Question 1

Describe the domestic production activities deduction.

Accepted Answer

The 2004 Jobs Act added Sec.199,which al

Question 2

Westwind Corporation reports the following results for the current year:
   What are Westwind's taxable income and regular tax liability before credits for the current year?

Accepted Answer

The net capital gain

Question 3

Winter Corporation's taxable income is $500,000.In addition,Winter has the following items:   What is Winter's financial accounting income?

Accepted Answer

A) $511,000 
B) $513,000 
C) $518,000 
D) $520,000 
A) $511,000 
B) $513,000 
C) $518,000 
D) $520,000

Question 4

Joker Corporation owns 80% of Klue Corporation.Joker Corporation also owns 45% of Lion Corporation and 45% of Mark Corporation.Klue Corporation owns 40% of Lion Corporation and 10% of Mark Corporation.Which corporations are members of a controlled group?

Accepted Answer

A) Klue,Lion,and Mark Corporations 
B) Joker,Klue,Lion,and Mark Corporations 
C) Joker,Klue,and Lion Corporations 
D) Joker and Klue Corporations 
A) Klue,Lion,and Mark Corporations 
B) Joker,Klue,Lion,and Mark Corporations 
C) Joker,Klue,and Lion Corporations 
D) Joker and Klue Corporations

Question 5

What is probably the most common reason for making a consolidated return election?

Accepted Answer

Filing consolidated returns al

Question 6

Baxter Corporation is a personal service corporation.Baxter Corporation has taxable income of $10,000.Baxter Corporation's tax is

Accepted Answer

A) $1,500. 
B) $3,400. 
C) $3,500. 
D) $3,900. 
A) $1,500. 
B) $3,400. 
C) $3,500. 
D) $3,900.

Question 7

Dallas Corporation,not a dealer in securities,realizes taxable income of $60,000 from the operation of its business.Additionally,in the same year,Dallas realizes a long-term capital loss of $10,000 from the sale of marketable securities.If the corporation realizes no other capital gains or losses,what is the proper treatment for the $10,000 long-term capital loss on the tax return?

Accepted Answer

A) Use $3,000 of the loss to reduce taxable income and carry $7,000 of the long-term capital loss forward for five years. 
B) Use $6,000 of the loss to reduce taxable income and carry $4,000 of the long-term capital loss forward for five years. 
C) Use $10,000 of the long-term capital loss to reduce taxable income. 
D) Carry the $10,000 long-term capital loss back three years as a short-term capital loss,then forward five years. 
A) Use $3,000 of the loss to reduce taxable income and carry $7,000 of the long-term capital loss forward for five years. 
B) Use $6,000 of the loss to reduce taxable income and carry $4,000 of the long-term capital loss forward for five years. 
C) Use $10,000 of the long-term capital loss to reduce taxable income. 
D) Carry the $10,000 long-term capital loss back three years as a short-term capital loss,then forward five years.

Question 8

Green Corporation is incorporated on March 1 and begins business on June 1.Green's first tax year ends on October 31,i.e. ,a short year.Green incurs the following expenses during the year:   What is the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible?

Accepted Answer

A) $36,000 
B) $5,028 
C) $667 
D) $500 
A) $36,000 
B) $5,028 
C) $667 
D) $500

Question 9

In February of the current year,Brent Corporation donates computer equipment that it purchased six months ago to Eastside High School for use in its educational program.The donated property had a $20,000 adjusted basis to Brent and a $40,000 FMV.What is the amount of the gift?

Accepted Answer

A) $20,000 
B) $30,000 
C) $35,000 
D) $50,000 
A) $20,000 
B) $30,000 
C) $35,000 
D) $50,000

Question 10

Sun and Moon Corporations each have only one class of stock outstanding.Their stock ownership is shown below.   Which of the four stock ownership changes that are illustrated is the minimum change that is needed if Sun and Moon Corporations are to be brother-sister corporations under the 50%-80% requirements? (Assume the two corporations are equally valued. )

Accepted Answer

A) No stock ownership change is required. 
B) Charles must acquire an additional 10% of Moon Corporation. 
C) Charles must acquire an additional 5% of Sun Corporation. 
D) Arthur must acquire an additional 30% of Moon Corporation. 
A) No stock ownership change is required. 
B) Charles must acquire an additional 10% of Moon Corporation. 
C) Charles must acquire an additional 5% of Sun Corporation. 
D) Arthur must acquire an additional 30% of Moon Corporation.

Question 11

Newco Corporation has asked you to help determine whether it should use the accrual method or the cash method of accounting.What are the tax issues involved in making this determination?

Accepted Answer

• Is Newco a farming corporation?
• If s

Question 12

A deferred tax asset indicates that a firm will realize the tax benefit of an event sometime in the future.

Accepted Answer

A) True 
 B)False

Question 13

Sparks Corporation receives a dividend of $100,000 from Jill Corporation,a C Corporation.Sparks owns 70% of Jill Corporation stock.Sparks' dividends-received deduction is $80,000.

Accepted Answer

A) True 
 B)False

Question 14

Corporate estimated tax payments are due April 15,June 15,September 15,and January 15.

