Question 1

Identify which of the following statements is false.

Accepted Answer

A) The 80% dividends-received deduction can be claimed when computing a corporation's undistributed personal holding company income (UPHCI). 
B) Rental expenses in excess of rental income are added back to taxable income to arrive at personal holding company income (PHCI). 
C) Wind Corporation is a personal holding company. Its taxable income for this year is $100,000. The corporation's charitable contributions are $5,000 greater than its income tax charitable contribution deduction limitation. Wind's UPHCI is $95,000, assuming no other adjustments must be made. 
D) The PHC tax is assessed at 20%. 
A) The 80% dividends-received deduction can be claimed when computing a corporation's undistributed personal holding company income (UPHCI). 
B) Rental expenses in excess of rental income are added back to taxable income to arrive at personal holding company income (PHCI). 
C) Wind Corporation is a personal holding company. Its taxable income for this year is $100,000. The corporation's charitable contributions are $5,000 greater than its income tax charitable contribution deduction limitation. Wind's UPHCI is $95,000, assuming no other adjustments must be made. 
D) The PHC tax is assessed at 20%. A

Question 2

When computing the accumulated earnings tax, the dividends-paid deduction is not available for

Accepted Answer

A) dividends paid during the tax year. 
B) throwback dividends. 
C) stock dividends. 
D) All of the above are deductible. 
A) dividends paid during the tax year. 
B) throwback dividends. 
C) stock dividends. 
D) All of the above are deductible. C

Question 3

What is the effect of the two-pronged test that allows the exclusion from PHCI of certain AIR (adjusted income from rents)?

Accepted Answer

The effect of the two-pronged test is that it makes it difficult to use rents to shelter other passive income. PHCI does not include rents if (1)AIR is at least 50% of AOGI, and (2)the dividends-paid deduction equals or exceeds the amount by which nonrental PHCI exceeds 10% of OGI.

Question 4

Identify which of the following statements is true.

Accepted Answer

A) A corporation accumulates earnings to fund the redemption of a shareholder's stock following her death so as to provide her estate with liquidity to pay death taxes. Such an accumulation of earnings is a reasonable business need. 
B) A corporation accumulates earnings to fund a buy-sell agreement. Such an accumulation of earnings is a reasonable business need. 
C) A corporation's net capital gain (minus any federal income taxes paid with respect to such gain)increases the tax base for the accumulated earnings tax. 
D) All of the above are false. 
A) A corporation accumulates earnings to fund the redemption of a shareholder's stock following her death so as to provide her estate with liquidity to pay death taxes. Such an accumulation of earnings is a reasonable business need. 
B) A corporation accumulates earnings to fund a buy-sell agreement. Such an accumulation of earnings is a reasonable business need. 
C) A corporation's net capital gain (minus any federal income taxes paid with respect to such gain)increases the tax base for the accumulated earnings tax. 
D) All of the above are false.

Question 5

The personal holding company penalty tax rate is

Accepted Answer

A) 20%. 
B) 10%. 
C) 15%. 
D) 35%. 
A) 20%. 
B) 10%. 
C) 15%. 
D) 35%.

Question 6

The following information is reported by Acme Corporation.   What is Acme Corporation's average operating cycle as a percentage of the year?

Accepted Answer

Inventory turnover = ($35,000/$350,000)×

Question 7

Foster Corporation has gross income for regular tax purposes of $100,000, which includes a net Sec. 1231 gain of $10,000 and a net capital gain of $10,000. Ordinary gross income for personal holding company purposes is

Accepted Answer

A) $70,000. 
B) $80,000. 
C) $90,000. 
D) $100,000. 
A) $70,000. 
B) $80,000. 
C) $90,000. 
D) $100,000.

Question 8

Identify which of the following statements is true.

