Question 1

All of the following are accurate statements about corporations,except

Accepted Answer

A) a corporation does not compute adjusted gross income. 
B) a corporation is not allowed a standard deduction. 
C) dividends received from a domestic corporation do not receive any preferential treatment. 
D) the limit on the charitable contribution deduction is 10% of taxable income (with certain adjustments). 
A) a corporation does not compute adjusted gross income. 
B) a corporation is not allowed a standard deduction. 
C) dividends received from a domestic corporation do not receive any preferential treatment. 
D) the limit on the charitable contribution deduction is 10% of taxable income (with certain adjustments). C

Question 2

A corporation distributes land with a FMV of $85,000 (basis $50,000).The land has a mortgage of $95,000 assumed by the shareholder.Gain to the corporation is

Accepted Answer

A) $0. 
B) $10,000. 
C) $35,000. 
D) $45,000. 
A) $0. 
B) $10,000. 
C) $35,000. 
D) $45,000. D

Question 3

Atlantic Corporation,a calendar-year taxpayer,has $120,000 of accumulated E&P deficit as of January 1.Atlantic's current E&P is $40,000.The corporation makes a $50,000 distribution to its shareholders.Shareholders have stock basis of $60,000.What is the amount of Atlantic's E&P deficit at the end of the year?

Accepted Answer

The $50,000 distribution to shareholders is a $40,000 taxable dividend (from current E&P)and a $10,000 return of capital to the shareholders (they have basis of at least this amount).The E&P deficit is not increased by the tax-free distribution; it continues to be $120,000.

Question 4

Dividends paid from E&P are taxable to shareholders and are,therefore,deductible by the corporation.

Accepted Answer

A) True 
 B)False

Question 5

Tara transfers land with a $690,000 adjusted basis and a $700,000 FMV to a corporation in a Sec.351 transfer.Immediately after the transfer,Tara owns 100% of the corporation-stock with a FMV of $615,000.In addition,$85,000 of business-related liabilities are assumed by the corporation with respect to the transfer.No other property is transferred.Tara's recognized gain on the transfer is

Accepted Answer

A) $0. 
B) $5,000. 
C) $10,000. 
D) $15,000. 
A) $0. 
B) $5,000. 
C) $10,000. 
D) $15,000.

Question 6

If a corporation reports both a NLTCG and a NSTCG after netting all capital gains and losses,both the NLTCG and the NSTCG are subject to tax at rates applicable to ordinary income.

Accepted Answer

A) True 
 B)False

Question 7

The corporate AMT rate is 26% on the first $186,300 of tax base and 28% on the balance.

Accepted Answer

A) True 
 B)False

Question 8

Danielle transfers land with a $100,000 FMV (basis $95,000)and $85,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $15,000.The corporation qualifies as a 351 transfer.The corporation assumes the $85,000 mortgage.What is the adjusted basis of the property to the corporation?

Accepted Answer

A) $0 
B) $15,000 
C) $95,000 
D) $100,000 
A) $0 
B) $15,000 
C) $95,000 
D) $100,000

Question 9

A shareholder receives a distribution from a corporation in complete liquidation.The distribution will be taxed as a dividend to the extent of current or accumulated E&P.

Accepted Answer

A) True 
 B)False

Question 10

A corporation pays AMT in the current year.It will be able to get the AMT back in a future year when its regular tax exceeds is tentative minimum tax.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements regarding corporate tax return schedules is correct?

Accepted Answer

A) Schedule M-3 reconciles taxable income with earnings and profits. 
B) Schedule M-1 reconciles retained earnings at the beginning of the year to the end of the year amount. 
C) Schedule M-2 reconciles book-tax differences. 
D) Schedule M-3 reconciles book-tax differences. 
A) Schedule M-3 reconciles taxable income with earnings and profits. 
B) Schedule M-1 reconciles retained earnings at the beginning of the year to the end of the year amount. 
C) Schedule M-2 reconciles book-tax differences. 
D) Schedule M-3 reconciles book-tax differences.

Question 12

Small Corporation had the following capital gains and losses during the current year:
   Taxable income,exclusive of the capital gains and losses above,is $68,000.
a.How should the capital gains and losses be treated for the current year?
b.What is the taxable income for the current year taking into consideration the capital gains and losses?

Accepted Answer

a.LTCG $30,000 - LTCL $23,000 = NLTCG $7

Question 13

Sycamore Corporation's financial statements show the following items for the current year in its financial accounting records:
   For tax purposes,depreciation is $22,000.Sycamore owns less than 20% of the company from which it received dividends.Calculate Sycamore's taxable income,tax liability,and carryforwards.

Accepted Answer

@#IMG-DLM& 
No deduction is allowed for the capita

Question 14

A shareholder transfers a building subject to a mortgage in a Sec.351 transfer.The corporation assumes the mortgage,and no gain is recognized on the transfer under Sec.351.The transfer of the liabilities has no effect on the shareholder's stock basis.

Accepted Answer

A) True 
 B)False

Question 15

What factors are considered in determining whether a redemption will be treated as an exchange subject to capital gain or loss treatment?

Accepted Answer

1.The redemption is not essentially equi

Question 16

In order for the Sec.351 nonrecognition rules to apply,the transferor-shareholders in aggregate must control the transferee corporation by owning more than 50% of its stock immediately after the exchange.

Accepted Answer

A) True 
 B)False

Question 17

Ohio Corporation's taxable income for the current year is $300,000.Its tax liability is

Accepted Answer

A) $78,000. 
B) $100,250. 
C) $102,000. 
D) $117,000. 
A) $78,000. 
B) $100,250. 
C) $102,000. 
D) $117,000.

Question 18

Blue Corporation distributes land and building having a $70,000 adjusted basis and a $200,000 FMV to its sole shareholder,Marina.Blue has current and accumulated E&P exceeding $200,000.The property is subject to a $120,000 mortgage,which Marina assumes.What is the amount of the taxable dividend received by Marina?

Accepted Answer

A) $0 
B) $70,000 
C) $80,000 
D) $130,000 
A) $0 
B) $70,000 
C) $80,000 
D) $130,000

Question 19

June Corporation has the following income and expense items during the current year:   The allowed dividends-received deduction is

Accepted Answer

A) $ 80,000. 
B) $168,000. 
C) $192,000. 
D) $240,000. 
A) $ 80,000. 
B) $168,000. 
C) $192,000. 
D) $240,000.

Question 20

If a corporation owns less than 20% of the stock of the distributing corporation,the dividends-received deduction is not allowed for the recipient corporation.

Accepted Answer

A) True 
 B)False

Exam 32: Corporations

All of the following are accurate statements about corporations,except

A corporation distributes land with a FMV of $85,000 (basis $50,000).The land has a mortgage of $95,000 assumed by the shareholder.Gain to the corporation is

Dividends paid from E&P are taxable to shareholders and are,therefore,deductible by the corporation.

If a corporation reports both a NLTCG and a NSTCG after netting all capital gains and losses,both the NLTCG and the NSTCG are subject to tax at rates applicable to ordinary income.

The corporate AMT rate is 26% on the first $186,300 of tax base and 28% on the balance.

A shareholder receives a distribution from a corporation in complete liquidation.The distribution will be taxed as a dividend to the extent of current or accumulated E&P.

A corporation pays AMT in the current year.It will be able to get the AMT back in a future year when its regular tax exceeds is tentative minimum tax.

Which of the following statements regarding corporate tax return schedules is correct?

A shareholder transfers a building subject to a mortgage in a Sec.351 transfer.The corporation assumes the mortgage,and no gain is recognized on the transfer under Sec.351.The transfer of the liabilities has no effect on the shareholder's stock basis.

What factors are considered in determining whether a redemption will be treated as an exchange subject to capital gain or loss treatment?

In order for the Sec.351 nonrecognition rules to apply,the transferor-shareholders in aggregate must control the transferee corporation by owning more than 50% of its stock immediately after the exchange.

Ohio Corporation's taxable income for the current year is $300,000.Its tax liability is

June Corporation has the following income and expense items during the current year: The allowed dividends-received deduction is

If a corporation owns less than 20% of the stock of the distributing corporation,the dividends-received deduction is not allowed for the recipient corporation.

Tax Research

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