Question 1

DPAD for 2016 is 9% of the greater of QPAI or TI, but not to exceed the W-2 wages limitation.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is always personal holding company income?

Accepted Answer

A) Interest. 
B) Rent income. 
C) Gas royalties. 
D) Personal service contract income. 
E) All of the above. 
A) Interest. 
B) Rent income. 
C) Gas royalties. 
D) Personal service contract income. 
E) All of the above.

Question 3

The domestic production activities deduction is intended to preserve U.S. manufacturing jobs and discourage their outsourcing.

Accepted Answer

A) True 
 B)False

Question 4

One of the components of DPGR is qualified production property (QPP). The QPP must be manufactured, produced, grown, or extracted entirely within the U.S.

Accepted Answer

A) True 
 B)False

Question 5

The DPAD is limited by 50% of the total W-2 wages paid by a taxpayer.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is added in arriving at ACE?

Accepted Answer

A) Tax-exempt income (net of expenses). 
B) Federal income tax. 
C) Premiums paid on key employees insurance. 
D) Loss on sale between related parties. 
E) None of the above. 
A) Tax-exempt income (net of expenses). 
B) Federal income tax. 
C) Premiums paid on key employees insurance. 
D) Loss on sale between related parties. 
E) None of the above.

Question 7

Ford Corporation, a calendar year corporation, has alternative minimum taxable income (before any exemption) of $1.28 million for 2016. The company is not a small corporation. If the regular corporate tax is $209,000, Ford's alternative minimum tax for 2016 is:

Accepted Answer

A) $47,000. 
B) $209,000. 
C) $256,000. 
D) $1,280,000. 
E) None of the above. 
A) $47,000. 
B) $209,000. 
C) $256,000. 
D) $1,280,000. 
E) None of the above.

Question 8

​ A company with a NOL carryforward for a tax year is ineligible for the DPAD if the carryforward eliminates current income.

Accepted Answer

A) True 
 B)False

Question 9

The AMT exemption amount of $40,000 phases out entirely once a corporation's average gross receipts exceeds $310,000.

Accepted Answer

A) True 
 B)False

Question 10

Mayberry, Inc. engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL) of $600,000 in 2016. The company also has an NOL carryover to 2016 of $500,000 and qualified W-2 wages of $300,000. Calculate any DPAD.

Accepted Answer

$9,000. Multiply 9% by the lesser of QPA

Question 11

A small corporation with unused minimum tax credits may use what percentage of regular tax as a minimum credit in 2016?

Accepted Answer

A) 0 
B) 25% 
C) 50% 
D) 75% 
E) None of the above 
A) 0 
B) 25% 
C) 50% 
D) 75% 
E) None of the above

Question 12

Kim's sole proprietorship consists of a bakery and retail food sales. The bakery's DPGR is $700,000, but after CGS, direct expenses, and a ratable portion of indirect expenses are deducted, QPAI is $100,000. W-2 wages related to DPGR are significant. The retail food sales have a loss of $900,000. If Kim files a joint return and her modified AGI is $119,500, what is her allowable DPAD, if any, for 2016?

Accepted Answer

A) None 
B) $6,000 
C) $7,170 
D) $9,000 
E) Some other amount 
A) None 
B) $6,000 
C) $7,170 
D) $9,000 
E) Some other amount

Question 13

Lime, Inc., has taxable income of $13 million in 2016. What is the maximum DPAD tax savings for this C corporation?

Accepted Answer

A) $132,600 
B) $265,200 
C) $397,800 
D) $409,500 
E) None of the above 
A) $132,600 
B) $265,200 
C) $397,800 
D) $409,500 
E) None of the above

Question 14

​As taxable income is reduced by an NOL carryback, there is a corresponding increase in the DPAD.

Accepted Answer

A) True 
 B)False

Question 15

The DPAD is not allowed for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 16

What is undistributed PHCI?

Accepted Answer

Undistributed PHCI is taxable income plu

Question 17

DPGR - Allowable Indirect Costs = QPAI. Is this formula correct?

Accepted Answer

A) True 
 B)False

Question 18

Which statement, if any, is false?

Accepted Answer

A) An S corporation is subject to the corporate AMT. 
B) A high level of investment in assets (e.g., equipment or structures) is a reason a company may be subject to the AMT. 
C) Many of the adjustments that apply to individuals also apply to corporations. 
D) The AMT is a separate tax system from the corporate income tax. 
E) None of the above. 
A) An S corporation is subject to the corporate AMT. 
B) A high level of investment in assets (e.g., equipment or structures) is a reason a company may be subject to the AMT. 
C) Many of the adjustments that apply to individuals also apply to corporations. 
D) The AMT is a separate tax system from the corporate income tax. 
E) None of the above.

Question 19

Reasonable needs for purposes of the accumulated earnings tax do not include loans to shareholders.

Accepted Answer

A) True 
 B)False

Question 20

Campbell, Inc., a calendar year corporation that was created in February 2012, has gross receipts as follows: $$\begin{array} { l c } 
\text { Year } & \text { Gross Receipts } \
2012 & \$ 2,990,220 \
2013 & 3,310,763 \
2014 & 4,885,027 \
2015 & 7,626,681 \
2016 & 9,120,132
\end{array}$$ Does Campbell qualify for the small corporation exemption for each year (2012 through 2017)?

