Exam 5: Other Corporate Tax Levies

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

The NOL deduction is calculated the same for regular and alternative minimum tax purposes.

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

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.How much is its alternative minimum tax liability?

Identify which of the following statements is true.

Arnold Corporation reports taxable income of $250,000,tax preference items of $20,000,and positive AMT adjustments of $20,000.What is its statutory exemption,when computing alternative minimum taxable income?

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?

What are the four general rules that provide a framework for the ACE calculation?

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

The general business credit can be used to offset the alternative minimum tax.

Identify which of the following statements is false.

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 150% declining balance method for regular income tax purposes.What is the amount of Becky's AMT adjustment?

Eight individuals own Navy Corporation,a C corporation.Three shareholders make up the board of directors and own 51% of the stock.The corporation has a successful manufacturing business.It has accumulated $3 million of E&P and expects to accumulate another $200,000 of E&P annually.Annual dividend payments are $30,000.Demand for Navy's goods has been strong,but the company does not anticipate any expansion or repair of the current plant for three to five years.Management has invested $200,000 annually in growth stocks.Its current investment portfolio is $1.2 million.The portfolio is held as protection against a business slowdown.Loans to shareholder-employees currently are $400,000.As Navy's CPA,what tax issues should you have your client consider?

Drury Corporation,which was organized three years ago,reports the following adjusted current earnings (ACE)and preadjustment alternative minimum taxable income (AMTI)amounts. What is the ACE adjustment to increase (or decrease)taxable income to arrive at AMTI for the current year?

When using the Bardahl formula,an increase in annual credit sales (while holding the average accounts receivable balance constant)has which of the following effects on the working capital requirements?

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

What is a personal holding company?

A corporation cannot reasonably accumulate earnings to

The alternative minimum tax is the excess of the tentative minimum tax amount over the regular tax amount.

In determining accumulated taxable income for the purpose of the accumulated earnings tax,which one of the following is allowed as a deduction?