Question 1

Which of the following rules are the same as to the income taxation of individuals and C corporations?

Accepted Answer

A) Recapture of depreciation on real property (§ 1250). 
B) Excess long-term capital losses carried over as short-term capital losses. 
C) Dividends received deduction. 
D) The unextended due date for filing the Federal income tax return for a calendar year. 
A) Recapture of depreciation on real property (§ 1250). 
B) Excess long-term capital losses carried over as short-term capital losses. 
C) Dividends received deduction. 
D) The unextended due date for filing the Federal income tax return for a calendar year.

Question 2

In determining a partner's basis in the partnership interest, which of the following reflects a correct adjustment?

Accepted Answer

A) Add capital losses. 
B) Subtract tax-exempt income. 
C) Subtract for decrease in partnership liabilities. 
D) Add partnership operating loss. 
A) Add capital losses. 
B) Subtract tax-exempt income. 
C) Subtract for decrease in partnership liabilities. 
D) Add partnership operating loss.

Question 3

Which of the following statements, if any, incorrectly characterize the check-the-box Regulations?

Accepted Answer

A) A one-owner business is a sole proprietorship if default (no election is made) occurs. 
B) A one-owner business can elect to be taxed as a corporation. 
C) If default (no election is made) occurs, a limited liability company is taxed as a partnership. 
D) The check-the-box Regulations can apply to entities that are already incorporated under state law. 
A) A one-owner business is a sole proprietorship if default (no election is made) occurs. 
B) A one-owner business can elect to be taxed as a corporation. 
C) If default (no election is made) occurs, a limited liability company is taxed as a partnership. 
D) The check-the-box Regulations can apply to entities that are already incorporated under state law.

Question 4

Jacob and Ashley form Junco Corporation with the following investments. $\begin{array}{lr}
&\text {From}&\text {From}\
&\text {Jacob}&\text {Ashley}\
\text { Cash } & \$ 200,000 \
\text { Equipment (basis of } \$ 400,000 \text {; fair market value } & 300,000 \
\text { of } \$ 300,000 \text { ) } & \
\text { Land (basis of } \$ 300,000 \text {; fair market value of } &&\$600,000 \
\$ 600,000) &
\end{array}$ Both Jacob and Ashley receive one-half of the Junco stock.In addition, Ashley receives cash of $100,000.One of the results of these transfers is that:

Accepted Answer

A) Jacob has a recognized loss of $100,000. 
B) Ashley has a recognized gain of $300,000. 
C) Junco has a basis of $400,000 in the land. 
D) Ashley's basis in the Junco stock is $500,000. 
A) Jacob has a recognized loss of $100,000. 
B) Ashley has a recognized gain of $300,000. 
C) Junco has a basis of $400,000 in the land. 
D) Ashley's basis in the Junco stock is $500,000.

Question 5

A partnership's ordinary income or loss is computed without considering any charitable contributions.This item is separately stated and passes through to the individual partners.

Accepted Answer

A) True 
 B)False

Question 6

The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

Accepted Answer

A) True 
 B)False

Question 7

A corporation with a fiscal year of July 1-June 30 has a due date for filing its Federal income tax return of October
15.

Accepted Answer

A) True 
 B)False

Question 8

Laurie is a 70% shareholder in Martin Ltd., a calendar year S corporation.As of January 1, 2020, Laurie's basis in her stock investment was $400,000.During 2020, she made an additional capital contribution to Martin of $90,000 and also loaned the corporation $80,000.During 2020, Martin Ltd.had an operating loss of $900,000.One of the results of these transactions as to 2020 is that:

Accepted Answer

A) Laurie can recognize a loss of $400,000. 
B) Laurie can recognize a loss of $490,000. 
C) Laurie can recognize a loss of $630,000. 
D) As of January 1, 2021, Laurie's basis in her stock is a negative $60,000. 
E) None of these. 
A) Laurie can recognize a loss of $400,000. 
B) Laurie can recognize a loss of $490,000. 
C) Laurie can recognize a loss of $630,000. 
D) As of January 1, 2021, Laurie's basis in her stock is a negative $60,000. 
E) None of these.

Question 9

Both Emerald Corporation and Gold Corporation own 500 shares of IBM Corporation common stock and both receive the same amount of cash dividends on their stock investment.The dividends received deduction each corporation can claim will be the same.

Accepted Answer

A) True 
 B)False

Question 10

Partnerships are not separate taxable entities and, consequently, are not taxed at the entity level.

Accepted Answer

A) True 
 B)False

Question 11

Using the legend provided, classify each statement accordingly.
-This is exempt from AMT.

Accepted Answer

A) Applies only to the income taxation of individuals 
B) Applies only to the income taxation of C corporations 
C) Applies to both the income taxation of individuals and of C corporations 
D) Applies to neither the income taxation of individuals nor of C corporations 
A) Applies only to the income taxation of individuals 
B) Applies only to the income taxation of C corporations 
C) Applies to both the income taxation of individuals and of C corporations 
D) Applies to neither the income taxation of individuals nor of C corporations

Question 12

Which of the following can use the cash method of accounting?

Accepted Answer

A) An individual taxpayer operating a sole proprietorship with gross receipts of $35 million for which inventory is an income producing factor. 
B) A corporation with gross receipts of $26 million. 
C) A partnership with gross receipts of $900,000 but for which inventory is an income-producing factor. 
D) A manufacturing corporation with gross receipts of $37.2 million. 
A) An individual taxpayer operating a sole proprietorship with gross receipts of $35 million for which inventory is an income producing factor. 
B) A corporation with gross receipts of $26 million. 
C) A partnership with gross receipts of $900,000 but for which inventory is an income-producing factor. 
D) A manufacturing corporation with gross receipts of $37.2 million.

Question 13

Which of the following statements, if any, is characteristic of constructive dividends?

Accepted Answer

A) They must be available to the shareholders on a pro rata basis. 
B) They can occur even if the corporation has no earnings and profits. 
C) They must be formally declared and paid (i.e., declaration date, record date, payment date). 
D) They are not deductible by the corporation. 
A) They must be available to the shareholders on a pro rata basis. 
B) They can occur even if the corporation has no earnings and profits. 
C) They must be formally declared and paid (i.e., declaration date, record date, payment date). 
D) They are not deductible by the corporation.

Question 14

Using the legend provided, classify each statement accordingly.
-A gain on an involuntary conversion cannot be deferred.

Accepted Answer

A) Applies only to the income taxation of individuals 
B) Applies only to the income taxation of C corporations 
C) Applies to both the income taxation of individuals and of C corporations 
D) Applies to neither the income taxation of individuals nor of C corporations 
A) Applies only to the income taxation of individuals 
B) Applies only to the income taxation of C corporations 
C) Applies to both the income taxation of individuals and of C corporations 
D) Applies to neither the income taxation of individuals nor of C corporations

Question 15

Which of the following is likely to be construed as a constructive dividend:

Accepted Answer

A) A loan from a shareholder to a corporation with an interest rate below market rates. 
B) A loan from a corporation to a shareholder with above market interest rates. 
C) A shareholder's personal use of corporate-owned housing. 
D) Additional shareholder contributions to capital to fund corporate operations. 
E) All of these likely constitute constructive dividends. 
A) A loan from a shareholder to a corporation with an interest rate below market rates. 
B) A loan from a corporation to a shareholder with above market interest rates. 
C) A shareholder's personal use of corporate-owned housing. 
D) Additional shareholder contributions to capital to fund corporate operations. 
E) All of these likely constitute constructive dividends.

Question 16

Using the legend provided, classify each statement accordingly.
-Upon its formation, § 351 tax deferral can apply.

Accepted Answer

A) Applies only to the income taxation of C corporations. 
B) Applies only to the income taxation of S corporations. 
C) Applies to both the income taxation of C corporations and S corporations. 
D) Applies to neither the income taxation of C corporations nor of S corporations. 
A) Applies only to the income taxation of C corporations. 
B) Applies only to the income taxation of S corporations. 
C) Applies to both the income taxation of C corporations and S corporations. 
D) Applies to neither the income taxation of C corporations nor of S corporations.

Question 17

Organizational expenditures include the costs of transferring assets to the new corporation.

Accepted Answer

A) True 
 B)False

Question 18

Orange Corporation generates current E&P of $40,000 and has accumulated E&P of $35,000 at the beginning of the current year.During the year, Orange makes a $120,000 distribution to its shareholders.Orange's accumulated E&P at year-end is negative.

Accepted Answer

A) True 
 B)False

Question 19

If a corporation has no E & P, its shareholders can not have constructive dividends.

Accepted Answer

A) True 
 B)False

Question 20

C corporations are not subject to the alternative minimum tax (AMT).

Accepted Answer

A) True 
 B)False

Which of the following rules are the same as to the income taxation of individuals and C corporations?

In determining a partner's basis in the partnership interest, which of the following reflects a correct adjustment?

Which of the following statements, if any, incorrectly characterize the check-the-box Regulations?

A partnership's ordinary income or loss is computed without considering any charitable contributions.This item is separately stated and passes through to the individual partners.

The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

A corporation with a fiscal year of July 1-June 30 has a due date for filing its Federal income tax return of October 15.

Both Emerald Corporation and Gold Corporation own 500 shares of IBM Corporation common stock and both receive the same amount of cash dividends on their stock investment.The dividends received deduction each corporation can claim will be the same.

Partnerships are not separate taxable entities and, consequently, are not taxed at the entity level.

Using the legend provided, classify each statement accordingly. -This is exempt from AMT.

Which of the following can use the cash method of accounting?

Which of the following statements, if any, is characteristic of constructive dividends?

Using the legend provided, classify each statement accordingly. -A gain on an involuntary conversion cannot be deferred.

Which of the following is likely to be construed as a constructive dividend:

Using the legend provided, classify each statement accordingly. -Upon its formation, § 351 tax deferral can apply.

Organizational expenditures include the costs of transferring assets to the new corporation.

Orange Corporation generates current E&P of $40,000 and has accumulated E&P of $35,000 at the beginning of the current year.During the year, Orange makes a $120,000 distribution to its shareholders.Orange's accumulated E&P at year-end is negative.

If a corporation has no E & P, its shareholders can not have constructive dividends.

C corporations are not subject to the alternative minimum tax (AMT).

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basic Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Filters

Exam 20: Corporations and Partnerships

Which of the following rules are the same as to the income taxation of individuals and C corporations?

In determining a partner's basis in the partnership interest, which of the following reflects a correct adjustment?

Which of the following statements, if any, incorrectly characterize the check-the-box Regulations?

A partnership's ordinary income or loss is computed without considering any charitable contributions.This item is separately stated and passes through to the individual partners.

The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

A corporation with a fiscal year of July 1-June 30 has a due date for filing its Federal income tax return of October 15.

Both Emerald Corporation and Gold Corporation own 500 shares of IBM Corporation common stock and both receive the same amount of cash dividends on their stock investment.The dividends received deduction each corporation can claim will be the same.

Partnerships are not separate taxable entities and, consequently, are not taxed at the entity level.

Using the legend provided, classify each statement accordingly. -This is exempt from AMT.

Which of the following can use the cash method of accounting?

Which of the following statements, if any, is characteristic of constructive dividends?

Using the legend provided, classify each statement accordingly. -A gain on an involuntary conversion cannot be deferred.

Which of the following is likely to be construed as a constructive dividend:

Using the legend provided, classify each statement accordingly. -Upon its formation, § 351 tax deferral can apply.

Organizational expenditures include the costs of transferring assets to the new corporation.

Orange Corporation generates current E&P of $40,000 and has accumulated E&P of $35,000 at the beginning of the current year.During the year, Orange makes a $120,000 distribution to its shareholders.Orange's accumulated E&P at year-end is negative.

If a corporation has no E & P, its shareholders can not have constructive dividends.

C corporations are not subject to the alternative minimum tax (AMT).

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basic Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Filters