Question 1

For a corporate taxpayer in the 21% marginal tax bracket, a $20,000 tax credit is equivalent to a $95,238 tax deduction.

Accepted Answer

A) True 
 B)False

Question 2

Corporation F owns 95 percent of the outstanding stock of Corporation G. This year, the corporations' records provide the following information:
a. Compute each corporation's taxable income if they file separate tax returns.
b. Compute consolidated taxable income if Corporation F and Corporation G file a consolidated tax return.

Accepted Answer

a. If they file separately, Corporation

Question 3

The burden of corporate taxation is often borne by corporate shareholders, customers, employees, and suppliers.

Accepted Answer

A) True 
 B)False

Question 4

The four primary legal characteristics of a corporation are unlimited liability, limited life, free transferability of interests, and centralized management.

Accepted Answer

A) True 
 B)False

Question 5

Corporate taxable income after December 31, 2017 is taxed using a progressive rate schedule with a top marginal rate of 21%.

Accepted Answer

A) True 
 B)False

Question 6

Corporations are allowed a deduction for charitable contributions, limited to 10 percent of taxable income before the deduction.

Accepted Answer

A) True 
 B)False

Question 7

The purpose of Schedule M-1 is to explain the differences between financial statement income and taxable income.

Accepted Answer

A) True 
 B)False

Question 8

The Schedule M-3 reconciliation requires less detailed information than the Schedule M-1 reconciliation.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  The IRS developed Schedule M-3 with the goal of increasing transparency between reported net income for financial accounting purposes and reported net income for tax purposes. 
B)  Schedule M-3 reports the temporary versus permanent characterization of book-tax differences. 
C)  Part I of Schedule M-3 reconciles worldwide financial statement net income to the financial statement net income of those corporations permitted to be included in the U.S. consolidated tax return group. 
D)  Schedule M-3 replaces Schedule M-1 for all tax years beginning after December 31, 2004. 
A)  The IRS developed Schedule M-3 with the goal of increasing transparency between reported net income for financial accounting purposes and reported net income for tax purposes. 
B)  Schedule M-3 reports the temporary versus permanent characterization of book-tax differences. 
C)  Part I of Schedule M-3 reconciles worldwide financial statement net income to the financial statement net income of those corporations permitted to be included in the U.S. consolidated tax return group. 
D)  Schedule M-3 replaces Schedule M-1 for all tax years beginning after December 31, 2004.

Question 10

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

Accepted Answer

A)  The corporate dividends-received deduction is reported on Line 8 of Schedule M-1. 
B)  A corporation incurring nondeductible fines and penalties would report those amounts on line 5 of Schedule M-1. 
C)  Line 2 of schedule M-1 should reflect the corporation's actual federal income tax liability for the current year. 
D)  A corporation realizing a current gain on a like-kind exchange that is deferred for tax purposes would not report that gain on Schedule M-1. 
A)  The corporate dividends-received deduction is reported on Line 8 of Schedule M-1. 
B)  A corporation incurring nondeductible fines and penalties would report those amounts on line 5 of Schedule M-1. 
C)  Line 2 of schedule M-1 should reflect the corporation's actual federal income tax liability for the current year. 
D)  A corporation realizing a current gain on a like-kind exchange that is deferred for tax purposes would not report that gain on Schedule M-1.

Question 11

Corporations with more than $1 million taxable income must pay 100% of their current federal income tax liability in the form of quarterly estimate payments to avoid an underpayment penalty.

Accepted Answer

A) True 
 B)False

Question 12

Airfreight Corporation has book income of $370,000. Book income includes a $25,000 gain realized on a like-kind nontaxable exchange of realty. Based only on these items, compute Airfreight's taxable income.

Accepted Answer

A)  $370,000 
B)  $395,000 
C)  $345,000 
D)  $420,000 
A)  $370,000 
B)  $395,000 
C)  $345,000 
D)  $420,000

Question 13

For distributions prior to 2018, dividends-received deductions generally are not allowed for dividends from foreign corporations.

Accepted Answer

A) True 
 B)False

Question 14

A nonprofit corporation may incur a federal income tax if it has unrelated business income.

Accepted Answer

A) True 
 B)False

Question 15

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Accepted Answer

A) True 
 B)False

For a corporate taxpayer in the 21% marginal tax bracket, a $20,000 tax credit is equivalent to a $95,238 tax deduction.

The burden of corporate taxation is often borne by corporate shareholders, customers, employees, and suppliers.

The four primary legal characteristics of a corporation are unlimited liability, limited life, free transferability of interests, and centralized management.

Corporate taxable income after December 31, 2017 is taxed using a progressive rate schedule with a top marginal rate of 21%.

Corporations are allowed a deduction for charitable contributions, limited to 10 percent of taxable income before the deduction.

The purpose of Schedule M-1 is to explain the differences between financial statement income and taxable income.

The Schedule M-3 reconciliation requires less detailed information than the Schedule M-1 reconciliation.

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

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

Corporations with more than $1 million taxable income must pay 100% of their current federal income tax liability in the form of quarterly estimate payments to avoid an underpayment penalty.

Airfreight Corporation has book income of $370,000. Book income includes a $25,000 gain realized on a like-kind nontaxable exchange of realty. Based only on these items, compute Airfreight's taxable income.

For distributions prior to 2018, dividends-received deductions generally are not allowed for dividends from foreign corporations.

A nonprofit corporation may incur a federal income tax if it has unrelated business income.

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes as Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income from Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters

Exam 11: The Corporate Taxpayer

For a corporate taxpayer in the 21% marginal tax bracket, a $20,000 tax credit is equivalent to a $95,238 tax deduction.

The burden of corporate taxation is often borne by corporate shareholders, customers, employees, and suppliers.

The four primary legal characteristics of a corporation are unlimited liability, limited life, free transferability of interests, and centralized management.

Corporate taxable income after December 31, 2017 is taxed using a progressive rate schedule with a top marginal rate of 21%.

Corporations are allowed a deduction for charitable contributions, limited to 10 percent of taxable income before the deduction.

The purpose of Schedule M-1 is to explain the differences between financial statement income and taxable income.

The Schedule M-3 reconciliation requires less detailed information than the Schedule M-1 reconciliation.

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

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

Corporations with more than $1 million taxable income must pay 100% of their current federal income tax liability in the form of quarterly estimate payments to avoid an underpayment penalty.

Airfreight Corporation has book income of $370,000. Book income includes a $25,000 gain realized on a like-kind nontaxable exchange of realty. Based only on these items, compute Airfreight's taxable income.

For distributions prior to 2018, dividends-received deductions generally are not allowed for dividends from foreign corporations.

A nonprofit corporation may incur a federal income tax if it has unrelated business income.

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes as Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income from Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters