Exam 11: The Corporate Taxpayer

Most tax credits for which a corporate taxpayer would be eligible are nonrefundable.

The corporate characteristic of limited liability is more important to the shareholders than the characteristic of centralized management.

Joanna has a 35% marginal tax rate and owns 100% of the stock of Loman Corporation.This year,Loman generated $400,000 of taxable income,paid $136,000 of corporate income tax,and paid a $50,000 dividend to Joanna.Suppose that the federal income tax system has been amended to allow shareholders to gross up dividend income by the corporate tax paid with respect to the dividend and credit this tax against their individual tax.Further assume that dividends-received by individuals are not eligible for a preferential tax rate.Calculate Joanna's reported dividend income and her tax due on the dividend.

Loraine Manufacturing,Inc.reported the following for the current tax year: What is Loraine Manufacturing's alternative minimum taxable income before any AMT exemption?

Mandrake,Inc.has book income of $569,300.Its income includes a $50,700 bad debt expense,determined by the allowance method.Actual write offs this year were $48,000.Based only on this information,compute Mandrake's taxable income.

Pocahontas,Inc.had the following results for its first two years of operation: Which of the following statements is true?

A corporation that is unable to meet its original filing deadline may obtain an automatic twelve-month extension of the time to file its federal income tax return.

Franton Co.,a calendar year,accrual basis corporation,reported $2,076,000 net income after tax on its current year financial statements prepared in accordance with GAAP.The corporation's financial records reveal the following information. Federal tax expense per books was $1,069,000. Franton received $22,400 of dividends from its investment in Microsoft and General Motors stock. Bad debt expense was $12,900,and write-offs of uncollectible accounts receivable totaled $16,300. Book depreciation was $110,890,and MACRS depreciation was $94,700. Franton paid a $50,000 fine to the City of Albany for illegal trash dumping. Compute Franton's taxable income and regular tax liability.

Rogers,Inc.owns 12% of Lampe Corporation's voting common stock.During the current year,Rogers generated $50,000 operating income and received $8,000 dividends from Lampe.Only $1,600 of the dividend is taxable.

Loda Inc.made an $8,300 nondeductible charitable contribution and a $2,000 nondeductible political contribution this year.Which of the following statements is true?

Sunny Vale Co.reported the following for the current tax year: Corporate tax rate schedule. Compute Sunny Vale's total income tax liability.

The taxable income earned by a personal service corporation is taxed at a flat rate of 35%.

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

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

Tropical Corporation was formed in 2015.For 2015 through 2017,its regular and tentative minimum tax were as follows: Corporate tax rate schedule. a.Compute Tropical's tax due for each year. b.In 2018,Tropical's regular taxable income is $2,000,000,and it has positive AMT adjustments of $500,000 and AMT preferences of $600,000.Compute Tropical's regular tax,tentative minimum tax,and tax due for 2018.

Assuming that the corporation has a 34% MTR,which of the following statements is true?

WEK Inc.is a New York corporation with manufacturing operations in the United States and in 12 foreign countries.This year,its taxable income from domestic manufacturing was $1,239,000,and its taxable income from foreign manufacturing was $1,773,000.WEK had no other sources of taxable income.WEK paid $487,000 compensation to its U.S.workers and $599,200 compensation to its foreign workers.Compute WEK's taxable income.

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.

Which of the following statements regarding the domestic production activities deduction is false?

Alexus Inc.'s alternative minimum taxable income before any AMT exemption is $210,000.Compute the corporation's AMT exemption: