Exam 3: The Corporate Income Tax

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?

Maxwell Corporation reports the following results: Maxwell's dividends- received deduction is

Which of the following items will not create a deferred tax liability?

Money Corporation has the following income and expenses for the tax year: What is Money's net operating loss?

Identify which of the following statements is true.

Richards Corporation has taxable income of $280,000 calculated before the charitable contribution deduction and before its dividends- received deduction of $34,000. Richards makes cash contributions of $35,000 to charitable organizations. What is Richards Corporation's charitable contribution deduction for the current year?

Francine Corporation reports the following income and expense items for the tax year ending December 31: What is Francine Corporation's taxable income?

Dreyfuss Corporation reports the following items:

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.

Sparks Corporation receives a dividend of $100,000 from Jill Corporation, a C corporation. Sparks owns 70% of Jill Corporation stock. Sparks' dividends- received deduction is $65,000.

Deferred tax liabilities occur when expenses are deductible for book purposes before tax purposes.

Bishop Corporation reports taxable income of $700,000 on its tax return. Given the following inform from the corporation's records, determine Bishop's net income per its financial accounting records.

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?

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?

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.

Corporations may carry charitable contributions in excess of the income limitation forward for five years.

All of the taxable income of a personal service corporation is taxed at a flat 21% rate.

Which of the following results in a deferred tax asset?

A C corporation must use a calendar year as its tax year unless it has a substantial business purpose to use a fiscal year.

Identify which of the following statements is true.