Exam 16: Corporate Operations

Remsco has taxable income of $60,000 and a charitable contribution limit modified taxable income of $72,000.Its charitable contributions for the year were $7,500.What is Remsco's current-year charitable contribution deduction and contribution carryover?

Which of the following is not required to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

For Corporation P to file a consolidated tax return with Corporation S,P must own what percentage of P's voting stock?

Jazz Corporation owns 10 percent of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss)before the dividend was ($6,000).What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Over what time period do corporations amortize purchased goodwill for tax purposes?

Atom Ventures Inc.(AV)owns stock in the Primo and Faraday corporations.The following summarizes information relating to AV's investment in Primo and Faraday as follows: Assuming that AV follows the general rules for reporting its income from these investments,what is the amount of AV's book-tax difference associated with the investment in these corporations (disregarding the dividends received deduction)? Is it favorable or unfavorable? Is it permanent or temporary?

Corporations may carry a net operating loss sustained in 2019 back two years and forward 20 years.

Pure Action Cycles Inc.,a bicycle manufacturer,has a net capital loss in 2019 of $(64,000).It had net capital gains of $21,500 in 2018,$45,000 in 2017,$10,000 in 2016 (but suffered a net operating loss in 2016),and $8,000 of net capital gain in 2015.What is the net capital gain in 2018 after the carryback is applied?

What is the unextended due date of the tax return of a calendar-year C corporation for 2019?

AR Systems Inc.(AR)had $120,000 of tax liability last year.It anticipates a current-year tax liability of $500,000.Assuming AR is considered a large corporation for purposes of estimating tax liability,what are the minimum estimated tax payments it should make to avoid underpayment penalties? Ignore the annualized income method.

Which of the following statements regarding book-tax differences is true?

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation)by corporations is true?

On January 1,2017,Credit Inc.recorded goodwill valued at $270,000 when it acquired the assets of another company.At the end of 2018,the auditors of Credit Inc.determined that the goodwill had been impaired by $50,000,and Credit Inc.wrote down the book value of the goodwill by $50,000.During 2019,the goodwill was not further impaired.In 2020,additional goodwill was impaired and was written down another $18,000 for financial reporting purposes.What is the temporary book-tax difference associated with the purchased goodwill in 2018,2019,and 2020? Are the differences favorable or unfavorable? Are the differences permanent or temporary?

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior-year tax liability (which was very low but above zero)to determine its quarterly estimated payments this year.Which of the following statements is true?

For book purposes,RadioAircast Inc.reported $15,000 of income from municipal bonds in 2018.It also expensed $12,000 of radio station filing fines paid to the FCC the same year.What is the total book-tax difference associated with these items? Is it favorable or unfavorable? What amount of the total adjustment is permanent and what amount is temporary?

On January 1,2018,GrowCo issued 50,000 nonqualified stock options (NQOs)valued at $1 per option.Each option entitles the owner to purchase one share of stock for $4.These options vest (accrue)at 20 percent per year for five years beginning in 2018.By the end of 2018,20,000 of the options had vested.At the end of 2019,these options were exercised when the stock price is $6.25.What is the total book-tax difference associated with the stock options for 2019? Is it favorable or unfavorable? How much of the adjustment is permanent and how much is temporary?

For estimated tax purposes,a "large" corporation is any corporation with average annual gross receipts of $5,000,000 in the three years prior to the current year.

WFO Corporation has gross receipts according to the following schedule: If WFO began business as a cash-method corporation in Year 1,in which year would it have first been required to use the accrual method?

For corporations,which of the following regarding net capital losses is true?

In a given year,Adams Corporation has goodwill impairment in excess of the allowable amortization for tax purposes.Adams has a favorable temporary book-tax difference for that year.