Exam 11: The Corporate Income Tax

A corporation owning 80 percent or more of the stock of another corporation has a dividends-received deduction of 100 percent.

Avocado Corporation paid $3,000 in estimated tax payments for the calendar year ended December 31, 2019. The corporation has an actual tax liability of $4,000 for the year. ​ a.If no extension is requested, when is the tax return due? b.If an extension of time to file is requested and approved, when is the tax return due? c.If an extension of time to file is requested and approved, when is the additional $1,000 of the 2019 tax due? ​

For 2019, what is the maximum tax rate for personal service corporations?

ABC Company owns 40 percent of JMT Company and 95 percent of DEM Company. JMT pays an $80,000 dividend to ABC and DEM pays a $40,000 dividend to ABC in the current year. Assuming that ABC has $1,000,000 of taxable income, calculate ABC's dividends received deduction for the current year.

The Guava Corporation has book net income of $90,000 for the current year. Included in this figure are the following items which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return. ​ 1. Federal income tax expense \2 5,000 2. Depreciation deducted on books, not deductible for tax purposes 4,000 3. Deduction for 50 percent of meals expense not allowed for tax purposes 3,000 4. Deduction for payroll tax penalties not allowed for tax purposes 2,000 5. Tax exempt interest income included in book income but not in tax return income 12,000 Based on the above information, calculate the Guava Corporation's taxable income for the year. Show your calculations.

The accumulated earnings tax is designed to prevent shareholders from avoiding tax at the shareholder level.

XYZ Corporation has a December 31 year-end. ​ a. When is XYZ Corporation's tax return due? b. When does XYZ Corporation need to make its estimated tax payments? c.Assuming that XYZ Corporation owes $5,000 on the original tax return due date and it files for an extension and is granted an automatic extension to file tax returns, what is the extended tax return date and when should taxes be paid?

Which of the following items is not generally a schedule M-1 adjustment?

In general, estimated payments for calendar-year corporations are due on:

The F. Repens Corporation has taxable income of $250,000 for the current year, including dividends of $60,000 received from 10-percent-owned domestic corporations. How much is the F. Repens Corporation's dividends received deduction for the current year?

What is the maximum amount of accumulated earnings that a corporation is allowed to accumulate, without regard to business needs, before the accumulated earnings tax is imposed?

Which of the following companies is taxed at a flat rate of 21 percent?

The Great Gumball Corporation is a gumball producer. The corporation has accumulated earnings of $425,000 and it can establish a reasonable need for $360,000. Calculate the amount of the accumulated earnings tax, if any, that will be imposed on the corporation.

Ficus, Inc. began business on March 1 of the current year, and elected to file its income tax return on a calendar-year basis. The corporation incurred $800 in organizational expenditures. Assuming the corporation does not elect to expense but chooses to amortize the costs over 180 months, the maximum allowable deduction for amortization of organizational expenditures in the current year is:

The Lagerstroemia Corporation was formed on January 1 of the current year. Calculate the Lagerstroemia Corporation's taxable income or loss for the current year given the following information: ​ Gross receipts \ 255,000 Cost of goods sold 150,000 Dividend income (from 10-percent-owned domestic corporation) 35,000 Interest income 10,000 Business expenses (other than organizational costs and charitable 120,000 contributions) 5,000 Charitable contributions 5,000 Taxable income/(loss) \

On July 1, 2019, Grey formed Arucaria Corporation. On that same date, Grey contributed $100,000 cash and transferred property with an adjusted basis of $60,000 to Arucaria in exchange for 3,000 shares of the corporation's common stock. The property transferred had a fair market value of $75,000 on the date of the transfer. Arucaria Corporation had no other shares of common stock outstanding on July 1, 2019. As a result of this transaction, Grey's basis in the stock and Arucaria Corporation's basis in the property (other than the cash), respectively, are:

The income of an S corporation is computed in much the same manner as that of a partnership.

Charitable contributions made by an S corporation are not deductible by the corporation; therefore, the shareholders receive no tax benefit from the contributions as itemized deductions.

If a corporation is unable to deduct a capital loss against capital gains for a particular tax year, it loses the tax benefit since the loss may not be carried to other tax years.

On July 1, of the current year, Robert forms the Yew Corporation. In exchange for 100 percent of the corporation's stock, Robert contributes land with a fair market value of $100,000. Robert acquired the land 5 years ago at a cost of $30,000. At the date of the contribution, the land is subject to a $10,000 mortgage which the corporation assumes. What is the basis of the land to Yew Corporation?