Exam 11: The Corporate Taxpayer

The federal tax law considers the member corporations of an affiliated group to be a single entity for federal tax purposes.

In its first taxable year, Platform, Inc. generated a $100,000 net operating loss and made a $10,000 cash donation to a local charity. In its second year, Platform generated $350,000 operating income and made a $20,000 donation to the same charity. Compute Platform's taxable income for its second year.

Loda Inc. made an $8,300 nondeductible charitable contribution and a $2,000 nondeductible political contribution this year. Which of the following statements is true?

What is the extended due date of the federal income tax return of a corporation with a tax year ended June 30, 2018?

The corporate characteristic of limited liability is more important to the shareholders than the characteristic of centralized management.

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

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

A nondeductible charitable contribution is a permanent book/tax difference.

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?

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.

Weston Corporation has accumulated minimum tax credits of $134,000 from tax years prior to 2018. If 2018 regular tax before credits is $47,000 and Jackson qualifies for general business credits of $14,000, its allowable minimum tax credit for 2018 is:

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

In terms of dispersal of ownership, corporations are classified as either closely held or publicly held.

Harmon, Inc. was incorporated and began business on January 1, 2017. Its tax liability for 2017 was $36,000. Its tax liability for 2018 was $50,000. Which of the following is a correct statement concerning the payment of estimated taxes for 2018?

Walker Inc. has accumulated minimum tax credits of $740,000 from tax years prior to 2018. Below are Walker's regular tax before credits for 2018 through 2021.

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

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

Hearth, Inc. reported $30,000 of depreciation expense on its financial statements. For federal income tax purposes, it deducted depreciation of $35,000. This book/tax difference would result in an increase to net income per books on the Schedule M-1 or M-3.

Westside, Inc. owns 15% of Innsbrook's common stock. This year, Westside generated $50,000 operating income and received $20,000 dividends from Innsbrook. Westside's taxable income is:

Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information: Gosling earned $3,500 on an investment in tax-exempt municipal bonds. Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income. Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000. Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes. Gosling's federal income tax expense per books was $220,000. a. Compute Gosling's taxable income and regular tax liability. b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.