Exam 11: The Corporate Taxpayer

John's, Inc. manufactures and sells fine furniture. What is John's regular tax liability if it had taxable income of $40,000,000 for its fiscal year ended September 30, 2018?

Angel Corporation's current-year regular tax liability is $40,000. Angel is eligible for a general business credit of $45,000. The corporation will receive a $5,000 refund of federal income tax.

Torquay Inc.'s(a calendar-year taxpayer) 2019 taxable income was $15,837,850, and its tax liability was $3,325,948. Torquay's director of tax estimates that the corporation's 2020 taxable income will be $13,350,000. Compute Torquay's 2020 estimated tax payment due on April 15, 2020.

Which of the following statements regarding Schedule M-3 is false?

Maxwell, Inc. had taxable income of $2,500,000 for its fiscal year ended June 30, 2018. Compute Maxwell's regular tax liability.

If a corporation has accumulated minimum tax credits from tax years prior to 2018, 100 percent of such credits are refundable on their 2018 tax return.

The corporate characteristic of free transferability exists if the corporate stock is subject to a buy-sell agreement.

Corporate taxable income after December 31, 2017 is taxed at a flat rate of 21%.

After 2017, a 100% dividends-received deduction is permitted for any dividends received from a foreign corporation.

For tax years beginning after December 31, 2015, which of the following statements regarding corporate tax filing requirements is false for corporations with a calendar year end?

Bisou Inc. made a $48,200 contribution to charity this year. Only $39,000 of the contribution was deductible. Bisou can carry the $9,200 nondeductible contribution back three years and forward five years.

Wave Corporation owns 90% of the stock of Surf, Inc. Each corporation reports the following separate items for the current tax year: $\begin{array}{lrrr}&\text { Wave}&\text { Surt}\\\text { Ordinary operating income (loss) } & \$ 500,000 & \$(100,000 \\\text { Capital gain (loss) } & (5,000) & 7,000\\\text { Section } 1231 \text { gain (loss) }&3,000&(10,000)\end{array}$ Compute consolidated taxable income if Wave and Surf file a consolidated federal income tax return:

Frazier, Inc. paid a $150,000 cash dividend to its shareholders. The corporation cannot deduct this payment on its corporate income tax return.

Rogers, Inc. owns 12% of Lampe Corporation's voting common stock. During the current year, Rogers generated $50,000 operating income and received $8,000 dividends from Lampe. Only $2,800 of the dividend is taxable.

Palm Corporation has book income of $424,000. Book income reflects $130,000 federal income tax expense and $55,000 depreciation expense. Tax depreciation expense computed under MACRS is $65,000. Palm received $25,000 of prepaid rent not included in book income. Based only on these items, compute Palm's taxable income.

Borough, Inc. is entitled to a rehabilitation credit of $500,000 for its current tax year. The corporation's regular tax liabilitybefore credits is $450,000. No estimated tax payments have been made. Which of the following statements is true?

At least three corporations are required to form an affiliated group.

Which of the following statements regarding the current year tax treatment of corporate dividends is true?

Which of the following statements regarding Schedule M-1 is true?

TasteCo, Inc. reported $210,500 of taxable income this year. What is its regular tax liability?