Question 1

The corporate alternative minimum tax rate is 26% of AMTI in excess of the AMT exemption.

Accepted Answer

A) True 
 B)False

Question 2

A significant advantage of issuing stock instead of debt is that payment of dividends is discretionary.

Accepted Answer

A) True 
 B)False

Question 3

The corporate characteristic of free transferability exists if the corporate stock is subject to a buy-sell agreement.

Accepted Answer

A) True 
 B)False

Question 4

A corporation that owns more than $10 million of total assets uses which schedule to reconcile book income to taxable income?

Accepted Answer

A) Schedule M-1 
B) Schedule M-2 
C) Schedule M-3 
D) Schedule M-4 
A) Schedule M-1 
B) Schedule M-2 
C) Schedule M-3 
D) Schedule M-4

Question 5

Corporations are rarely targeted in political debates over taxation.

Accepted Answer

A) True 
 B)False

Question 6

The dividends-received deduction is equal to 80% of any dividends-received by a corporate taxpayer.

Accepted Answer

A) True 
 B)False

Question 7

For a corporate taxpayer in the 34% marginal tax bracket,a $20,000 tax credit is equivalent to a $58,824 tax deduction.

Accepted Answer

A) True 
 B)False

Question 8

Doctors Inc.is a corporation owned by four physicians in which they operate their medical practice.For the current year,Doctors Inc.had taxable income of $135,000.What is its regular tax liability?

Accepted Answer

A) $32,450 
B) $35,900 
C) $45,900 
D) $47,250 
A) $32,450 
B) $35,900 
C) $45,900 
D) $47,250

Question 9

Fleet,Inc.owns 85% of the stock of Pete,Inc.and 35% of the stock of Zete,Inc.The remaining stock of Pete and Zete is owned by unrelated individuals.Which of the following statements is correct?

Accepted Answer

A) Fleet,Pete,and Zete are an affiliated group. 
B) Fleet and Zete are an affiliated group. 
C) Fleet and Pete are an affiliated group. 
D) There is no affiliated group here. 
A) Fleet,Pete,and Zete are an affiliated group. 
B) Fleet and Zete are an affiliated group. 
C) Fleet and Pete are an affiliated group. 
D) There is no affiliated group here.

Question 10

Hearth,Inc.reported $30,000 of depreciation expense on its financial statements.For federal income tax purposes,it deducted depreciation of $35,000.This book/tax difference would result in an increase to net income per books on the Schedule M-1 or M-3.

Accepted Answer

A) True 
 B)False

Question 11

Poppy's book income of $739,300 includes a net long-term capital loss of $42,000 and federal income tax expense of $170,000.Based only on these items,Poppy's taxable income is:

Accepted Answer

A) $739,300 
B) $951,300 
C) $909,300 
D) $781,300 
A) $739,300 
B) $951,300 
C) $909,300 
D) $781,300

Question 12

A corporation is required to report differences between book and taxable income on either Schedule M-1 or Schedule M-3 of the corporate income tax return.

Accepted Answer

A) True 
 B)False

Question 13

Aaron,Inc.is a nonprofit corporation that collects and distributes food for needy families.Aaron,Inc.also operates a small grocery store for profit.Which of the following statements is true?

Accepted Answer

A) The income from the collection and distribution of food and the income from grocery store are taxable. 
B) No income from either of the activities is taxable. 
C) Only the income from the collection and distribution of food is taxable. 
D) Only the income from the grocery store is taxable. 
A) The income from the collection and distribution of food and the income from grocery store are taxable. 
B) No income from either of the activities is taxable. 
C) Only the income from the collection and distribution of food is taxable. 
D) Only the income from the grocery store is taxable.

Question 14

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Accepted Answer

A) True 
 B)False

Question 15

Bisou Inc.made a $48,200 contribution to charity this year.Only $39,000 of the contribution was deductible.Bisou can carry the $9,200 nondeductible contribution back three years and forward five years.

Accepted Answer

A) True 
 B)False

Question 16

Westside,Inc.owns 15% of Innsbrook's common stock.This year,Westside generated $50,000 operating income and received $20,000 dividends from Innsbrook.Westside's taxable income is:

Accepted Answer

A) $56,000 
B) $66,000 
C) $50,000 
D) $54,000 
A) $56,000 
B) $66,000 
C) $50,000 
D) $54,000

Question 17

The four primary legal characteristics of a corporation are unlimited liability,limited life,free transferability of interests,and centralized management.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements regarding Schedule M-3 is false?

Accepted Answer

A) The IRS developed Schedule M-3 with the goal of increasing transparency between reported net income for financial accounting purposes and reported net income for tax purposes. 
B) Schedule M-3 reports the temporary versus permanent characterization of book-tax differences. 
C) Part I of Schedule M-3 reconciles worldwide financial statement net income to the financial statement net income of those corporations permitted to be included in the U.S.consolidated tax return group. 
D) Schedule M-3 replaces Schedule M-1 for all tax years beginning after December 31,2004. 
A) The IRS developed Schedule M-3 with the goal of increasing transparency between reported net income for financial accounting purposes and reported net income for tax purposes. 
B) Schedule M-3 reports the temporary versus permanent characterization of book-tax differences. 
C) Part I of Schedule M-3 reconciles worldwide financial statement net income to the financial statement net income of those corporations permitted to be included in the U.S.consolidated tax return group. 
D) Schedule M-3 replaces Schedule M-1 for all tax years beginning after December 31,2004.

Question 19

Which of the following items is not used to compute the Domestic Production Activities Deduction?

Accepted Answer

A) Overseas sales of domestic products 
B) Taxable income 
C) Compensation paid to US workforce 
D) Net income from qualified domestic production activity 
A) Overseas sales of domestic products 
B) Taxable income 
C) Compensation paid to US workforce 
D) Net income from qualified domestic production activity

Question 20

Wave Corporation owns 90% of the stock of Surf,Inc.Each corporation reports the following separate items for the current tax year:     Compute consolidated taxable income if Wave and Surf file a consolidated federal income tax return:

Accepted Answer

A) $400,000. 
B) $395,000. 
C) $410,000. 
D) $500,000. 
A) $400,000. 
B) $395,000. 
C) $410,000. 
D) $500,000.

The corporate alternative minimum tax rate is 26% of AMTI in excess of the AMT exemption.

A significant advantage of issuing stock instead of debt is that payment of dividends is discretionary.

The corporate characteristic of free transferability exists if the corporate stock is subject to a buy-sell agreement.

A corporation that owns more than $10 million of total assets uses which schedule to reconcile book income to taxable income?

Corporations are rarely targeted in political debates over taxation.

The dividends-received deduction is equal to 80% of any dividends-received by a corporate taxpayer.

For a corporate taxpayer in the 34% marginal tax bracket,a $20,000 tax credit is equivalent to a $58,824 tax deduction.

Doctors Inc.is a corporation owned by four physicians in which they operate their medical practice.For the current year,Doctors Inc.had taxable income of $135,000.What is its regular tax liability?

Fleet,Inc.owns 85% of the stock of Pete,Inc.and 35% of the stock of Zete,Inc.The remaining stock of Pete and Zete is owned by unrelated individuals.Which of the following statements is correct?

Hearth,Inc.reported $30,000 of depreciation expense on its financial statements.For federal income tax purposes,it deducted depreciation of $35,000.This book/tax difference would result in an increase to net income per books on the Schedule M-1 or M-3.

Poppy's book income of $739,300 includes a net long-term capital loss of $42,000 and federal income tax expense of $170,000.Based only on these items,Poppy's taxable income is:

A corporation is required to report differences between book and taxable income on either Schedule M-1 or Schedule M-3 of the corporate income tax return.

Aaron,Inc.is a nonprofit corporation that collects and distributes food for needy families.Aaron,Inc.also operates a small grocery store for profit.Which of the following statements is true?

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Bisou Inc.made a $48,200 contribution to charity this year.Only $39,000 of the contribution was deductible.Bisou can carry the $9,200 nondeductible contribution back three years and forward five years.

Westside,Inc.owns 15% of Innsbrook's common stock.This year,Westside generated $50,000 operating income and received $20,000 dividends from Innsbrook.Westside's taxable income is:

The four primary legal characteristics of a corporation are unlimited liability,limited life,free transferability of interests,and centralized management.

Which of the following statements regarding Schedule M-3 is false?

Which of the following items is not used to compute the Domestic Production Activities Deduction?

Wave Corporation owns 90% of the stock of Surf,Inc.Each corporation reports the following separate items for the current tax year: Compute consolidated taxable income if Wave and Surf file a consolidated federal income tax return:

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, llcs, and S Corporations

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters

Exam 11: The Corporate Taxpayer

The corporate alternative minimum tax rate is 26% of AMTI in excess of the AMT exemption.

A significant advantage of issuing stock instead of debt is that payment of dividends is discretionary.

The corporate characteristic of free transferability exists if the corporate stock is subject to a buy-sell agreement.

A corporation that owns more than $10 million of total assets uses which schedule to reconcile book income to taxable income?

Corporations are rarely targeted in political debates over taxation.

The dividends-received deduction is equal to 80% of any dividends-received by a corporate taxpayer.

For a corporate taxpayer in the 34% marginal tax bracket,a $20,000 tax credit is equivalent to a $58,824 tax deduction.

Doctors Inc.is a corporation owned by four physicians in which they operate their medical practice.For the current year,Doctors Inc.had taxable income of $135,000.What is its regular tax liability?

Fleet,Inc.owns 85% of the stock of Pete,Inc.and 35% of the stock of Zete,Inc.The remaining stock of Pete and Zete is owned by unrelated individuals.Which of the following statements is correct?

Hearth,Inc.reported $30,000 of depreciation expense on its financial statements.For federal income tax purposes,it deducted depreciation of $35,000.This book/tax difference would result in an increase to net income per books on the Schedule M-1 or M-3.

Poppy's book income of $739,300 includes a net long-term capital loss of $42,000 and federal income tax expense of $170,000.Based only on these items,Poppy's taxable income is:

A corporation is required to report differences between book and taxable income on either Schedule M-1 or Schedule M-3 of the corporate income tax return.

Aaron,Inc.is a nonprofit corporation that collects and distributes food for needy families.Aaron,Inc.also operates a small grocery store for profit.Which of the following statements is true?

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Bisou Inc.made a $48,200 contribution to charity this year.Only $39,000 of the contribution was deductible.Bisou can carry the $9,200 nondeductible contribution back three years and forward five years.

Westside,Inc.owns 15% of Innsbrook's common stock.This year,Westside generated $50,000 operating income and received $20,000 dividends from Innsbrook.Westside's taxable income is:

The four primary legal characteristics of a corporation are unlimited liability,limited life,free transferability of interests,and centralized management.

Which of the following statements regarding Schedule M-3 is false?

Which of the following items is not used to compute the Domestic Production Activities Deduction?

Wave Corporation owns 90% of the stock of Surf,Inc.Each corporation reports the following separate items for the current tax year: Compute consolidated taxable income if Wave and Surf file a consolidated federal income tax return:

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, llcs, and S Corporations

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters