Exam 20: Corporations and Partnerships

The amount of the dividends received deduction is affected by the percentage of ownership held by the recipient corporation in the paying corporation.

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of C corporations. b.Applies only to the income taxation of S corporations. c.Applies to both the income taxation of C corporations and S corporations. d.Applies to neither the income taxation of C corporations nor of S corporations. -Tax-exempt income received by the corporation will pass through to its shareholders as tax-exempt income.

Alabaster Corporation,a calendar year taxpayer,was formed on July 1,2016,and incurred organizational expenditures of $52,000.Its deduction for these expenditures for 2016 can be a:

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of C corporations. b.Applies only to the income taxation of S corporations. c.Applies to both the income taxation of C corporations and S corporations. d.Applies to neither the income taxation of C corporations nor of S corporations. -Corporation can have both common and preferred stock outstanding.

In completing a Schedule M-1 of Form 1120,the Federal income tax per books is added to net income per books to arrive at taxable income.Why?

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -Excess charitable contributions can be carried over for five years.

The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

As a separately stated item,the long-term capital losses of an S corporation will pass through to its shareholders as short-term capital losses.

The Carson brothers plan to open an auto repair facility.They anticipate losses in the early years of the business and are concerned about potential liability.What type of business entity should they choose?

In computing the taxable income (or loss)of an S corporation,an NOL carryover from a prior year is not allowed.

Regarding the tax treatment of charitable contributions,corporations enjoy two major advantages over individuals.Elaborate.

Like individuals,corporations can take advantage of § 1031 to elect to defer recognizing gain on like-kind exchanges.

Gray is a calendar year taxpayer.In early December 2016,Gray's Board of Directors authorizes a pledge of an $80,000 donation to the Red Cross to help provide food and shelter to victims of natural disasters.The donation is paid as follows: $10,000 in late December 2016,$40,000 in February 2017,and $30,000 in early May 2017.Disregarding percentage limitations,the maximum deduction for 2016 is:

During 2016,Violet had the following capital gains and losses: Long-term capital gain $4,000 Short-term capital gain 5,000 ​ In 2015 Violet had a net long-term capital loss of $6,000 which could not be used.Assume all capital gains and losses result from the sale of securities held as investments.How are these transactions handled if Violet is: a.An individual? b.A C corporation?

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -The foreign tax credit is not available.

If a corporation does not choose to amortize its organizational expenditures,such expenses can never be deducted.

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -Gain on an involuntary conversion cannot be deferred.

A partner's basis in the partnership interest is increased by his or her share of the tax-exempt income received by the partnership.

The rules dealing with the recapture of depreciation on real estate are different for corporations than for individuals.Explain.

Which of the following,if any,correctly describe the status or nature of limited liability companies?