Question 1

Corporations may carry a net operating loss sustained in the current year back two years and forward 20 years.

Accepted Answer

A) True 
 B)False

Question 2

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following describes the correct treatment of incentive stock options (ISOs)granted when ASC 718 applies?

Accepted Answer

A)  Financial accounting-no expense; tax-no deduction. 
B)  Financial accounting-no expense; tax-deduct bargain element at exercise. 
C)  Financial-expense value over vesting period; tax-no deduction. 
D)  Financial-expense value over vesting period; tax-deduct bargain element at exercise. 
A)  Financial accounting-no expense; tax-no deduction. 
B)  Financial accounting-no expense; tax-deduct bargain element at exercise. 
C)  Financial-expense value over vesting period; tax-no deduction. 
D)  Financial-expense value over vesting period; tax-deduct bargain element at exercise.

Question 4

Which of the following statements regarding capital gains and losses is false?

Accepted Answer

A)  In terms of tax treatment, corporations generally prefer capital gains to ordinary income. 
B)  Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year. 
C)  C corporations can carry back net capital losses three years and they can carry them forward for five years. 
D)  Corporations must apply capital loss carrybacks and carryovers in a particular order. 
A)  In terms of tax treatment, corporations generally prefer capital gains to ordinary income. 
B)  Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year. 
C)  C corporations can carry back net capital losses three years and they can carry them forward for five years. 
D)  Corporations must apply capital loss carrybacks and carryovers in a particular order.

Question 5

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

Accepted Answer

A)  Approval of the payment from the board of directors. 
B)  Approval from the IRS prior to making the contribution. 
C)  Payment made within three and one-half months of the tax year-end. 
D)  All of the choices are necessary. 
A)  Approval of the payment from the board of directors. 
B)  Approval from the IRS prior to making the contribution. 
C)  Payment made within three and one-half months of the tax year-end. 
D)  All of the choices are necessary.

Question 6

A C corporation reports its taxable income or loss on Form 1065.

Accepted Answer

A) True 
 B)False

Question 7

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Accepted Answer

A) True 
 B)False

Question 8

For incentive stock options granted when ASC 718 applies,the value of the options that accrue in a given year always creates a permanent,unfavorable book-tax difference.

Accepted Answer

A) True 
 B)False

Question 9

ValuCo gives you the following information:
   What is its ACE adjustment for the year? Is it favorable or unfavorable?

Accepted Answer

$55,500,unfavorable
Two of the three ite

Question 10

On January 1,2005 [before the adoption of ASC 718],Net Optimizers Inc.granted 1,000 nonqualified stock options (NQOs)valued at $.05 per option.Each option entitles the owner to purchase one share of stock for $1.These options vest at 10 percent per year for ten years.On December 31,2017,300 options are exercised when the stock price is $5.In 2017,what is the book-tax difference associated with the stock options? Is it favorable or unfavorable? Is it permanent or temporary?

Accepted Answer

$1,200,fav

Question 11

Which of the following statements regarding the alternative minimum tax is false?

Accepted Answer

A)  Corporations compute the AMT by multiplying their AMT base by 35% and subtracting their regular tax liability. 
B)  Small corporations are exempt from the AMT. 
C)  All first-year corporations are exempt from the AMT. 
D)  None of the choices are false (choose if you believe all of these above statements are true). 
A)  Corporations compute the AMT by multiplying their AMT base by 35% and subtracting their regular tax liability. 
B)  Small corporations are exempt from the AMT. 
C)  All first-year corporations are exempt from the AMT. 
D)  None of the choices are false (choose if you believe all of these above statements are true).

Question 12

Which of the following describes the correct treatment of incentive stock options (ISOs)granted when ASC 718 does not apply?

Accepted Answer

A)  Financial accounting-no expense; tax-no deduction. 
B)  Financial accounting-no expense; tax-deduct bargain element at exercise. 
C)  Financial accounting-expense value over vesting period; tax-no deduction. 
D)  Financial accounting-expense value over vesting period; tax-deduct bargain element at exercise. 
A)  Financial accounting-no expense; tax-no deduction. 
B)  Financial accounting-no expense; tax-deduct bargain element at exercise. 
C)  Financial accounting-expense value over vesting period; tax-no deduction. 
D)  Financial accounting-expense value over vesting period; tax-deduct bargain element at exercise.

Question 13

The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes.

Accepted Answer

A) True 
 B)False

Question 14

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

Accepted Answer

A) True 
 B)False

Question 15

Jazz Corporation owns 50% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Accepted Answer

A)  $0. 
B)  $7,000. 
C)  $8,000. 
D)  $10,000. 
A)  $0. 
B)  $7,000. 
C)  $8,000. 
D)  $10,000.

Question 16

Corporations may carry excess charitable contributions forward five years,but they may not carry them back.

Accepted Answer

A) True 
 B)False

Question 17

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior year tax liability (which was very low but above zero)to determine its quarterly estimated payments this year.Which of the following statements is true?

Accepted Answer

A)  Rapidpro may use the prior year tax liability to determine its first and second quarter estimated tax payments only since it is a large corporation. 
B)  To avoid penalty, the second quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first quarter estimated taxable income (assume it does not rely on its current year actual tax liability to determine its estimated tax payment). 
C)  To avoid penalty, the third quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third quarter estimated taxable income (assume it does not rely on its current year actual tax liability to determine its estimated tax payment). 
D)  None of the choices are true. 
A)  Rapidpro may use the prior year tax liability to determine its first and second quarter estimated tax payments only since it is a large corporation. 
B)  To avoid penalty, the second quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first quarter estimated taxable income (assume it does not rely on its current year actual tax liability to determine its estimated tax payment). 
C)  To avoid penalty, the third quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third quarter estimated taxable income (assume it does not rely on its current year actual tax liability to determine its estimated tax payment). 
D)  None of the choices are true.

Question 18

Omnidata uses the annualized income method to determine its quarterly federal income tax payments.It had $100,000,$50,000,and $90,000 of taxable income for the first,second,and third quarters,respectively ($240,000 in total through the first three quarters).What is Omnidata's annual estimated taxable income as of the end of the third quarter?

Accepted Answer

A)  $300,000. 
B)  $320,000. 
C)  $400,000. 
D)  $480,000. 
A)  $300,000. 
B)  $320,000. 
C)  $400,000. 
D)  $480,000.

Question 19

Jazz Corporation owns 10% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss)before the dividend was ($6,000).What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Accepted Answer

A)  $0. 
B)  $2,800. 
C)  $4,200. 
D)  $7,000. 
E)  None of the choices are correct. 
A)  $0. 
B)  $2,800. 
C)  $4,200. 
D)  $7,000. 
E)  None of the choices are correct.

Question 20

Which of the following statements is false regarding corporate estimated tax payments?

Accepted Answer

A)  The due dates for estimated tax payments are the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. 
B)  Corporations must pay estimated taxes only if they have a federal income tax liability greater than $10,000 (including the alternative minimum tax). 
C)  Even though a corporation extends its tax return, it still must pay its tax liability for the year by three and one-half months after year-end. 
D)  Corporations using the annualized income method for determining estimated tax payments project their tax liability for the year based on income from the first, second, and third quarters. 
A)  The due dates for estimated tax payments are the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. 
B)  Corporations must pay estimated taxes only if they have a federal income tax liability greater than $10,000 (including the alternative minimum tax). 
C)  Even though a corporation extends its tax return, it still must pay its tax liability for the year by three and one-half months after year-end. 
D)  Corporations using the annualized income method for determining estimated tax payments project their tax liability for the year based on income from the first, second, and third quarters.

Corporations may carry a net operating loss sustained in the current year back two years and forward 20 years.

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Which of the following describes the correct treatment of incentive stock options (ISOs)granted when ASC 718 applies?

Which of the following statements regarding capital gains and losses is false?

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

A C corporation reports its taxable income or loss on Form 1065.

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

For incentive stock options granted when ASC 718 applies,the value of the options that accrue in a given year always creates a permanent,unfavorable book-tax difference.

ValuCo gives you the following information: What is its ACE adjustment for the year? Is it favorable or unfavorable?

Which of the following statements regarding the alternative minimum tax is false?

Which of the following describes the correct treatment of incentive stock options (ISOs)granted when ASC 718 does not apply?

The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes.

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

Jazz Corporation owns 50% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Corporations may carry excess charitable contributions forward five years,but they may not carry them back.

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior year tax liability (which was very low but above zero)to determine its quarterly estimated payments this year.Which of the following statements is true?

Jazz Corporation owns 10% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss)before the dividend was ($6,000).What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Which of the following statements is false regarding corporate estimated tax payments?

Business Income,Deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 5: Corporate Operations

Corporations may carry a net operating loss sustained in the current year back two years and forward 20 years.

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Which of the following describes the correct treatment of incentive stock options (ISOs)granted when ASC 718 applies?

Which of the following statements regarding capital gains and losses is false?

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

A C corporation reports its taxable income or loss on Form 1065.

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

For incentive stock options granted when ASC 718 applies,the value of the options that accrue in a given year always creates a permanent,unfavorable book-tax difference.

ValuCo gives you the following information: What is its ACE adjustment for the year? Is it favorable or unfavorable?

Which of the following statements regarding the alternative minimum tax is false?

Which of the following describes the correct treatment of incentive stock options (ISOs)granted when ASC 718 does not apply?

The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes.

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

Jazz Corporation owns 50% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Corporations may carry excess charitable contributions forward five years,but they may not carry them back.

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior year tax liability (which was very low but above zero)to determine its quarterly estimated payments this year.Which of the following statements is true?

Jazz Corporation owns 10% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss)before the dividend was ($6,000).What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Which of the following statements is false regarding corporate estimated tax payments?

Business Income,Deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters