Exam 15: Corporate Taxation

Red Corporation has taxable income before DRD of $174,000.Included in that amount is a dividend of $20,000 from a large publicly-traded domestic corporation.Red also made a $25,000 cash contribution to a qualified charitable organization.The contribution is not included in the net income amount given.What is taxable income of Red Corporation?

A corporation can elect to be taxed as a Subchapter S corporation if it meets certain requirements including that it has 100 or fewer shareholders,all of whom are individuals,estates,and certain trusts.

Willow Corporation has book income of $300,000 which includes tax expense of $70,000.It reported a capital loss of $10,000,and tax-exempt municipal bond interest of $30,000.Willow's taxable income is:

Pricilla formed a corporation and owns all of the stock.She contributed property with a FMV of $60,000 and a basis of $55,000 and she received $10,000 cash from the corporation.Pricilla's taxable gain is:

Schedule L is prepared using the accounting method the corporation uses to keep its financial accounting records.

When the 80% test is met,a stockholder may recognize a gain but will not recognize a loss.

PQR Corporation has taxable income before DRD of $60,000 that includes a dividend of $10,000 from a large publicly-traded domestic corporation.What is the tax liability of PQR Corporation?

Corporations are not subject to alternative minimum tax.

Corporations with total receipts and total assets less than $250,000 are not required to complete Schedule L or Schedule M-1.

When a corporation is formed,if the sole shareholder receives stock in exchange for property subject to a liability,the shareholder will recognize a gain.

Large C corporations must use the accrual basis of accounting.

Khaki Company is a Subchapter S corporation.It properly reported net income of $100,000 for financial statement purposes.It had charitable contributions of $5,000 and dividend income of $10,000 from a large domestic publicly traded company.What is the ordinary business income of Khaki Company that will be reported to its shareholders on Schedule K-1?

A corporation with a net capital gain will be taxed on that gain at preferential tax rates,similar to an individual.

Which of the following statements is correct?

Which of the following statements is incorrect?

Which of the following statements is correct with respect to the formation of a corporation?

A Subchapter S corporation is a corporation that is taxed in a manner similar to a partnership.

Which of the following statements is incorrect?

Quince Company has book income of $120,000 properly determined in accordance with financial accounting principles.The following information is also available: • The company received a $10,000 dividend from a large publicly-traded domestic corporation. • Income tax expense on the financial statements was $30,000. • Depreciation expense on the financial statements is $25,000 less than depreciation expense determined using tax laws. • The company received life insurance proceeds of $15,000. • Charitable contributions of $20,000 were made. Determine the taxable income of Quince Company.

In 2011,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2012 and 2013,it had net capital gains of $5,000 and $8,000,respectively.In 2014,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2015?