Question 1

Initially,corporations with average annual gross receipts for the last three years of $5 million or less are not subject to the corporate AMT rules.

Accepted Answer

A) True 
 B)False

Question 2

A corporation can choose to voluntarily revoke a valid Subchapter S election.How do the shareholders accomplish a voluntary revocation and when will the revocation be effective?

Accepted Answer

If shareholders owning a majority of the

Question 3

If a corporation has a net capital loss,it can carry that loss back three years and then forward six.

Accepted Answer

A) True 
 B)False

Question 4

A parent-subsidiary group is one in which a common parent corporation owns,directly or indirectly,at least 80% of one or more other corporations.

Accepted Answer

A) True 
 B)False

Question 5

A capital loss carryforward will create a reconciling item on Schedule M-1,but a capital loss carryback will not.

Accepted Answer

A) True 
 B)False

Question 6

Purple Company makes and sells computer printers.It has taxable income of $1,300,000 before taking into account charitable contributions.The company contributed a parcel of unused land to an art museum to be used to construct a branch museum.The land had a FMV of $50,000 and a basis of $30,000.The company also donated 1,000 of its computer printers to the local community college for use in student computer labs.The printers have a FMV of $200 each and a basis of $120 each.Determine the taxable income of Purple Company and its charitable contribution carryforward,if any.

Accepted Answer

Charitable contributions are limited to

Question 7

Which of the following statements is incorrect?

Accepted Answer

A)  A corporation can choose a fiscal year-end of its choice when filing its first tax return. 
B)  A corporate tax return is due 2½ months after the end of the fiscal year. 
C)  Corporations that own foreign subsidiaries cannot file a Form 1120. 
D)  Some corporations can use the cash-basis of accounting. 
A)  A corporation can choose a fiscal year-end of its choice when filing its first tax return. 
B)  A corporate tax return is due 2½ months after the end of the fiscal year. 
C)  Corporations that own foreign subsidiaries cannot file a Form 1120. 
D)  Some corporations can use the cash-basis of accounting.

Question 8

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Accepted Answer

A) True 
 B)False

Question 9

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 10

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15th day of:

Accepted Answer

A)  January. 
B)  February. 
C)  March. 
D)  April. 
A)  January. 
B)  February. 
C)  March. 
D)  April.

Question 11

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 (basis of $10,000).Which of the following statements is correct?

Accepted Answer

A)  Howie will report a loss of $3,000. 
B)  The basis of the truck to HH Company is $7,000. 
C)  Howie will have a basis in his stock of $10,000. 
D)  All of the statements are correct. 
A)  Howie will report a loss of $3,000. 
B)  The basis of the truck to HH Company is $7,000. 
C)  Howie will have a basis in his stock of $10,000. 
D)  All of the statements are correct.

Question 12

A corporation has a fiscal year-end of May.If the corporation receives an automatic six-month extension to file its return,the return will be due on the 15th of:

Accepted Answer

A)  November. 
B)  December. 
C)  January. 
D)  February. 
A)  November. 
B)  December. 
C)  January. 
D)  February.

Question 13

Saffron Corporation has book income of $200,000 which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:

Accepted Answer

A)  $210,000. 
B)  $230,000. 
C)  $240,000. 
D)  $250,000. 
A)  $210,000. 
B)  $230,000. 
C)  $240,000. 
D)  $250,000.

Question 14

C corporations with average annual gross receipts over $5 million must use the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 15

Schedule M-1 reconciles from net income per books to net income per the tax law.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is incorrect?

Accepted Answer

A)  Schedule M-1 is a reconciliation from book income to taxable income. 
B)  Schedule L is prepared in accordance with the accounting method used to keep financial accounting records. 
C)  Schedule M-3 is only prepared by corporations with total receipts and total assets of less than $250,000. 
D)  Schedule M-1 shows all book/tax differences,regardless of whether they are permanent or temporary differences. 
A)  Schedule M-1 is a reconciliation from book income to taxable income. 
B)  Schedule L is prepared in accordance with the accounting method used to keep financial accounting records. 
C)  Schedule M-3 is only prepared by corporations with total receipts and total assets of less than $250,000. 
D)  Schedule M-1 shows all book/tax differences,regardless of whether they are permanent or temporary differences.

Question 17

Parent-subsidiary corporations must file a consolidated tax return.

Accepted Answer

A) True 
 B)False

Question 18

Corporate distributions to shareholders from earnings and profits are called dividends.

Accepted Answer

A) True 
 B)False

Question 19

When a corporation is formed,the transaction is tax-free.

Accepted Answer

A) True 
 B)False

Question 20

A corporation subject to AMT has AMT income of $270,000.What is the amount of alternative minimum tax?

Accepted Answer

A)  $57,500. 
B)  $54,000. 
C)  $52,000. 
D)  $46,000. 
A)  $57,500. 
B)  $54,000. 
C)  $52,000. 
D)  $46,000.

Initially,corporations with average annual gross receipts for the last three years of $5 million or less are not subject to the corporate AMT rules.

A corporation can choose to voluntarily revoke a valid Subchapter S election.How do the shareholders accomplish a voluntary revocation and when will the revocation be effective?

If a corporation has a net capital loss,it can carry that loss back three years and then forward six.

A parent-subsidiary group is one in which a common parent corporation owns,directly or indirectly,at least 80% of one or more other corporations.

A capital loss carryforward will create a reconciling item on Schedule M-1,but a capital loss carryback will not.

Which of the following statements is incorrect?

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^th day of:

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 (basis of $10,000).Which of the following statements is correct?

A corporation has a fiscal year-end of May.If the corporation receives an automatic six-month extension to file its return,the return will be due on the 15^th of:

Saffron Corporation has book income of $200,000 which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:

C corporations with average annual gross receipts over $5 million must use the accrual basis of accounting.

Schedule M-1 reconciles from net income per books to net income per the tax law.

Which of the following statements is incorrect?

Parent-subsidiary corporations must file a consolidated tax return.

Corporate distributions to shareholders from earnings and profits are called dividends.

When a corporation is formed,the transaction is tax-free.

A corporation subject to AMT has AMT income of $270,000.What is the amount of alternative minimum tax?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Filters

Exam 15: Corporate Taxation

Initially,corporations with average annual gross receipts for the last three years of $5 million or less are not subject to the corporate AMT rules.

A corporation can choose to voluntarily revoke a valid Subchapter S election.How do the shareholders accomplish a voluntary revocation and when will the revocation be effective?

If a corporation has a net capital loss,it can carry that loss back three years and then forward six.

A parent-subsidiary group is one in which a common parent corporation owns,directly or indirectly,at least 80% of one or more other corporations.

A capital loss carryforward will create a reconciling item on Schedule M-1,but a capital loss carryback will not.

Which of the following statements is incorrect?

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15th day of:

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 (basis of $10,000).Which of the following statements is correct?

A corporation has a fiscal year-end of May.If the corporation receives an automatic six-month extension to file its return,the return will be due on the 15th of:

Saffron Corporation has book income of $200,000 which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:

C corporations with average annual gross receipts over $5 million must use the accrual basis of accounting.

Schedule M-1 reconciles from net income per books to net income per the tax law.

Which of the following statements is incorrect?

Parent-subsidiary corporations must file a consolidated tax return.

Corporate distributions to shareholders from earnings and profits are called dividends.

When a corporation is formed,the transaction is tax-free.

A corporation subject to AMT has AMT income of $270,000.What is the amount of alternative minimum tax?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Filters

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^th day of:

A corporation has a fiscal year-end of May.If the corporation receives an automatic six-month extension to file its return,the return will be due on the 15^th of: