Question 1

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

Accepted Answer

A) True 
 B)False

Question 2

A Subchapter S corporation must be a domestic corporation.

Accepted Answer

A) True 
 B)False

Question 3

Once a corporation properly elects to be a Subchapter S corporation,it cannot terminate its election for five years.

Accepted Answer

A) True 
 B)False

Question 4

Orange Corporation was formed in 2015.In that year it had a net capital loss of $2,000.In 2016,it had a net capital gain of $5,000.In 2017,the company reported a net capital loss of $9,000.What is the amount of capital loss carryforward to 2018,if any?

Accepted Answer

A) $0. 
B) $4,000. 
C) $6,000. 
D) $9,000. 
A) $0. 
B) $4,000. 
C) $6,000. 
D) $9,000.

Question 5

A domestic corporation can receive a deduction for dividend income it receives from another domestic corporation.

Accepted Answer

A) True 
 B)False

Question 6

Andre formed a corporation and owns all the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

Accepted Answer

A) $7,000. 
B) $8,000. 
C) $10,000. 
D) Some other number. 
A) $7,000. 
B) $8,000. 
C) $10,000. 
D) Some other number.

Question 7

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15th day of:

Accepted Answer

A) September. 
B) August. 
C) July. 
D) June. 
A) September. 
B) August. 
C) July. 
D) June.

Question 8

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Accepted Answer

A) True 
 B)False

Question 9

Valarie owns 100% of Green Company.Green has earnings and profits of $10,000.The corporation distributes property with a basis of $9,000 and a FMV of $12,000 to Valarie.She must report dividend income of:

Accepted Answer

A) $2,000. 
B) $9,000. 
C) $10,000. 
D) $12,000. 
A) $2,000. 
B) $9,000. 
C) $10,000. 
D) $12,000.

Question 10

A corporation must file Form 1120 2½ months after the end of its fiscal year.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is incorrect?

Accepted Answer

A) Schedule M-1 is a reconciliation from book income to taxable income. 
B) Schedule L is prepared in accordance with the accounting method used to keep financial accounting records. 
C) Schedule M-3 is only prepared by corporations with total receipts and total assets of less than $250,000. 
D) Schedule M-1 shows all book/tax differences,regardless of whether they are permanent or temporary differences. 
A) Schedule M-1 is a reconciliation from book income to taxable income. 
B) Schedule L is prepared in accordance with the accounting method used to keep financial accounting records. 
C) Schedule M-3 is only prepared by corporations with total receipts and total assets of less than $250,000. 
D) Schedule M-1 shows all book/tax differences,regardless of whether they are permanent or temporary differences.

Question 12

Aqua Company has net income for financial statement purposes of $100,000.On its financial statements it recorded a charitable contribution of $20,000 and federal income tax expense of $30,000.What is Aqua's taxable income?

Accepted Answer

First,determine the amount of taxable in

Question 13

Basira transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all the stock.The land has a basis of $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

Accepted Answer

A) $0. 
B) $300,000. 
C) $400,000. 
D) $500,000. 
A) $0. 
B) $300,000. 
C) $400,000. 
D) $500,000.

Question 14

When the 80% test is met,a stockholder may recognize a gain but will not recognize a loss.

Accepted Answer

A) True 
 B)False

Question 15

The basis of property received by a corporation is equal to the basis in the hands of the shareholder plus any gain recognized by the shareholder.

Accepted Answer

A) True 
 B)False

Question 16

Schedule M-1 reconciles from taxable income to book income.

Accepted Answer

A) True 
 B)False

Question 17

On Schedule M-1,federal income tax must be added back to taxable income.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following items is subtracted from book income to arrive at taxable income?

Accepted Answer

A) Federal income tax expense on the income statement. 
B) Book depreciation that is in excess of tax depreciation. 
C) Life insurance proceeds. 
D) Final month rent collected at lease signing. 
A) Federal income tax expense on the income statement. 
B) Book depreciation that is in excess of tax depreciation. 
C) Life insurance proceeds. 
D) Final month rent collected at lease signing.

Question 19

Which of the following statements is incorrect with respect to parent-subsidiary corporations?

