Exam 20: Corporations and Partnerships

Emerald Corporation and Gold Corporation each own 500 shares of IBM Corporation common stock and each receives the same amount of cash dividends on their stock investment.The dividends received deduction each corporation can claim will be the same.

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 -Like-kind exchange provisions apply.

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 -A net short-term capital loss can be used to offset a net long-term capital gain.

Sarah,a sole shareholder,rents property to her corporation.The rent income she receives from the lease is a constructive dividend to Sarah.

In the current year,Auburn Corporation (a calendar year taxpayer),has the following income and expenses: ​ Gross income from operations $1,000,000 Expenses from operations 1,100,000 Dividends from Blond Corporation 200,000 ​ Auburn Corporation owns 20% of the stock in Blond Corporation.The dividends received deduction for the current year is:

Taxpayers who want both limited liability and the passthrough of losses should choose either the Subchapter S or the LLC entity form of doing business.

In a § 351 transfer to a controlled corporation,the corporation's basis for the property it receives is the shareholder's basis increased by any boot given by the corporation.

Satisfying the definition of a small business corporation is no longer necessary once the S election is initially made.

Examples of separately stated items of an S corporation include tax-exempt interest.

Currently all C corporations must file a Schedule M-3 with Form 1120.

In comparing C corporations with individuals,which of the following,if any,relate only to individuals?

Jordan and his two brothers are equal owners in Taupe Partnership.If Jordan sells business property (basis of $230,000;fair market value of $280,000)to Taupe for $280,000,he must recognize the $50,000 realized gain.

Jim,Betty,and Bill form Crow Corporation.Jim and Betty each contribute cash of $500,000,while Bill contributes land (basis of $550,000;fair market value of $600,000).Each shareholder receives one-third of Crow's stock,and Bill also receives $100,000 in cash.Which,if any,of the following choices is a correct result of the incorporation?

A corporation that claims the dividends received deduction may completely or only partly avoid any tax on the dividends involved.What accounts for the difference in tax consequences?

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 -Net short-term capital gains are taxed as ordinary income.

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 -Tax rates are progressive.

On March 4,2016,all of the shareholders of Kingfisher Corporation (a calendar year entity)voluntarily revoke the S election (effective as soon as possible).For all of 2016,Kingfisher Corporation will be a C corporation.

In terms of the pass-through of tax attributes to the owners,both partnerships and C corporations follow the conduit approach.

If property contributed to a partnership is subject to a liability (assumed by the partnership),gain is recognized to the contributing partner to the extent of the liability.

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. -A dividends received deduction is not allowed.