Exam 11: The Corporate Taxpayer

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.

TasteCo, Inc. reported $210,500 of taxable income this year. What is its regular tax liability?

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

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:

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

Which of the following is a primary legal characteristic of the corporate form of business?

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.

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

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.

Franton Co., a calendar year, accrual basis corporation, reported $2,076,000 net income after tax on its 2012 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.

Grumond was incorporated on January 1, 2004, and adopted a calendar year for tax purposes. It had the following gross receipts for its first six taxable years: For which of these years is Grumond exempt from AMT?

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?

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:

Corporations with taxable incomes in excess of $18,333,333 have a 35% marginal tax rate and a 35% average tax rate.

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

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?

Calliwell Corporation is a Colorado corporation engaged in the manufacture and sale of computer components. In 2013, 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 allowable 2013 domestic production activities deduction is: