Exam 5: Corporate Operations

In January 2017,Khors Company issues nonqualified stock options to its CEO,Jenny Svaro.Because the company does not expect Ms.Svaro to leave the company,the options vest at the time they are granted with a total value of $50,000.In December of 2017,the company experiences a surge in its stock price,and Ms.Svaro exercises the options.The total bargain element at the time of exercise is $40,000.For 2017,what is the nature of the book-tax difference due to the options exercised?

Netgate Corporation's gross regular tax liability for 2017 was $95,375.What was its taxable income? (Use Corporate Tax Rate Schedule.)

A corporation with a minimum tax credit carryover may reduce regular tax down to the amount of its tentative minimum tax when its regular tax exceeds its tentative minimum tax.

Which of the following regarding Schedule M-1 and Schedule M-3 of Form 1120 is false?

Which of the following is not an acceptable method of determining the required annual payment of federal income tax for corporations?

Which of the following is not calculated in the corporate income tax formula?

Which of the following statements regarding nonqualified stock options (NQOs)is false?

For estimated tax purposes,a "large" corporation is any corporation with average annual gross receipts of $5,000,000 in the three years prior to the current year.

A corporation may carry a net capital loss back two years and forward 20 years.

For tax purposes,companies using nonqualified stock options deduct expenses in the year the options are exercised.

TerraWise Inc.reported the following information for 2017: What is TerraWise Inc.'s AMTI?

AB Inc.received a dividend from CD Corporation and is able to claim a dividends received deduction without limitation.AB owns 10 percent of CD.What is AB's marginal tax rate (to the nearest tenth of a percent)on the dividends received (after taking the DRD into account)assuming its ordinary marginal tax rate is 34%?

Which of the following statements is false regarding consolidated tax returns?

It is important to distinguish between temporary and permanent book-tax differences for which of the following reasons?

TrendSetter Inc.paid $50,000 in premiums for life insurance coverage for its key employees for which TrendSetter Inc.is the beneficiary.What is the nature of the book-tax difference created by this expense?

What is the unextended due date of the tax return of a calendar-year corporation for 2017?

The amount of a corporation's AMT is the amount of its tentative minimum tax in excess of its regular tax.

For 2017,SRH's taxable income is $35,000 and JHH's taxable income is $45,000.Together,Scott and Jackson Howard own 100 percent of both corporations.What is the combined tax liability of the two corporations? (Use Corporate Tax Rate Schedule.)

NOL and capital loss carryovers are deductible in calculating the charitable contribution limit modified taxable income,while NOL and capital loss carrybacks are not.

Over what time period do corporations amortize purchased goodwill for tax purposes?