Exam 11: The Corporate Taxpayer

At least three corporations are required to form an affiliated group.

AMT adjustments can only increase a corporation's alternative minimum taxable income.

Calliwell Corporation is a Colorado corporation engaged in the manufacture and sale of computer components.This year,it earned $2 million of net income from this qualified activity.Before the domestic production activities deduction,its taxable income is $2,100,000 and compensation paid to its U.S.workforce is $670,000.Its taxable income is:

This year,Sonoma Corporation received the following dividends: Before considering the above dividends,Sonoma has taxable income of $550,000.Calculate Sonoma's allowable dividends-received deduction and taxable income.

Gosling,Inc.,a calendar year,accrual basis corporation,reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP.The corporation's financial records reveal the following information: Corporate tax rate schedule. Gosling earned $478,000 from a qualified domestic production activity. Gosling earned $3,500 on an investment in tax-exempt municipal bonds. Gosling's depreciation expense per books was $72,000,and its MACRS depreciation deduction was $105,000. Gosling recorded $58,000 of business meals and entertainment expense for book purposes. Gosling's federal income tax expense per books was $440,000. a.Compute Gosling's taxable income and regular tax liability. b.Prepare a Schedule M-1,page 5,Form 1120,reconciling Gosling's book and taxable income.

Frazier,Inc.paid a $150,000 cash dividend to its shareholders.The corporation cannot deduct this payment on its corporate income tax return.

Silver Bullet Inc.reported the following for its current tax year: Corporate tax rate schedule. Compute Silver Bullet's total income tax liability.

Corporations with more than $1 million taxable income must pay 100% of their current federal income tax liability in the form of quarterly estimate payments to avoid an underpayment penalty.

An affiliated group consists of a parent company that directly owns 80% of at least one subsidiary corporation plus all other subsidiaries that are 80% owned within the group.

For its current tax year,Volcano,Inc.reported the following: Compute Volcano's alternative minimum tax.

Angel Corporation's current-year regular tax liability is $40,000.Angel is eligible for a general business credit of $45,000.The corporation will receive a $5,000 refund of federal income tax.

The domestic production activities deduction is computed as a percentage of the greater of taxable income or net income from qualified production activities.

Which of the following is a means to avoid the double taxation burden imposed on the profits of corporations?

Torquay Inc.'s 2016 taxable income was $9,782,200,and its tax liability was $3,325,948.Torquay's director of tax estimates that the corporation's 2017 taxable income will be $13,350,000.Use the corporate tax rate schedule to compute Torquay's 2017 estimated tax payment due on April 15,2017.

The rate schedule for determining the regular tax liability of a corporation includes rates ranging from 15% to 39%.

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

Eagle,Inc.made a contribution to the Boy Scouts of $25,000 during its current tax year.The corporation's taxable income before any charitable contribution deduction was $200,000.The corporation has a current charitable contribution deduction of $25,000.

The burden of corporate taxation is often borne by corporate shareholders,customers,employees,and suppliers.

Generally,the corporate income tax is computed on a proportionate rate schedule.

Borough,Inc.is entitled to a rehabilitation credit of $500,000 for its current tax year.The corporation's regular tax liability is $450,000.No estimated tax payments have been made.Which of the following statements is true?