Accepted Answer

Since Campbell is a new corporation in 2

DPAD for 2016 is 9% of the greater of QPAI or TI, but not to exceed the W-2 wages limitation.

Which of the following is always personal holding company income?

The domestic production activities deduction is intended to preserve U.S. manufacturing jobs and discourage their outsourcing.

One of the components of DPGR is qualified production property (QPP). The QPP must be manufactured, produced, grown, or extracted entirely within the U.S.

The DPAD is limited by 50% of the total W-2 wages paid by a taxpayer.

Which of the following is added in arriving at ACE?

Ford Corporation, a calendar year corporation, has alternative minimum taxable income (before any exemption) of $1.28 million for 2016. The company is not a small corporation. If the regular corporate tax is $209,000, Ford's alternative minimum tax for 2016 is:

A company with a NOL carryforward for a tax year is ineligible for the DPAD if the carryforward eliminates current income.

The AMT exemption amount of $40,000 phases out entirely once a corporation's average gross receipts exceeds $310,000.

Mayberry, Inc. engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL) of $600,000 in 2016. The company also has an NOL carryover to 2016 of $500,000 and qualified W-2 wages of $300,000. Calculate any DPAD.

A small corporation with unused minimum tax credits may use what percentage of regular tax as a minimum credit in 2016?

Lime, Inc., has taxable income of $13 million in 2016. What is the maximum DPAD tax savings for this C corporation?

As taxable income is reduced by an NOL carryback, there is a corresponding increase in the DPAD.

The DPAD is not allowed for AMT purposes.

What is undistributed PHCI?

DPGR - Allowable Indirect Costs = QPAI. Is this formula correct?

Which statement, if any, is false?

Reasonable needs for purposes of the accumulated earnings tax do not include loans to shareholders.

Campbell, Inc., a calendar year corporation that was created in February 2012, has gross receipts as follows: Year Gross Receipts 2012 \ 2,990,220 2013 3,310,763 2014 4,885,027 2015 7,626,681 2016 9,120,132 Does Campbell qualify for the small corporation exemption for each year (2012 through 2017)?

Understanding and Working With the Federal Tax Law

Corporations Introduction and Operating Rules

Corporations Organization and Capital Structure

Corporations Earnings Profits and Dividend Distributions

Corporations Redemptions and Liquidations

Corporations Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships Formation Operation and Basis

Partnerships Distributions Transfer of Interests and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 3: Corporations Special Situations

DPAD for 2016 is 9% of the greater of QPAI or TI, but not to exceed the W-2 wages limitation.

Which of the following is always personal holding company income?

The domestic production activities deduction is intended to preserve U.S. manufacturing jobs and discourage their outsourcing.

One of the components of DPGR is qualified production property (QPP). The QPP must be manufactured, produced, grown, or extracted entirely within the U.S.

The DPAD is limited by 50% of the total W-2 wages paid by a taxpayer.

Which of the following is added in arriving at ACE?

Ford Corporation, a calendar year corporation, has alternative minimum taxable income (before any exemption) of $1.28 million for 2016. The company is not a small corporation. If the regular corporate tax is $209,000, Ford's alternative minimum tax for 2016 is:

​ A company with a NOL carryforward for a tax year is ineligible for the DPAD if the carryforward eliminates current income.

The AMT exemption amount of $40,000 phases out entirely once a corporation's average gross receipts exceeds $310,000.

Mayberry, Inc. engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL) of $600,000 in 2016. The company also has an NOL carryover to 2016 of $500,000 and qualified W-2 wages of $300,000. Calculate any DPAD.

A small corporation with unused minimum tax credits may use what percentage of regular tax as a minimum credit in 2016?

Lime, Inc., has taxable income of $13 million in 2016. What is the maximum DPAD tax savings for this C corporation?

​As taxable income is reduced by an NOL carryback, there is a corresponding increase in the DPAD.

The DPAD is not allowed for AMT purposes.

What is undistributed PHCI?

DPGR - Allowable Indirect Costs = QPAI. Is this formula correct?

Which statement, if any, is false?

Reasonable needs for purposes of the accumulated earnings tax do not include loans to shareholders.

Campbell, Inc., a calendar year corporation that was created in February 2012, has gross receipts as follows: Year Gross Receipts 2012 \ 2,990,220 2013 3,310,763 2014 4,885,027 2015 7,626,681 2016 9,120,132 Does Campbell qualify for the small corporation exemption for each year (2012 through 2017)?

Understanding and Working With the Federal Tax Law

Corporations Introduction and Operating Rules

Corporations Organization and Capital Structure

Corporations Earnings Profits and Dividend Distributions

Corporations Redemptions and Liquidations

Corporations Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships Formation Operation and Basis

Partnerships Distributions Transfer of Interests and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

A company with a NOL carryforward for a tax year is ineligible for the DPAD if the carryforward eliminates current income.

As taxable income is reduced by an NOL carryback, there is a corresponding increase in the DPAD.