Accepted Answer

A) The personal holding company tax is levied to prevent closely held corporations from sheltering passive income. 
B) Caleb Corporation is owned by a mother and her two daughters. It reports $100,000 of rental income; $30,000 of depreciation, interest, and property taxes on the rental real estate; and $10,000 of dividend income. Caleb Corporation is classified as a personal holding company. 
C) Luke Corporation is owned by a father and his son. The corporation employs 10 individuals to provide public accounting services. Father and son make all of the work assignments for the professional employees. The professional fees earned by the corporation are personal holding company income. 
D) All of the above are false. 
A) The personal holding company tax is levied to prevent closely held corporations from sheltering passive income. 
B) Caleb Corporation is owned by a mother and her two daughters. It reports $100,000 of rental income; $30,000 of depreciation, interest, and property taxes on the rental real estate; and $10,000 of dividend income. Caleb Corporation is classified as a personal holding company. 
C) Luke Corporation is owned by a father and his son. The corporation employs 10 individuals to provide public accounting services. Father and son make all of the work assignments for the professional employees. The professional fees earned by the corporation are personal holding company income. 
D) All of the above are false.

Question 9

When computing the accumulated earnings tax, which of the following is not a reduction to arrive at accumulated taxable income?

Accepted Answer

A) accumulated earnings credit 
B) NOL deduction claimed 
C) accrued federal income taxes 
D) dividends-paid deduction 
A) accumulated earnings credit 
B) NOL deduction claimed 
C) accrued federal income taxes 
D) dividends-paid deduction

Question 10

In years beginning in 2018 through 2020, any minimum tax credit carryover from prior alternative minimum tax.years will be allowed to the extent of the regular tax liability plus 50% of the excess of the minimum tax credit over the amount credited against the regular tax.

Accepted Answer

A) True 
 B)False

Question 11

Given the following information about Jones Corporation, what are Jones's working capital needs using the Bardahl formula, assuming that federal income taxes are not an operating expense?

Accepted Answer

Inventory turnover (as a percent of the

Question 12

Khuns Corporation, a personal holding company, reports the following:   Calculate Khuns Corporation's adjusted income from rents (AIR).

Accepted Answer

The answer of Khuns Corporation, a personal holding company, reports...

Question 13

Which of the following is not an adjustment to taxable income when computing the personal holding company tax?

Accepted Answer

A) dividends-received deduction 
B) dividends-paid deduction 
C) NOL carryover from immediately preceding tax year 
D) All of the above are adjustments. 
A) dividends-received deduction 
B) dividends-paid deduction 
C) NOL carryover from immediately preceding tax year 
D) All of the above are adjustments.

Question 14

Eagle Corporation, a personal holding company, has the following results:   Calculate the PHC tax.

Accepted Answer

@#IMG-DLM& *$10,000

Question 15

The courts and the Treasury Regulations have mentioned a number of reasonable needs that allow a corporation to accrue earnings and avoid the accumulated earnings tax. What are these reasons?

Accepted Answer

• Expansion of a business or replacement

Question 16

All of the following are recognized as reasons for accumulating earnings except

Accepted Answer

A) working capital needs. 
B) product liability loss reserves. 
C) redemption of stock of deceased shareholder. 
D) All of the above are recognized reasons for accumulating earnings. 
A) working capital needs. 
B) product liability loss reserves. 
C) redemption of stock of deceased shareholder. 
D) All of the above are recognized reasons for accumulating earnings.

Question 17

The accumulated earnings tax is imposed at what rate?

Accepted Answer

A) 10% 
B) 20% 
C) 15% 
D) 35% 
A) 10% 
B) 20% 
C) 15% 
D) 35%

Question 18

What is a personal holding company?

Accepted Answer

A personal holding company is any corpor

Question 19

Identify which of the following statements is true.

Accepted Answer

A) The Bardahl formula is based on the firm's inventory period, receivables period, credit period, and total cash expenditures for cost of sales and operating expenses. 
B) The Bardahl formula uses the concept of working capital, cash over current liabilities. 
C) The Bardahl formula provides mathematical exactness when calculating reasonable working capital needs for accumulated earnings tax purposes. 
D) All of the above are false. 
A) The Bardahl formula is based on the firm's inventory period, receivables period, credit period, and total cash expenditures for cost of sales and operating expenses. 
B) The Bardahl formula uses the concept of working capital, cash over current liabilities. 
C) The Bardahl formula provides mathematical exactness when calculating reasonable working capital needs for accumulated earnings tax purposes. 
D) All of the above are false.

Question 20

Identify which of the following statements is true.

Accepted Answer

A) In practice, the accumulated earnings tax applies only to closely held corporations. 
B) A corporation bears the burden of proving that its earnings are not being accumulated to avoid income taxes. 
C) To avoid the accumulated earnings tax, a corporation needs to have a definite plan for expending the accumulated earnings. 
D) All of the above are true. 
A) In practice, the accumulated earnings tax applies only to closely held corporations. 
B) A corporation bears the burden of proving that its earnings are not being accumulated to avoid income taxes. 
C) To avoid the accumulated earnings tax, a corporation needs to have a definite plan for expending the accumulated earnings. 
D) All of the above are true.

Identify which of the following statements is false.

When computing the accumulated earnings tax, the dividends-paid deduction is not available for

What is the effect of the two-pronged test that allows the exclusion from PHCI of certain AIR (adjusted income from rents)?

Identify which of the following statements is true.

The personal holding company penalty tax rate is

The following information is reported by Acme Corporation. What is Acme Corporation's average operating cycle as a percentage of the year?

Foster Corporation has gross income for regular tax purposes of $100,000, which includes a net Sec. 1231 gain of $10,000 and a net capital gain of $10,000. Ordinary gross income for personal holding company purposes is

Identify which of the following statements is true.

When computing the accumulated earnings tax, which of the following is not a reduction to arrive at accumulated taxable income?

In years beginning in 2018 through 2020, any minimum tax credit carryover from prior alternative minimum tax.years will be allowed to the extent of the regular tax liability plus 50% of the excess of the minimum tax credit over the amount credited against the regular tax.

Given the following information about Jones Corporation, what are Jones's working capital needs using the Bardahl formula, assuming that federal income taxes are not an operating expense?

Khuns Corporation, a personal holding company, reports the following: Calculate Khuns Corporation's adjusted income from rents (AIR).

Which of the following is not an adjustment to taxable income when computing the personal holding company tax?

Eagle Corporation, a personal holding company, has the following results: Calculate the PHC tax.

The courts and the Treasury Regulations have mentioned a number of reasonable needs that allow a corporation to accrue earnings and avoid the accumulated earnings tax. What are these reasons?

All of the following are recognized as reasons for accumulating earnings except

The accumulated earnings tax is imposed at what rate?

What is a personal holding company?

Identify which of the following statements is true.

Identify which of the following statements is true.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters

Exam 5: Other Corporate Tax Levies

Identify which of the following statements is false.

When computing the accumulated earnings tax, the dividends-paid deduction is not available for

What is the effect of the two-pronged test that allows the exclusion from PHCI of certain AIR (adjusted income from rents)?

Identify which of the following statements is true.

The personal holding company penalty tax rate is

The following information is reported by Acme Corporation. What is Acme Corporation's average operating cycle as a percentage of the year?

Foster Corporation has gross income for regular tax purposes of $100,000, which includes a net Sec. 1231 gain of $10,000 and a net capital gain of $10,000. Ordinary gross income for personal holding company purposes is

Identify which of the following statements is true.

When computing the accumulated earnings tax, which of the following is not a reduction to arrive at accumulated taxable income?

In years beginning in 2018 through 2020, any minimum tax credit carryover from prior alternative minimum tax.years will be allowed to the extent of the regular tax liability plus 50% of the excess of the minimum tax credit over the amount credited against the regular tax.

Given the following information about Jones Corporation, what are Jones's working capital needs using the Bardahl formula, assuming that federal income taxes are not an operating expense?

Khuns Corporation, a personal holding company, reports the following: Calculate Khuns Corporation's adjusted income from rents (AIR).

Which of the following is not an adjustment to taxable income when computing the personal holding company tax?

Eagle Corporation, a personal holding company, has the following results: Calculate the PHC tax.

The courts and the Treasury Regulations have mentioned a number of reasonable needs that allow a corporation to accrue earnings and avoid the accumulated earnings tax. What are these reasons?

All of the following are recognized as reasons for accumulating earnings except

The accumulated earnings tax is imposed at what rate?

What is a personal holding company?

Identify which of the following statements is true.

Identify which of the following statements is true.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters