Question 1

When computing a corporation's alternative minimum taxable income,its taxable income is

Accepted Answer

A)  only increased (never decreased) by tax preference items. 
B)  only increased (never decreased) by adjustments. 
C)  increased by the statutory exemption of $40,000. 
D)  increased by 75% of the excess of adjusted current earnings over taxable income. 
A)  only increased (never decreased) by tax preference items. 
B)  only increased (never decreased) by adjustments. 
C)  increased by the statutory exemption of $40,000. 
D)  increased by 75% of the excess of adjusted current earnings over taxable income.

Question 2

Larry Corporation purchased a new precision casting machine for its manufacturing facility.The machine cost $2 million,and another $150,000 was spent on installation.The machine was placed in service in June 2009.The old machine,which was placed in service in 2003,was sold in 2009 to an unrelated party for a $250,000 financial accounting profit.What asset disposition and capital recovery issues do you need to address when removing the old machine from,and placing the new machine on,the financial accounting and tax books and in calculating the 2009 tax depreciation?

Accepted Answer

The following tax issues need to be addr

Question 3

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

Accepted Answer

Inventory turnover = ($35,000/$350,000)×

Question 4

Raptor Corporation is a PHC for 2009 and reports $200,000 of taxable income on its federal income tax return.
   What is Raptor's PHC tax,assuming that it does not pay any dividends?

Accepted Answer

@#IMG-DLM& * 80,000-

Question 5

Lake Corporation is a personal holding company.Lake reports the following results for the current year:
   No dividends are paid during the current year or the 2-and-one-half-month throwback period.The mortgage relates to the rental properties.Calculate the adjusted income from rents exclusion from personal holding company income.

Accepted Answer

@#IMG-DLM& The rents cannot be excluded

Question 6

Which of the following statements about the alternative minimum tax depreciation rules is correct?

Accepted Answer

A)  The MACRS depreciation rules are used to calculate the depreciation deduction when calculating alternative minimum taxable income regardless of the date the property was placed in service. 
B)  The excess of the gain reported on the disposition of tangible personal property for income tax purposes over the gain reported for alternative minimum tax purposes is a positive adjustment to taxable income in arriving at alternative minimum taxable income. 
C)  A 31.5-year recovery period is used when calculating the commercial real property depreciation deduction for alternative minimum taxable income purposes. 
D)  No depreciation adjustment is made when computing AMT for real property acquired after 1998. 
A)  The MACRS depreciation rules are used to calculate the depreciation deduction when calculating alternative minimum taxable income regardless of the date the property was placed in service. 
B)  The excess of the gain reported on the disposition of tangible personal property for income tax purposes over the gain reported for alternative minimum tax purposes is a positive adjustment to taxable income in arriving at alternative minimum taxable income. 
C)  A 31.5-year recovery period is used when calculating the commercial real property depreciation deduction for alternative minimum taxable income purposes. 
D)  No depreciation adjustment is made when computing AMT for real property acquired after 1998.

Question 7

Identify which of the following statements is true.

Accepted Answer

A)  Payment of deficiency dividends will prevent the imposition of the accumulated earnings tax. 
B)  All corporations are exempt from the accumulated earnings tax on their first $250,000 of accumulated earnings. 
C)  A health service corporation can claim an accumulated earnings credit of $250,000. 
D)  All of the above are false. 
A)  Payment of deficiency dividends will prevent the imposition of the accumulated earnings tax. 
B)  All corporations are exempt from the accumulated earnings tax on their first $250,000 of accumulated earnings. 
C)  A health service corporation can claim an accumulated earnings credit of $250,000. 
D)  All of the above are false.

Question 8

In the current year,Sun Corporation's federal income taxes before credits are $220,000.Its TMT is $100,000.Their only available credit is a research credit (part of the general business credit)of $160,000.The general business credit is limited to what amount?

Accepted Answer

The lesser of: (a)$160,000 tentative gen

Question 9

In the last three years,Wolf Corporation had gross receipts of $3,000,000,$5,000,000,and $10,000,000.Which of the following statements is correct?

Accepted Answer

A)  Wolf receives a statutory exemption of $40,000 based on its receipts. 
B)  Wolf is exempt from the AMT. 
C)  Wolf is subject to the AMT in the current year. 
D)  There is insufficient information to determine whether Wolf is subject to the AMT. 
A)  Wolf receives a statutory exemption of $40,000 based on its receipts. 
B)  Wolf is exempt from the AMT. 
C)  Wolf is subject to the AMT in the current year. 
D)  There is insufficient information to determine whether Wolf is subject to the AMT.

Question 10

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?

Accepted Answer

The following tax issues need to be addr

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements regarding the minimum tax credit is correct?

Accepted Answer

A)  It can only be carried forward. 
B)  It must be carried back before being carried forward. 
C)  Taxpayers may elect to forgo the carryback period and carry the credit forward. 
D)  There are not carryforwards or carrybacks of the minimum tax credit. 
A)  It can only be carried forward. 
B)  It must be carried back before being carried forward. 
C)  Taxpayers may elect to forgo the carryback period and carry the credit forward. 
D)  There are not carryforwards or carrybacks of the minimum tax credit.

Question 13

Beta Corporation incurs an $80,000 regular tax liability and a $20,000 AMT liability.Assuming no restrictions on Beta's ability to use the minimum tax credit,what journal entry would be necessary to record tax expense?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not an adjustment to taxable income when computing the personal holding company tax?

Accepted Answer

A)  dividends-received deduction 
B)  dividends-paid deduction 
C)  NOL carryover from immediately preceding tax year 
D)  All of the above are adjustments. 
A)  dividends-received deduction 
B)  dividends-paid deduction 
C)  NOL carryover from immediately preceding tax year 
D)  All of the above are adjustments.

Question 16

Identify which of the following statements is true.

Accepted Answer

A)  Depreciation on real property may be a tax preference item for purposes of computing AMT. 
B)  Depreciation on real property may be an adjustment item for purposes of computing AMT. 
C)  Adjustments to taxable income always increase alternative minimum taxable income. 
D)  Both A and B are true. 
A)  Depreciation on real property may be a tax preference item for purposes of computing AMT. 
B)  Depreciation on real property may be an adjustment item for purposes of computing AMT. 
C)  Adjustments to taxable income always increase alternative minimum taxable income. 
D)  Both A and B are true.

Question 17

The courts and the Treasury Regulations have mentioned a number of reasonable needs that allow a corporation to accrue earnings and avoid the accumulated earnings tax.What are these reasons?

Accepted Answer

• Expansion of a business or replacement

Question 18

Identify which of the following statements is true.

Accepted Answer

A)  The corporate alternative minimum tax rate is 35%. 
B)  No credits are allowed when computing the tentative minimum tax. 
C)  Tax preference items always increase alternative minimum taxable income. 
D)  All of the above are false. 
A)  The corporate alternative minimum tax rate is 35%. 
B)  No credits are allowed when computing the tentative minimum tax. 
C)  Tax preference items always increase alternative minimum taxable income. 
D)  All of the above are false.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

How does the deduction for U.S.production activities affect AMTI?

Accepted Answer

A)  The computation of qualified production activities is the same for taxable income and AMTI. 
B)  The computation of qualified production activities is based on qualified production activities income for AMTI. 
C)  The computation of qualified production activities is based on AMTI before the deduction for qualified production activities. 
D)  The computation of qualified production activities is based on the lesser of qualified production activities income or AMTI before the deduction for qualified production activities. 
A)  The computation of qualified production activities is the same for taxable income and AMTI. 
B)  The computation of qualified production activities is based on qualified production activities income for AMTI. 
C)  The computation of qualified production activities is based on AMTI before the deduction for qualified production activities. 
D)  The computation of qualified production activities is based on the lesser of qualified production activities income or AMTI before the deduction for qualified production activities.

When computing a corporation's alternative minimum taxable income,its taxable income is

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

Raptor Corporation is a PHC for 2009 and reports $200,000 of taxable income on its federal income tax return. What is Raptor's PHC tax,assuming that it does not pay any dividends?

Which of the following statements about the alternative minimum tax depreciation rules is correct?

Identify which of the following statements is true.

In the current year,Sun Corporation's federal income taxes before credits are $220,000.Its TMT is $100,000.Their only available credit is a research credit (part of the general business credit)of $160,000.The general business credit is limited to what amount?

In the last three years,Wolf Corporation had gross receipts of $3,000,000,$5,000,000,and $10,000,000.Which of the following statements is correct?

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

Which of the following statements regarding the minimum tax credit is correct?

Beta Corporation incurs an $80,000 regular tax liability and a $20,000 AMT liability.Assuming no restrictions on Beta's ability to use the minimum tax credit,what journal entry would be necessary to record tax expense?

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

Which of the following is not an adjustment to taxable income when computing the personal holding company tax?

Identify which of the following statements is true.

The courts and the Treasury Regulations have mentioned a number of reasonable needs that allow a corporation to accrue earnings and avoid the accumulated earnings tax.What are these reasons?

Identify which of the following statements is true.

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

How does the deduction for U.S.production activities affect AMTI?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

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Exam 5: Other Corporate Tax Levies

When computing a corporation's alternative minimum taxable income,its taxable income is

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

Raptor Corporation is a PHC for 2009 and reports $200,000 of taxable income on its federal income tax return. What is Raptor's PHC tax,assuming that it does not pay any dividends?

Which of the following statements about the alternative minimum tax depreciation rules is correct?

Identify which of the following statements is true.

In the current year,Sun Corporation's federal income taxes before credits are $220,000.Its TMT is $100,000.Their only available credit is a research credit (part of the general business credit)of $160,000.The general business credit is limited to what amount?

In the last three years,Wolf Corporation had gross receipts of $3,000,000,$5,000,000,and $10,000,000.Which of the following statements is correct?

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

Which of the following statements regarding the minimum tax credit is correct?

Beta Corporation incurs an $80,000 regular tax liability and a $20,000 AMT liability.Assuming no restrictions on Beta's ability to use the minimum tax credit,what journal entry would be necessary to record tax expense?

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

Which of the following is not an adjustment to taxable income when computing the personal holding company tax?

Identify which of the following statements is true.

The courts and the Treasury Regulations have mentioned a number of reasonable needs that allow a corporation to accrue earnings and avoid the accumulated earnings tax.What are these reasons?

Identify which of the following statements is true.

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

How does the deduction for U.S.production activities affect AMTI?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters