Question 1

A corporation may elect to take a credit for dividends paid in lieu of claiming a dividends-received deduction.

Accepted Answer

A) True 
 B)False  False

Question 2

Harry forms the Nectarine Corporation during the current tax year. To form the corporation, Harry transfers assets having a fair market value of $650,000 to Nectarine Corporation for 100 percent of the corporation's stock. Harry's adjusted basis in the assets transferred was $375,000 and Nectarine Corporation assumed a $200,000 mortgage on the assets. If the fair market value of the stock received by Harry is $450,000, what is his basis in the stock received from the corporation?

Accepted Answer

A) $175,000 
B) $200,000 
C) $375,000 
D) $450,000 
E) None of these 
A) $175,000 
B) $200,000 
C) $375,000 
D) $450,000 
E) None of these A

Question 3

A corporation may be subject to both the accumulated earnings tax and the personal holding company tax in the same year.

Accepted Answer

A) True 
 B)False  False

Question 4

Corporations are not allowed to amortize the costs of organizing the corporation.

Accepted Answer

A) True 
 B)False

Question 5

In the current year, Parvifolia, Inc. had $400,000 of revenue from operations and $160,000 of dividends from nonaffiliated 15-percent-owned domestic corporations. The corporation's deductible operating expenses totaled $410,000. What is Parvifolia, Inc.'s dividends received deduction for the current year?

Accepted Answer

A) 80,000 
B) $75,000 
C) $120,000 
D) $160,000 
E) None of these 
A) 80,000 
B) $75,000 
C) $120,000 
D) $160,000 
E) None of these

Question 6

A corporation must reconcile, to the IRS's satisfaction, the differences between net income as shown on the company's books and taxable income (before special deductions and net operating losses) as shown on the tax return.

Accepted Answer

A) True 
 B)False

Question 7

The Heal Yourself Health Care Corporation, a service corporation, has accumulated earnings of $375,000 and the corporation can establish a reasonable need for $125,000. Calculate the amount of the accumulated earnings tax, if any, that will be imposed on the corporation.

Accepted Answer

$45,000 =

Question 8

For the year ended December 31, 2019, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items: ? $\begin{array} { l  }
 \text {Interest income on tax-exempt municipal securities }&\$30,000 \
 \text { Loss on sale of 1 and acquired in 1987 as an investment  }&\$40,000 \
 \text {Interest expense on loan to purchase tax-exempt municipal securities }&\$10,000 \
\end{array}$
 What is the taxable income of Prunus, Inc. for 2019?

Accepted Answer

A) $800,000 
B) $820,000 
C) $830,000 
D) $870,000 
E) None of these 
A) $800,000 
B) $820,000 
C) $830,000 
D) $870,000 
E) None of these

Question 9

For the current year, the Beech Corporation has net income on its books of $60,000, including the following items: $$\begin{array} { l l } 
\text { Net capital losses } & \$ 15,000 \
\text { Federal income tax expense } & \$ 25,000
\end{array}$$ Federal tax depreciation exceeds the depreciation deducted on the books by $5,000. What is the corporation's taxable income?

Accepted Answer

A) $66,000 
B) $90,000 
C) $95,000 
D) $103,000 
E) None of these 
A) $66,000 
B) $90,000 
C) $95,000 
D) $103,000 
E) None of these

Question 10

Capital losses of a corporation must be used to offset capital gains and net capital losses may not be deducted from the ordinary income of a corporation.

Accepted Answer

A) True 
 B)False

Question 11

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business, assuming their total organizational expenses do not exceed $50,000.

Accepted Answer

A) True 
 B)False

Question 12

In 2019, the corporate alternative minimum tax rate is 28 percent.

Accepted Answer

A) True 
 B)False

Question 13

An S corporation files a Form 1120S.

Accepted Answer

A) True 
 B)False

Question 14

The Peach Corporation is a regular corporation that contributes $25,000 cash to qualified charitable organizations during the current year. The corporation has net taxable income of $190,000 before deducting the contributions.
a.What is the amount of Peach Corporation's allowable deduction for charitable contributions for the current year?
b.What may the corporation do with any excess amount of contributions?

Accepted Answer

The answer of The Peach Corporation is a regular corporation...

Question 15

Rex and Marsha each own 50 percent of the Grandiflora Corporation, an S corporation with a calendar tax year. At the beginning of the tax year, Marsha and Rex both have a basis in the stock of the corporation of $25,000. On June 30, 2019, Rex sells his interest in the corporation to George for $200,000, and for 2019 the Grandiflora Corporation has a loss of $90,000.
a.Calculate the amount of the corporation's loss that may be deducted by Rex on his 2019 tax return.
b.Calculate the amount of the corporation's loss that may be deducted by George on his 2019 tax return.
c.Calculate the amount of the corporation's loss that may be deducted by Marsha on her 2019 tax return.

Accepted Answer

The answer of Rex and Marsha each own 50 percent...

Question 16

Brokers' fees incurred in the issuance of a corporation's stock are considered organizational expenditures.

Accepted Answer

A) True 
 B)False

Question 17

Rob, Bill, and Steve form Big Company. Rob performs $45,000 of services for his 45 shares of the company. Bill transferred property with a basis of $5,000 for $75,000 of stock (75 shares). Steve contributes cash of $100,000 for his 100 shares. Which of the three must recognize income in the year of the formation?

Accepted Answer

A) Rob 
B) Rob, Bill 
C) Bill 
D) Steve, Bill 
E) Steve, Rob 
A) Rob 
B) Rob, Bill 
C) Bill 
D) Steve, Bill 
E) Steve, Rob

Question 18

The original due date for a tax return of a corporation filing a Form 1120 with a calendar tax year-end falls before the original due date of a return for an individual taxpayer with the same tax year.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is false in regards to filing requirements?

Accepted Answer

A) Corporations file their tax returns on Form 1120. 
B) A 6-month extension can be obtained by a corporation (other than a corporation with a tax year ending on June 30) that files Form 1120. 
C) Filing an extension for a corporate tax return also provides an extension for paying the corporation's tax due. A corporation can wait to pay its tax liability without penalty when the return is filed. 
D) None of these is false. 
A) Corporations file their tax returns on Form 1120. 
B) A 6-month extension can be obtained by a corporation (other than a corporation with a tax year ending on June 30) that files Form 1120. 
C) Filing an extension for a corporate tax return also provides an extension for paying the corporation's tax due. A corporation can wait to pay its tax liability without penalty when the return is filed. 
D) None of these is false.

Question 20

What is the purpose of Schedule M-1?

Accepted Answer

Schedule M-1 is included in corporate ta

A corporation may elect to take a credit for dividends paid in lieu of claiming a dividends-received deduction.

A corporation may be subject to both the accumulated earnings tax and the personal holding company tax in the same year.

Corporations are not allowed to amortize the costs of organizing the corporation.

A corporation must reconcile, to the IRS's satisfaction, the differences between net income as shown on the company's books and taxable income (before special deductions and net operating losses) as shown on the tax return.

The Heal Yourself Health Care Corporation, a service corporation, has accumulated earnings of $375,000 and the corporation can establish a reasonable need for $125,000. Calculate the amount of the accumulated earnings tax, if any, that will be imposed on the corporation.

Capital losses of a corporation must be used to offset capital gains and net capital losses may not be deducted from the ordinary income of a corporation.

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business, assuming their total organizational expenses do not exceed $50,000.

In 2019, the corporate alternative minimum tax rate is 28 percent.

An S corporation files a Form 1120S.

Brokers' fees incurred in the issuance of a corporation's stock are considered organizational expenditures.

The original due date for a tax return of a corporation filing a Form 1120 with a calendar tax year-end falls before the original due date of a return for an individual taxpayer with the same tax year.

Which of the following is false in regards to filing requirements?

What is the purpose of Schedule M-1?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

Tax Administration and Tax Planning

Filters

Exam 11: The Corporate Income Tax

A corporation may elect to take a credit for dividends paid in lieu of claiming a dividends-received deduction.

A corporation may be subject to both the accumulated earnings tax and the personal holding company tax in the same year.

Corporations are not allowed to amortize the costs of organizing the corporation.

A corporation must reconcile, to the IRS's satisfaction, the differences between net income as shown on the company's books and taxable income (before special deductions and net operating losses) as shown on the tax return.

The Heal Yourself Health Care Corporation, a service corporation, has accumulated earnings of $375,000 and the corporation can establish a reasonable need for $125,000. Calculate the amount of the accumulated earnings tax, if any, that will be imposed on the corporation.

Capital losses of a corporation must be used to offset capital gains and net capital losses may not be deducted from the ordinary income of a corporation.

Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business, assuming their total organizational expenses do not exceed $50,000.

In 2019, the corporate alternative minimum tax rate is 28 percent.

An S corporation files a Form 1120S.

Brokers' fees incurred in the issuance of a corporation's stock are considered organizational expenditures.

The original due date for a tax return of a corporation filing a Form 1120 with a calendar tax year-end falls before the original due date of a return for an individual taxpayer with the same tax year.

Which of the following is false in regards to filing requirements?

What is the purpose of Schedule M-1?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

Tax Administration and Tax Planning

Filters