Question 1

To prevent triple taxation, a corporation is entitled to deduct 50 percent of the dividends received from all other domestic corporations.

Accepted Answer

A) True 
 B)False

Question 2

In the current year, corporations pay a flat 21 percent federal income tax.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not a requirement for qualification as an S corporation?

Accepted Answer

A) The corporation must be a domestic corporation. 
B) The corporation must have 25 or fewer shareholders. 
C) The corporation must have only one class of stock outstanding. 
D) The shareholders of the corporation must not be nonresident aliens. 
E) None of these. 
A) The corporation must be a domestic corporation. 
B) The corporation must have 25 or fewer shareholders. 
C) The corporation must have only one class of stock outstanding. 
D) The shareholders of the corporation must not be nonresident aliens. 
E) None of these.

Question 4

Robert, Kim, Tony, and Sharon decided to form the Cash Cow Corporation. In exchange for 40 percent of the stock, Robert contributed an apartment building with a fair market value of $700,000 and subject to a liability of $300,000. Robert's basis in the apartment building is $225,000. Kim contributed warehouse storage units worth $450,000 in exchange for 40 percent of the stock plus $50,000 in cash from the corporation. Her basis in the warehouse is $125,000. Tony contributed $100,000 cash for 10 percent of the stock. Sharon is performing services worth $100,000 for 10 percent of the stock.
a. What is the recognized gain or recognized income for:
1. Robert
2. Kim
3. Tony
4. Sharon
b. What is the basis in the stock for:
1. Robert
2. Kim
3. Tony
4. Sharon
c. What is the corporation's basis in:
1. The apartment building
2. The warehouse

Accepted Answer

a. The gain recognized is as follows:
1.

Question 5

The Bay Fig Corporation has $350,000 of taxable income from operations for the current year, and dividends of $50,000 received from 10-percent-owned domestic corporations. How much is the Bay Fig Corporation's dividends received deduction for the current year?

Accepted Answer

A) $25,000 
B) $32,500 
C) $50,000 
D) $175,000 
E) None of these 
A) $25,000 
B) $32,500 
C) $50,000 
D) $175,000 
E) None of these

Question 6

Which of the following corporations is allowed to make an S corporation election?

Accepted Answer

A) A US corporation owned and operated by two US citizens (individuals). 
B) A US corporation owned by a Brazilian corporation. 
C) A US owned and operated corporation with 7,000 separate shareholders. 
D) None of these could be an S corporation. 
A) A US corporation owned and operated by two US citizens (individuals). 
B) A US corporation owned by a Brazilian corporation. 
C) A US owned and operated corporation with 7,000 separate shareholders. 
D) None of these could be an S corporation.

Question 7

Corporations may deduct without limitation any amount of charitable contributions providing the amounts are paid to qualified organizations.

Accepted Answer

A) True 
 B)False

Question 8

Corporate tax rates favor large corporations.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is not true of S corporations?

Accepted Answer

A) S corporations are corporations that receive tax treatment similar to that given to partnerships. 
B) Section 1231 gains and losses pass through separately to stockholders of an S corporation. 
C) The amount of S corporation losses that a shareholder of an S corporation may report on his or her tax return is limited to the basis of the stock plus any loans made by the shareholder to the corporation. 
D) If a taxpayer purchases stock in an S corporation from another shareholder during the year, the new shareholder may report the entire amount of any loss for the year attributable to the shares purchased. 
E) If an otherwise qualifying shareholder acquires 40 percent of the stock of an S corporation, the new shareholder cannot cause the corporation to lose its S corporation election. 
A) S corporations are corporations that receive tax treatment similar to that given to partnerships. 
B) Section 1231 gains and losses pass through separately to stockholders of an S corporation. 
C) The amount of S corporation losses that a shareholder of an S corporation may report on his or her tax return is limited to the basis of the stock plus any loans made by the shareholder to the corporation. 
D) If a taxpayer purchases stock in an S corporation from another shareholder during the year, the new shareholder may report the entire amount of any loss for the year attributable to the shares purchased. 
E) If an otherwise qualifying shareholder acquires 40 percent of the stock of an S corporation, the new shareholder cannot cause the corporation to lose its S corporation election.

Question 10

Terry forms the Camphor Corporation during the current year. She transfers property with a value of $700,000 to Camphor Corporation in exchange for 100 percent of the stock in the corporation. Terry's basis in the property transferred was $400,000 and the corporation assumed a $275,000 mortgage on the property. If the fair market value of the stock received by Terry is $425,000, what is the corporation's basis in the property received from Terry?

Accepted Answer

A) $125,000 
B) $275,000 
C) $400,000 
D) $450,000 
E) $700,000 
A) $125,000 
B) $275,000 
C) $400,000 
D) $450,000 
E) $700,000

To prevent triple taxation, a corporation is entitled to deduct 50 percent of the dividends received from all other domestic corporations.

In the current year, corporations pay a flat 21 percent federal income tax.

Which of the following is not a requirement for qualification as an S corporation?

The Bay Fig Corporation has $350,000 of taxable income from operations for the current year, and dividends of $50,000 received from 10-percent-owned domestic corporations. How much is the Bay Fig Corporation's dividends received deduction for the current year?

Which of the following corporations is allowed to make an S corporation election?

Corporations may deduct without limitation any amount of charitable contributions providing the amounts are paid to qualified organizations.

Corporate tax rates favor large corporations.

Which of the following statements is not true of S corporations?

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

To prevent triple taxation, a corporation is entitled to deduct 50 percent of the dividends received from all other domestic corporations.

In the current year, corporations pay a flat 21 percent federal income tax.

Which of the following is not a requirement for qualification as an S corporation?

The Bay Fig Corporation has $350,000 of taxable income from operations for the current year, and dividends of $50,000 received from 10-percent-owned domestic corporations. How much is the Bay Fig Corporation's dividends received deduction for the current year?

Which of the following corporations is allowed to make an S corporation election?

Corporations may deduct without limitation any amount of charitable contributions providing the amounts are paid to qualified organizations.

Corporate tax rates favor large corporations.

Which of the following statements is not true of S corporations?

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