Exam 10: Taxation of Corporations

A corporation has a July 31 year end.What is the last date it can file its return due for its July 31, 2019 year end if it files an extension?

A corporation must have positive earnings and profits in both its current earnings and profits account and its accumulated earnings and profits account to make a taxable dividend distribution.

The accumulated earnings tax and the personal holding company tax can both apply to a corporation in place of the regular corporate income tax.

Moranza Corporation, which has current earnings and profits (CE&P) of $10,000 and accumulated earnings and profits (AE&P) of $30,000, makes a $15,000 distribution to its sole shareholder, Justin, at the end of the current year.Justin has a basis in his Moranza stock of $2,000.What is the amount of taxable income Justin must report from the Moranza distribution?

What is Gigantic Corporation's net tax liability if its taxable income is $325,000 and it has a general business credit of $125,000?

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.What are Alpha's charitable contribution deductions in determining its taxable income for 2018 and 2019, respectively?

Walker Corporation issues one right to purchase one share of preferred stock at $90 for each ten shares of common stock owned by a shareholder.Seth owns 200 shares of common stock and receives 20 rights.The rights can be exercised anytime during the next 6 months.On the date of issuance of the stock rights, the common stock is selling for $14 per share and the rights are selling for $10 each.Seth has a total basis in the 200 common shares of $600 and elects to allocate basis to the rights.If Seth sells the 20 rights for $600 five months after they are received, what is his realized gain?

In 2019, a corporation is allowed a 60 percent dividend received deduction if it owns at least 20 percent of the corporation paying the dividend.

Maui Corporation makes two distributions during the current tax year-the first for $20,000 on February 1 and the second for $30,000 on August 1.Before consideration of the distributions, the corporation has $18,000 in current earnings and profits and $21,000 of accumulated earnings and profits.How much of the second distribution is taxable as a dividend?

Coho is a corporation that has $1,100,000 of gross revenue and $1,021,000 of deductible expenses? What is its income tax liability for 2019?

All corporations whose income tax liability is less than $1,000,000 in the current year can avoid an underpayment penalty if each of their estimated tax payments is 25 percent or more of their immediately preceding tax year's tax liability.

Borneo Corporation has $21,000 in current earnings and profits and $5,000 of accumulated earnings and profits.Borneo distributes $20,000 of income to its shareholders on June 15 and another $10,000 on December 15.How much of the December 15 distribution is taxable as a dividend?

What is the percentage excise tax that a disqualified person can be assessed on a prohibited transaction if that person fails to correct the transaction?

Intercompany dividends are one of many items eliminated in preparing a consolidated tax return.

Casey Corporation has three assets when it decides to liquidate: Machine (Sec. 1231) \ 140,000 \ 60,000 \ 110,000 Building (Sec. 1231) \ 900,000 \ 450,000 \ 380,000 Stocks (Capital) \ 50,000 \ 50,000 \ 30,000 The corporation sells the stock for its fair market value and distributes the other two assets to its sole shareholder.What is its tax liability on its final tax return in 2018 if it had $45,000 of income from operations prior to liquidating?