Question 1

The personal holding company tax rate in 2016 is 39.6%.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following items will be an addition to AMTI in arriving at ACE?

Accepted Answer

A) Excess capital loss. 
B) Federal income tax. 
C) Tax-exempt income. 
D) Excess charitable contributions. 
E) None of the above. 
A) Excess capital loss. 
B) Federal income tax. 
C) Tax-exempt income. 
D) Excess charitable contributions. 
E) None of the above.

Question 3

Which statement is false?​

Accepted Answer

A) ​The AMT is not limited to C corporations. 
B) ​The DPAD is not limited to C corporations. 
C) ​The penalty tax on PHCs is not dependent on the existence of a tax avoidance motive. 
D) ​In the case of a sole proprietor, the DPAD is a deduction from adjusted gross income. 
E) ​All are true. 
A) ​The AMT is not limited to C corporations. 
B) ​The DPAD is not limited to C corporations. 
C) ​The penalty tax on PHCs is not dependent on the existence of a tax avoidance motive. 
D) ​In the case of a sole proprietor, the DPAD is a deduction from adjusted gross income. 
E) ​All are true.

Question 4

Stacey, Inc., has taxable income of $10 million in 2016. What is the maximum DPAD tax savings for this C corporation?

Accepted Answer

A) None 
B) $204,000 
C) $306,000 
D) $315,000 
E) None of the above 
A) None 
B) $204,000 
C) $306,000 
D) $315,000 
E) None of the above

Question 5

Tax-exempt interest on state and local private activity bonds (issued in 2010) is a tax preference item.

Accepted Answer

A) True 
 B)False

Question 6

A taxpayer who prepares and sells Mexican food at several of its restaurant locations can qualify for DPAD as to the receipts only from take-out orders and home-delivery sales.

Accepted Answer

A) True 
 B)False

Question 7

Which reason is unlikely to cause a regular corporation to have to pay AMT?

Accepted Answer

A) A service-type of company with little inventory. 
B) A high level of investment in assets such as equipment and structures. 
C) Low taxable income due to a cyclical downturn, strong international competition, a low-margin industry, or other factors. 
D) Investment at low real interest rates, which increases the company's deductions for depreciation relative to those for interest payments. 
E) None of the above. 
A) A service-type of company with little inventory. 
B) A high level of investment in assets such as equipment and structures. 
C) Low taxable income due to a cyclical downturn, strong international competition, a low-margin industry, or other factors. 
D) Investment at low real interest rates, which increases the company's deductions for depreciation relative to those for interest payments. 
E) None of the above.

Question 8

In terms of the effect of the DPAD, the maximum tax savings for a corporation with $10 million of taxable income is $316,000 in 2016.

Accepted Answer

A) True 
 B)False

Question 9

How is DPAD handled in an S corporation or a partnership situation?

Accepted Answer

In the case of a pass-through entity, su

Question 10

NOLs are negative adjustments.

Accepted Answer

A) True 
 B)False

Question 11

The ACE adjustment can be positive or negative.

Accepted Answer

A) True 
 B)False

Question 12

Which, if any, of the following is a characteristic of the DPAD?

Accepted Answer

A) Not applicable in situations involving S corporations. 
B) Applicable only to manufactured goods that are exported from the U.S. 
C) Can never apply when the rendition of personal services is involved. 
D) Can sometimes apply when some of the components of a product are manufactured in foreign countries. 
E) None of the above. 
A) Not applicable in situations involving S corporations. 
B) Applicable only to manufactured goods that are exported from the U.S. 
C) Can never apply when the rendition of personal services is involved. 
D) Can sometimes apply when some of the components of a product are manufactured in foreign countries. 
E) None of the above.

Question 13

Green Company, a U.S. corporation based in Texas, manufactures and sells a product which includes some components made in the Dominican Republic. None of Green's income from sales constitute DPGR.

Accepted Answer

A) True 
 B)False

Question 14

The objective of the AMT is to force taxpayers that are more profitable than their taxable income reflects to pay additional income taxes.

Accepted Answer

A) True 
 B)False

Question 15

Jeff Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2016 tax year, Jeff had a U.S. profit of $1.2 million (QPAI) and a profit from the imported merchandise of $300,000. What is Jeff's DPAD?

Accepted Answer

A) $36,000 
B) $72,000 
C) $108,000 
D) $117,000 
E) None of the above 
A) $36,000 
B) $72,000 
C) $108,000 
D) $117,000 
E) None of the above

Question 16

Gerbil Corporation was formed in 2006. If in 2016, it has average gross receipts of under $7.5 million, the company cannot be subject to the AMT.

Accepted Answer

A) True 
 B)False

Question 17

In 2016, Job Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $7 million. If Job Corporation's ACE is $16 million, its tentative minimum tax for 2016 is:

Accepted Answer

A) $2.55 million. 
B) $2.75 million. 
C) $3.45 million. 
D) $4.2 million. 
E) None of the above. 
A) $2.55 million. 
B) $2.75 million. 
C) $3.45 million. 
D) $4.2 million. 
E) None of the above.

Question 18

Yvonne Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2016 tax year, Yvonne had a U. S. profit of $1.3 million (QPAI) and a loss from the imported merchandise of $200,000. What is Yvonne's DPAD?

