Exam 5: Other Corporate Tax Levies

Barker Corporation,a personal service company,has $200,000 of taxable income.Barker has tax preferences and positive adjustments of $200,000 and negative adjustments of $140,000 for alternative minimum tax purposes.No credits are available.Barker's regular tax liability is $70,000.What is the tentative minimum tax amount?

Which of the following is not permitted an accumulated earnings credit based on reasonable needs of the business?

Becky places five-year property in service during June 2014 using the half-year convention.Depreciation is $1,500 under the 150% declining balance method and $2,000 under 200% declining balance.Becky uses the 200% declining balance method for regular income tax purposes.What is the amount of Becky's AMT adjustment?

The ACE adjustment always increases alternative minimum taxable income (AMTI).

Dragon Corporation reports a distribution on its return from the third previous year as a stock redemption producing a capital gain.When the return is audited during the current year,the distribution of the third previous year is characterized by the IRS as a dividend.This change causes Dragon Corporation to be classified as a personal holding company for the third previous year.Which of the following statements is correct?

A manufacturing corporation has accumulated E&P of $210,000 and current E&P of $65,000.Accumulated taxable income,before reduction for the accumulated earnings credit,is $90,000 for the current year.No dividends were paid during the year.The corporation has an increase in reasonable business needs of $35,000.If the corporation is not a service corporation and has reported no long-term capital gains,what is the amount of earnings subject to the accumulated earnings tax?

Which of following generally does not indicate an unreasonable earnings accumulation?

Khuns Corporation,a personal holding company,reports the following: Calculate Khuns Corporation's adjusted income from rents (AIR).

What is the effect of the two-pronged test that allows the exclusion from PHCI of certain AIR (adjusted income from rents)?

The personal holding company tax

The accumulated earnings tax does not apply to corporations that

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is true.

ASC 740 requires that

The following information is reported by Acme Corporation. What is Acme Corporation's average operating cycle as a percentage of the year?

All corporations,except S corporations and small C corporations,must calculate the ACE adjustment.

Church Corporation is a closely held C corporation.All of the stock is owned by Charles and Chanda Church.The corporation,in its second month of operation in its initial tax year,anticipates earning $150,000 of gross income in the current year.Gross income is expected to be approximately 40% dividends,30% corporate bond interest,and 30% net real estate rentals (after interest,property taxes,and depreciation).Administrative expenses are expected to be $20,000.What special problems does the large amount of passive income that Church Corporation expects to earn present to you as their CPA?

Life insurance proceeds are a positive adjustment for adjusted current earnings (ACE),but not alternative minimum taxable income (AMTI).

To avoid the accumulated earnings tax,a corporation needs to have a definite plan for expending the accumulated earnings.