Exam 3: The Corporate Income Tax

Richards Corporation has taxable income of $280,000 calculated before the charitable contribution deduction and before its dividends-received deduction of $34,000.Richards makes cash contributions of $35,000 to charitable organizations.What is Richards Corporation's charitable contribution deduction for the current year?

Identify which of the following statements is true.

Which of the following results in a deferred tax asset?

Garth Corporation donates inventory having an adjusted basis of $40,000 and an FMV of $150,000 to a qualified public charity.The inventory will be used by the charity to care for the ill.The maximum charitable contribution deduction before consideration of the 10% limitation is

Which of the following types of evidence indicate that a valuation allowance is needed to reduce the deferred tax asset?

A C corporation must use a calendar year as its tax year unless it has a substantial business purpose to use a fiscal year.

Bermuda Corporation reports the following results in 2009 and 2010: What is Bermuda's contribution deduction in 2011 and 2012? What is the disposition of any remaining amount?

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.

Courtney Corporation had the following income and expenses for the tax year: Courtney had taxable income for the past three years of: a)Determine the corporation's NOL for the current year. b)Determine the amount of NOL carried back to each preceding tax year and the amount of NOL,if any,available as a carryforward.

West Corporation purchases 50 shares (less than 1%)of Perch Corporation common stock on April 3.The ex-dividend date is April 4.West Corporation pays $50,000 for the stock and receives a dividend of $5,000 on the Perch stock.On May 1,West Corporation sells the Perch stock for $45,000.West's taxable income before the dividends-received deduction is $4,000.West's dividends-received deduction is

Super Corporation gives a painting to a museum for public display on August 6.The painting was purchased on April 3 of the same year for $20,000 and is worth $30,000 at the date of gift.Also,Super accrues a charitable contribution on December 30 and pays the $12,000 contribution on February 1 of the next year.Super Corporation is a calendar-year corporation that uses the accrual method of accounting.Before considering the 10% limitation rule,the maximum deduction for the current year is

Identify which of the following statements is false.

A new corporation may generally select one of the following accounting methods with the exception of

Zerotech Corporation donates the following property to an elementary school: • Computer printer purchased three years ago for $1,000.The printer has a $500 FMV and $0 adjusted basis on contribution date. • Computer equipment acquired one year ago at a cost of $5,000.The equipment has an $8,000 FMV and $0 adjusted basis on contribution date. • Computer software acquired two months ago at a cost of $10,000.The software will be used in a prekindergarten program.Its FMV on the contribution date is $10,000 and it has an adjusted basis of $0. a)Identify any donation qualifying for special treatment. b)What is Zerotech's charitable contribution deduction?

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

Glacier Corporation,a large retail sales company,has a taxable income of $20,000,000.What is Glacier Corporation's tax?

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?

Identify which of the following statements is true.

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?

Jeffrey Corporation has asked you to prepare its corporate federal income tax return.What issue do you need to address in considering whether Schedule M-3 is required?