Accepted Answer

A) True 
 B)False

Question 15

Bebop Corporation reports the following results in the current year:
   What is Bebop's taxable income?

Accepted Answer

The answer of Bebop Corporation reports the following results in...

Question 16

Little Corporation uses the accrual method of accounting.Little's sole shareholder,Renee,uses the cash method of accounting.Both taxpayers use the calendar year as their tax year.The corporation accrues a $25,000 interest payment to Renee on December 25,2011 and makes the payment on March 10,2012.What are the tax consequences of the transactions to both taxpayers in 2011 and 2012?

Accepted Answer

Little Corporation cannot dedu

Question 17

James Corporation purchased residential real estate in 2007 for $225,000,of which $25,000 was allocated to land and $200,000 was allocated to the building.James Corporation took straight-line MACRS deductions of $30,000 during the years 2005-2009.In 2012,James Corporation sold the property for $285,000,of which $60,000 is allocated to the land and $225,000 is allocated to the building.What are the amounts and character of James Corporation's recognized gain or loss on the sale?

Accepted Answer

The answer of James Corporation purchased residential real estate in...

Question 18

Walter,who owns all of the Ajax Corporation stock,purchases a truck from Ajax Corporation in January.The truck cost $12,000 and has a $10,000 adjusted basis.Walter pays the truck's $8,000 FMV.Later in the same year,Walter sells the truck to an unrelated party for $13,000.With respect to these transactions,

Accepted Answer

A) Ajax Corporation reports a loss of $2,000 and Walter reports a gain of $5,000. 
B) Ajax Corporation reports no loss and Walter reports a gain of $3,000. 
C) Ajax Corporation reports a loss of $4,000 and Walter reports a gain of $5,000. 
D) Ajax Corporation reports no loss and Walter reports a gain of $5,000. 
A) Ajax Corporation reports a loss of $2,000 and Walter reports a gain of $5,000. 
B) Ajax Corporation reports no loss and Walter reports a gain of $3,000. 
C) Ajax Corporation reports a loss of $4,000 and Walter reports a gain of $5,000. 
D) Ajax Corporation reports no loss and Walter reports a gain of $5,000.

Question 19

JLA is a U.S.shoe manufacturer.Its domestic production income is $1,000,000 and U.S.W-2 wages are $600,000.Taxable income before the domestic production deduction is $500,000.What is the amount of the production activities deduction?

Accepted Answer

A) $15,000 
B) $20,000 
C) $45,000 
D) $50,000 
A) $15,000 
B) $20,000 
C) $45,000 
D) $50,000

Question 20

Grant Corporation is not a large corporation for estimated tax purposes and reports on a calendar-year basis.Grant expects the following results:   Grant's tax liability for last year was $240,000.Grant's minimum total estimated tax payment for this year to avoid a penalty is

Accepted Answer

A) $240,000. 
B) $248,000. 
C) $288,000. 
D) $280,000. 
A) $240,000. 
B) $248,000. 
C) $288,000. 
D) $280,000.

Exam 3: the Corporate Income Tax

Describe the domestic production activities deduction.

Westwind Corporation reports the following results for the current year: What are Westwind's taxable income and regular tax liability before credits for the current year?

Winter Corporation's taxable income is $500,000.In addition,Winter has the following items: What is Winter's financial accounting income?

Joker Corporation owns 80% of Klue Corporation.Joker Corporation also owns 45% of Lion Corporation and 45% of Mark Corporation.Klue Corporation owns 40% of Lion Corporation and 10% of Mark Corporation.Which corporations are members of a controlled group?

What is probably the most common reason for making a consolidated return election?

Baxter Corporation is a personal service corporation.Baxter Corporation has taxable income of $10,000.Baxter Corporation's tax is

Green Corporation is incorporated on March 1 and begins business on June 1.Green's first tax year ends on October 31,i.e. ,a short year.Green incurs the following expenses during the year: What is the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible?

In February of the current year,Brent Corporation donates computer equipment that it purchased six months ago to Eastside High School for use in its educational program.The donated property had a $20,000 adjusted basis to Brent and a $40,000 FMV.What is the amount of the gift?

Newco Corporation has asked you to help determine whether it should use the accrual method or the cash method of accounting.What are the tax issues involved in making this determination?

A deferred tax asset indicates that a firm will realize the tax benefit of an event sometime in the future.

Sparks Corporation receives a dividend of $100,000 from Jill Corporation,a C Corporation.Sparks owns 70% of Jill Corporation stock.Sparks' dividends-received deduction is $80,000.

Corporate estimated tax payments are due April 15,June 15,September 15,and January 15.

Bebop Corporation reports the following results in the current year: What is Bebop's taxable income?

JLA is a U.S.shoe manufacturer.Its domestic production income is $1,000,000 and U.S.W-2 wages are $600,000.Taxable income before the domestic production deduction is $500,000.What is the amount of the production activities deduction?

Grant Corporation is not a large corporation for estimated tax purposes and reports on a calendar-year basis.Grant expects the following results: Grant's tax liability for last year was $240,000.Grant's minimum total estimated tax payment for this year to avoid a penalty is

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