Exam 3: The Corporate Income Tax

On December 10,2011,Dell Corporation (a calendar-year taxpayer)accrues an obligation for a $100,000 bonus to Muriel,a sales representative who had had an outstanding year.Muriel owns no Dell Corporation stock.The bonus is paid on May 5,2012.What is Dell's deduction for 2011? What is Dell's deduction for 2012?

Identify which of the following statements is true.

How does the use of a net capital loss differ for individual and corporate taxpayers?

Edison Corporation is organized on July 31.The corporation starts business on August 10.The corporation adopts a November 30 fiscal year end.The following expenses are incurred during the year: What is the maximum amount of organizational expenditures that can be deducted by the corporation for its first tax year ending November 30?

Identify which of the following statements is true.

Which of the following items will not create a deferred tax liability?

Sun and Moon Corporations each have only one class of stock outstanding.Their stock ownership is shown below. Which of the four stock ownership changes that are illustrated is the minimum change that is needed if Sun and Moon Corporations are to be brother-sister corporations under the 50%-80% requirements? (Assume the two corporations are equally valued.)

Lass Corporation reports a $25,000 net capital loss this year.The corporation reports the following net capital gains during the past three years. Determine the amount of net capital loss carried back to each preceding tax year and the amount of capital loss,if any,available as a carryforward.