Accepted Answer

A) $33,000 
B) $66,000 
C) $99,000 
D) $1,080,000 
E) None of the above 
A) $33,000 
B) $66,000 
C) $99,000 
D) $1,080,000 
E) None of the above

Question 19

​Saffron Corporation, a calendar year taxpayer, has alternative minimum taxable income (before adjustment for adjusted current earnings) of $2 million for 2017. If Saffron Corporation's adjusted current earnings is $4 million, its tentative minimum tax for 2017 is:

Accepted Answer

A) ​$400,000. 
B) ​$692,000. 
C) ​$700,000. 
D) ​$800,000. 
E) ​None of the above. 
A) ​$400,000. 
B) ​$692,000. 
C) ​$700,000. 
D) ​$800,000. 
E) ​None of the above.

Question 20

​Which entity is subject to the ACE provisions?

Accepted Answer

A) ​S corporation. 
B) ​Real estate investment trust (REITs). 
C) ​Real estate investment companies. 
D) ​Real estate mortgage investment conduits 
E) ​None of the above. 
A) ​S corporation. 
B) ​Real estate investment trust (REITs). 
C) ​Real estate investment companies. 
D) ​Real estate mortgage investment conduits 
E) ​None of the above.

The personal holding company tax rate in 2016 is 39.6%.

Which of the following items will be an addition to AMTI in arriving at ACE?

Which statement is false?

Stacey, Inc., has taxable income of $10 million in 2016. What is the maximum DPAD tax savings for this C corporation?

Tax-exempt interest on state and local private activity bonds (issued in 2010) is a tax preference item.

A taxpayer who prepares and sells Mexican food at several of its restaurant locations can qualify for DPAD as to the receipts only from take-out orders and home-delivery sales.

Which reason is unlikely to cause a regular corporation to have to pay AMT?

In terms of the effect of the DPAD, the maximum tax savings for a corporation with $10 million of taxable income is $316,000 in 2016.

How is DPAD handled in an S corporation or a partnership situation?

NOLs are negative adjustments.

The ACE adjustment can be positive or negative.

Which, if any, of the following is a characteristic of the DPAD?

Green Company, a U.S. corporation based in Texas, manufactures and sells a product which includes some components made in the Dominican Republic. None of Green's income from sales constitute DPGR.

The objective of the AMT is to force taxpayers that are more profitable than their taxable income reflects to pay additional income taxes.

Jeff Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2016 tax year, Jeff had a U.S. profit of $1.2 million (QPAI) and a profit from the imported merchandise of $300,000. What is Jeff's DPAD?

Gerbil Corporation was formed in 2006. If in 2016, it has average gross receipts of under $7.5 million, the company cannot be subject to the AMT.

In 2016, Job Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $7 million. If Job Corporation's ACE is $16 million, its tentative minimum tax for 2016 is:

Yvonne Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2016 tax year, Yvonne had a U. S. profit of $1.3 million (QPAI) and a loss from the imported merchandise of $200,000. What is Yvonne's DPAD?

Saffron Corporation, a calendar year taxpayer, has alternative minimum taxable income (before adjustment for adjusted current earnings) of $2 million for 2017. If Saffron Corporation's adjusted current earnings is $4 million, its tentative minimum tax for 2017 is:

Which entity is subject to the ACE provisions?

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

The personal holding company tax rate in 2016 is 39.6%.

Which of the following items will be an addition to AMTI in arriving at ACE?

Which statement is false?​

Stacey, Inc., has taxable income of $10 million in 2016. What is the maximum DPAD tax savings for this C corporation?

Tax-exempt interest on state and local private activity bonds (issued in 2010) is a tax preference item.

A taxpayer who prepares and sells Mexican food at several of its restaurant locations can qualify for DPAD as to the receipts only from take-out orders and home-delivery sales.

Which reason is unlikely to cause a regular corporation to have to pay AMT?

In terms of the effect of the DPAD, the maximum tax savings for a corporation with $10 million of taxable income is $316,000 in 2016.

How is DPAD handled in an S corporation or a partnership situation?

NOLs are negative adjustments.

The ACE adjustment can be positive or negative.

Which, if any, of the following is a characteristic of the DPAD?

Green Company, a U.S. corporation based in Texas, manufactures and sells a product which includes some components made in the Dominican Republic. None of Green's income from sales constitute DPGR.

The objective of the AMT is to force taxpayers that are more profitable than their taxable income reflects to pay additional income taxes.

Jeff Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2016 tax year, Jeff had a U.S. profit of $1.2 million (QPAI) and a profit from the imported merchandise of $300,000. What is Jeff's DPAD?

Gerbil Corporation was formed in 2006. If in 2016, it has average gross receipts of under $7.5 million, the company cannot be subject to the AMT.

In 2016, Job Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $7 million. If Job Corporation's ACE is $16 million, its tentative minimum tax for 2016 is:

Yvonne Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2016 tax year, Yvonne had a U. S. profit of $1.3 million (QPAI) and a loss from the imported merchandise of $200,000. What is Yvonne's DPAD?

​Saffron Corporation, a calendar year taxpayer, has alternative minimum taxable income (before adjustment for adjusted current earnings) of $2 million for 2017. If Saffron Corporation's adjusted current earnings is $4 million, its tentative minimum tax for 2017 is:

​Which entity is subject to the ACE provisions?

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

Which statement is false?

Saffron Corporation, a calendar year taxpayer, has alternative minimum taxable income (before adjustment for adjusted current earnings) of $2 million for 2017. If Saffron Corporation's adjusted current earnings is $4 million, its tentative minimum tax for 2017 is:

Which entity is subject to the ACE provisions?