Exam 15: Corporate Taxation

Quince Company has book income of $120,000 properly determined in accordance with financial accounting principles.The following information is also available: The company received a $10,000 dividend from a large publicly-traded domestic corporation. Income tax expense on the financial statements was $30,000. Depreciation expense on the financial statements is $25,000 less than depreciation expense determined using tax laws. The company received life insurance proceeds of $15,000. Charitable contributions of $20,000 were made. Determine the taxable income of Quince Company.

Corporate distributions to shareholders are always dividends.

Schedule L is a reconciliation of net income per books to net income per the tax law.

Purple Company makes and sells computer printers.It has taxable income of $1,300,000 before taking into account charitable contributions.The company contributed a parcel of unused land to an art museum to be used to construct a branch museum.The land had a FMV of $50,000 and a basis of $30,000.The company also donated 1,000 of its computer printers to the local community college for use in student computer labs.The printers have a FMV of $200 each and a basis of $120 each.Determine the taxable income of Purple Company and its charitable contribution carryforward,if any.

Khaki Company is a Subchapter S corporation.It properly reported net income of $100,000 for financial statement purposes.It had charitable contributions of $5,000 and dividend income of $10,000 from a large domestic publicly traded company.What is the ordinary business income of Khaki Company that will be reported to its shareholders on Schedule K-1?

A corporation with a net capital gain will be taxed on that gain at preferential tax rates,similar to an individual.

All C corporations file their tax returns using a Form 1120.

Corporate tax returns are due 3.5 months after the end of their tax year,the same as individual income tax returns.

Saffron Corporation has book income of $200,000,which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:

Which of the following statements is correct?

Which of the following statements is correct?

When a corporation is formed,if the sole shareholder receives stock in exchange for property subject to a liability,the shareholder will recognize a gain.

Blue Company has taxable income of $90,000 before charitable contributions.The company made a $10,000 cash contribution to the local university.What is the tax liability of the company for the year?

If a corporation has a net capital loss,the loss is carried forward indefinitely.

If a corporation would like a Subchapter S election to be valid for the current year,a Form 2553 must be filed:

When a corporation is formed,if the sole shareholder contributes property and receives,in return,stock plus property,the individual will report a taxable gain equal to the FMV of the property received.

In 2014,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2015 and 2016,it had net capital gains of $5,000 and $8,000,respectively.In 2017,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2018?

A corporation makes a pro rata distribution of property to its shareholders as part of its normal operations.The FMV of the property is less than its basis.The corporation will record a loss on the distribution.

Alabaster Company is a Subchapter S corporation.It properly reported net income of $250,000 for financial statement purposes.It had net capital gains of $60,000 and charitable contributions of $20,000.What is the ordinary business income (loss)of Alabaster Company that will be reported to its shareholders on Schedule K-1?

C Corporations are not permitted to report a net capital loss.