Accepted Answer

A) If a consolidated tax return is filed,losses on intercompany sales cannot be immediately recognized. 
B) A parent-subsidiary group must file a consolidated tax return. 
C) A parent-subsidiary group is one where a common parent corporation owns,directly or indirectly,at least 80% of one or more other corporations. 
D) With a consolidated return,net losses of one company can offset net income from another company. 
A) If a consolidated tax return is filed,losses on intercompany sales cannot be immediately recognized. 
B) A parent-subsidiary group must file a consolidated tax return. 
C) A parent-subsidiary group is one where a common parent corporation owns,directly or indirectly,at least 80% of one or more other corporations. 
D) With a consolidated return,net losses of one company can offset net income from another company.

Question 20

Grape Corporation makes a nonliquidating distribution of appreciated property to its shareholders.

Accepted Answer

A) The shareholders will report a gain. 
B) The corporation will report a gain. 
C) The shareholders will report dividend income equal to the basis of the property distributed. 
D) The corporation will report dividend expense equal to the fair value of the property distributed. 
A) The shareholders will report a gain. 
B) The corporation will report a gain. 
C) The shareholders will report dividend income equal to the basis of the property distributed. 
D) The corporation will report dividend expense equal to the fair value of the property distributed.

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

A Subchapter S corporation must be a domestic corporation.

Once a corporation properly elects to be a Subchapter S corporation,it cannot terminate its election for five years.

Orange Corporation was formed in 2015.In that year it had a net capital loss of $2,000.In 2016,it had a net capital gain of $5,000.In 2017,the company reported a net capital loss of $9,000.What is the amount of capital loss carryforward to 2018,if any?

A domestic corporation can receive a deduction for dividend income it receives from another domestic corporation.

Andre formed a corporation and owns all the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^th day of:

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Valarie owns 100% of Green Company.Green has earnings and profits of $10,000.The corporation distributes property with a basis of $9,000 and a FMV of $12,000 to Valarie.She must report dividend income of:

A corporation must file Form 1120 2½ months after the end of its fiscal year.

Which of the following statements is incorrect?

Aqua Company has net income for financial statement purposes of $100,000.On its financial statements it recorded a charitable contribution of $20,000 and federal income tax expense of $30,000.What is Aqua's taxable income?

Basira transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all the stock.The land has a basis of $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

When the 80% test is met,a stockholder may recognize a gain but will not recognize a loss.

The basis of property received by a corporation is equal to the basis in the hands of the shareholder plus any gain recognized by the shareholder.

Schedule M-1 reconciles from taxable income to book income.

On Schedule M-1,federal income tax must be added back to taxable income.

Which of the following items is subtracted from book income to arrive at taxable income?

Which of the following statements is incorrect with respect to parent-subsidiary corporations?

Grape Corporation makes a nonliquidating distribution of appreciated property to its shareholders.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Filters

Exam 15: Corporate Taxation

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

A Subchapter S corporation must be a domestic corporation.

Once a corporation properly elects to be a Subchapter S corporation,it cannot terminate its election for five years.

Orange Corporation was formed in 2015.In that year it had a net capital loss of $2,000.In 2016,it had a net capital gain of $5,000.In 2017,the company reported a net capital loss of $9,000.What is the amount of capital loss carryforward to 2018,if any?

A domestic corporation can receive a deduction for dividend income it receives from another domestic corporation.

Andre formed a corporation and owns all the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15th day of:

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Valarie owns 100% of Green Company.Green has earnings and profits of $10,000.The corporation distributes property with a basis of $9,000 and a FMV of $12,000 to Valarie.She must report dividend income of:

A corporation must file Form 1120 2½ months after the end of its fiscal year.

Which of the following statements is incorrect?

Aqua Company has net income for financial statement purposes of $100,000.On its financial statements it recorded a charitable contribution of $20,000 and federal income tax expense of $30,000.What is Aqua's taxable income?

Basira transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all the stock.The land has a basis of $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

When the 80% test is met,a stockholder may recognize a gain but will not recognize a loss.

The basis of property received by a corporation is equal to the basis in the hands of the shareholder plus any gain recognized by the shareholder.

Schedule M-1 reconciles from taxable income to book income.

On Schedule M-1,federal income tax must be added back to taxable income.

Which of the following items is subtracted from book income to arrive at taxable income?

Which of the following statements is incorrect with respect to parent-subsidiary corporations?

Grape Corporation makes a nonliquidating distribution of appreciated property to its shareholders.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Filters

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^th day of: