Question 1

Which of the following could cause a corporation's alternative minimum taxable income to be lower than regular taxable income?

Accepted Answer

A)  Current year percentage depletion is smaller than cost depletion 
B)  ADS depreciation is larger than MACRS depreciation 
C)  The company is not entitled to an AMT exemption 
D)  The corporation has adjusted current earnings greater than AMTI before the ACE adjustment 
A)  Current year percentage depletion is smaller than cost depletion 
B)  ADS depreciation is larger than MACRS depreciation 
C)  The company is not entitled to an AMT exemption 
D)  The corporation has adjusted current earnings greater than AMTI before the ACE adjustment B

Question 2

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  False

Question 3

Corporation F owns 95 percent of the outstanding stock of Corporation
   a. Compute each corporation's taxable income if they file separate tax returns.
 b. Compute consolidated taxable income if Corporation F and Corporation G file a consolidated tax return.

Accepted Answer

a. If they file separately, Corporation F reports a taxable loss of $(481,000) = $(500,000) + $15,000 + $4,000; Corporation G reports taxable income of $797,000 = $800,000 - $3,000 and has a non-deductible capital loss.
b. If they file consolidated, the net Section 1231 gain of $1,000 = $4,000 - $3,000 is treated as a capital gain and the consolidated group can deduct $16,000 = $15,000 + $1,000 of Corporation G's capital loss. Consolidated taxable income is $300,000 = $(500,000) + $800,000 + $15,000 + $4,000 - $3,000 - $16,000 deductible capital loss.

Question 4

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 5

Which of the following statements about the calculation of alternative minimum taxable income is true?

Accepted Answer

A)  Excess percentage depletion is a positive adjustment to AMTI. 
B)  The AMT net operating loss can reduce AMTI to zero. 
C)  The AMTI exemption for all corporations is $40,000. 
D)  The minimum tax credit can be carried back two years. 
A)  Excess percentage depletion is a positive adjustment to AMTI. 
B)  The AMT net operating loss can reduce AMTI to zero. 
C)  The AMTI exemption for all corporations is $40,000. 
D)  The minimum tax credit can be carried back two years.

Question 6

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.

Accepted Answer

A)  $3,012,000 
B)  $2,852,430 
C)  $2,900,490 
D)  $1,127,490 
A)  $3,012,000 
B)  $2,852,430 
C)  $2,900,490 
D)  $1,127,490

Question 7

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 8

The corporate alternative minimum tax is designed to insure that corporations with substantial economic income will pay their fair share of the federal tax burden.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Alexus Inc.'s alternative minimum taxable income before any AMT exemption is $210,000. Compute the corporation's AMT exemption:

Accepted Answer

A)  $25,000 
B)  $0 
C)  $42,500 
D)  $40,000 
A)  $25,000 
B)  $0 
C)  $42,500 
D)  $40,000

Question 11

Grumond was incorporated on January 1, 2010, 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?

Accepted Answer

A)  2010 
B)  2010, 2011, and 2012 
C)  2010, 2011, 2012, and 2013 
D)  2010, 2011, 2012, 2013, and 2015 
A)  2010 
B)  2010, 2011, and 2012 
C)  2010, 2011, 2012, and 2013 
D)  2010, 2011, 2012, 2013, and 2015

Question 12

In determining the incidence of the corporate income tax:

Accepted Answer

A)  Corporations may pass the tax burden onto consumers in the form of higher prices 
B)  Corporate shareholders may bear the burden of the corporate tax in the form of lower return on investment 
C)  Corporate employees may bear the burden of the corporate tax in the form of lower compensation 
D)  All of the above parties may bear the indirect burden of the corporate income tax 
A)  Corporations may pass the tax burden onto consumers in the form of higher prices 
B)  Corporate shareholders may bear the burden of the corporate tax in the form of lower return on investment 
C)  Corporate employees may bear the burden of the corporate tax in the form of lower compensation 
D)  All of the above parties may bear the indirect burden of the corporate income tax

Question 13

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

Accepted Answer

A)  $136,000 
B)  $162,400 
C)  $26,400 
D)  $298,400 
A)  $136,000 
B)  $162,400 
C)  $26,400 
D)  $298,400

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A corporation that is unable to meet its original filing deadline may obtain an automatic twelve-month extension of the time to file its federal income tax return.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 allowable domestic production activities deduction is:

Accepted Answer

A)  $180,000 
B)  $120,000 
C)  $189,000 
D)  $335,000 
A)  $180,000 
B)  $120,000 
C)  $189,000 
D)  $335,000

Question 18

A corporate taxpayer would prefer a $50,000 deduction to a $50,000 credit.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  There is no AMT credit carryover from 2014 to 2015. 
B)  There is an AMT credit carryover from 2014 to 2015. 
C)  There is an AMT credit carryover from 2015 to 2016. 
D)  There is an AMT credit carryback from 2015 to 2014. 
A)  There is no AMT credit carryover from 2014 to 2015. 
B)  There is an AMT credit carryover from 2014 to 2015. 
C)  There is an AMT credit carryover from 2015 to 2016. 
D)  There is an AMT credit carryback from 2015 to 2014.

Question 20

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

Which of the following could cause a corporation's alternative minimum taxable income to be lower than regular taxable income?

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.

Corporation F owns 95 percent of the outstanding stock of Corporation a. Compute each corporation's taxable income if they file separate tax returns. b. Compute consolidated taxable income if Corporation F and Corporation G file a consolidated tax return.

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:

Which of the following statements about the calculation of alternative minimum taxable income is true?

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

The corporate alternative minimum tax is designed to insure that corporations with substantial economic income will pay their fair share of the federal tax burden.

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

Alexus Inc.'s alternative minimum taxable income before any AMT exemption is $210,000. Compute the corporation's AMT exemption:

Grumond was incorporated on January 1, 2010, 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?

In determining the incidence of the corporate income tax:

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

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

A corporation that is unable to meet its original filing deadline may obtain an automatic twelve-month extension of the time to file its federal income tax return.

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.

A corporate taxpayer would prefer a $50,000 deduction to a $50,000 credit.

Aloha, Inc. had the following results for its first two years of operation: 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:

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

Which of the following could cause a corporation's alternative minimum taxable income to be lower than regular taxable income?

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.

Corporation F owns 95 percent of the outstanding stock of Corporation a. Compute each corporation's taxable income if they file separate tax returns. b. Compute consolidated taxable income if Corporation F and Corporation G file a consolidated tax return.

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:

Which of the following statements about the calculation of alternative minimum taxable income is true?

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

The corporate alternative minimum tax is designed to insure that corporations with substantial economic income will pay their fair share of the federal tax burden.

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

Alexus Inc.'s alternative minimum taxable income before any AMT exemption is $210,000. Compute the corporation's AMT exemption:

Grumond was incorporated on January 1, 2010, 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?

In determining the incidence of the corporate income tax:

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

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

A corporation that is unable to meet its original filing deadline may obtain an automatic twelve-month extension of the time to file its federal income tax return.

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.

A corporate taxpayer would prefer a $50,000 deduction to a $50,000 credit.

Aloha, Inc. had the following results for its first two years of operation: 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:

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