock is $2,000.Edward's basis for his stock is $1,000.How much gain, if any, does M&E Corporation recognize on the distribution of this land to its shareholders?

Which of the following is not a positive adjustment to taxable income to determine current earnings and profits?

A controlled corporate group can consist of a parent and subsidiary or two corporations owned by the same individual.

An exempt organization will not be assessed an unrelated business income tax if:

Corporation P owns 85 percent of Corporation S1; Corporation S1 owns 60 percent of Corporation S2; Corporation S2 owns 90 percent of S3; Corporation S3 owns 60 percent of Corporation S4 and 15 percent of Corporation S2; Corporation S4 owns 100 percent of Corporation S5.Identify the consolidated group(s) of corporations.

Monroe Corporation reported the following results for the current year: Gross income from operations \1 50,000 Operating expenses 154,000 Dividends from 30 \% owned domestic corporation 100,000 Long-term capital gain 2,000 Short-term capital loss (3,000) Charitable contributions 15,000 In addition to the above, Monroe Corporation has a $5,000 NOL carryforward from last year.How much can Monroe Corporation take as a dividend received deduction for the current year?

In determining consolidated net income, each corporation first must compute separate taxable income.