Question 1

Corporations may be taxed on less than 100% of dividends received due to the dividends-received deduction,while individuals are taxed on all of their dividend income.

Accepted Answer

A) True 
 B)False  True

Question 2

Individuals Rhett and Scarlet form Lady Corporation.Rhett transfers land and a building with a $140,000 adjusted basis and a $230,000 FMV in exchange for 50% of the stock of Lady Corporation worth $210,000 and a $20,000 note.Scarlet contributes cash of $230,000 for 50% of the stock of Lady Corporation worth $210,000 and a note of the Lady Corporation valued at $20,000.Rhett's recognized gain on the transfer is

Accepted Answer

A)  $0. 
B)  $20,000. 
C)  $70,000. 
D)  $90,000. 
A)  $0. 
B)  $20,000. 
C)  $70,000. 
D)  $90,000. B

Question 3

In the current year,Bosc Corporation has taxable income of $100,000,and its regular tax liability is $22,250.Bartlett's AMT adjustments other than ACE are $70,000,and it has $320,000 of adjusted current earnings.What is the amount of Bosc Corporation's AMT liability?

Accepted Answer

The answer of In the current year,Bosc Corporation has taxable...

Question 4

For purposes of the accumulated earnings tax,reasonable needs of the business include providing working capital for the business.

Accepted Answer

A) True 
 B)False

Question 5

Blue Corporation distributes land and building having a $70,000 adjusted basis and a $200,000 FMV to its sole shareholder,Marina.Blue has current and accumulated E&P exceeding $200,000.The property is subject to a $120,000 mortgage,which Marina assumes.What is the amount of the taxable dividend received by Marina?

Accepted Answer

A)  $0 
B)  $70,000 
C)  $80,000 
D)  $130,000 
A)  $0 
B)  $70,000 
C)  $80,000 
D)  $130,000

Question 6

If a corporation's charitable contributions exceed the deduction limitation in a particular year,the excess

Accepted Answer

A)  is not deductible in any future year. 
B)  becomes a carryforward to a maximum of five succeeding years. 
C)  may be carried back to the third preceding year. 
D)  is carried over indefinitely. 
A)  is not deductible in any future year. 
B)  becomes a carryforward to a maximum of five succeeding years. 
C)  may be carried back to the third preceding year. 
D)  is carried over indefinitely.

Question 7

A corporation has regular taxable income of $90,000 and its gross receipts have never exceeded $5,000,000.Tax preference items and positive adjustments total $70,000.Its regular tax liability is $15,450.The alternative minimum tax is

Accepted Answer

A)  $0. 
B)  $9,050. 
C)  $24,000. 
D)  $24,500. 
A)  $0. 
B)  $9,050. 
C)  $24,000. 
D)  $24,500.

Question 8

If certain requirements are met,Sec.351 permits deferral of recognition of gain or loss on the transfer of property to a corporation solely in exchange for stock of the corporation.

Accepted Answer

A) True 
 B)False

Question 9

A family-owned corporation with substantial investment income could be subject to both the accumulated earnings tax and the personal holding company tax.

Accepted Answer

A) True 
 B)False

Question 10

Corkie Corporation distributes $80,000 cash along with land having a $60,000 adjusted basis and a $40,000 FMV to its shareholder Josh.What are the tax consequences to Corkie Corporation?

Accepted Answer

A)  $20,000 loss realized and recognized 
B)  $20,000 loss realized but not recognized 
C)  $20,000 gain realized but not recognized 
D)  $20,000 gain realized and recognized 
A)  $20,000 loss realized and recognized 
B)  $20,000 loss realized but not recognized 
C)  $20,000 gain realized but not recognized 
D)  $20,000 gain realized and recognized

Question 11

Corporations may deduct 80% of dividends received from a domestic corporation if the recipient corporation owns 20% or more and less than 80% of the voting power and value of the stock of the issuing corporation.

Accepted Answer

A) True 
 B)False

Question 12

Jenkins Corporation has the following income and expense items during the current year:
 
The allowed dividends-received deduction is

Accepted Answer

A)  $100,000. 
B)  $120,000. 
C)  $125,000. 
D)  $150,000. 
A)  $100,000. 
B)  $120,000. 
C)  $125,000. 
D)  $150,000.

Question 13

Discuss the tax consequences of a complete liquidation to the liquidated corporation and to the shareholders.

Accepted Answer

The liquidated corporation generally rec

Question 14

Tara transfers land with a $600,000 adjusted basis and a $700,000 FMV to a corporation in a Sec.351 transfer.Immediately after the transfer,Tara owns 100% of the corporation-stock with a FMV of $660,000.In addition,Tara's $40,000 principal balance on her student loan is legally assumed by the corporation as part of the overall transfer.No other property is transferred.Tara's recognized gain on the transfer is

Accepted Answer

A)  $0. 
B)  $40,000. 
C)  $60,000. 
D)  $100,000. 
A)  $0. 
B)  $40,000. 
C)  $60,000. 
D)  $100,000.

Question 15

A closely held corporation will generally prefer to pay higher salary and lower dividends to shareholders who are employed in the business.

Accepted Answer

A) True 
 B)False

Question 16

Ten years ago Finn Corporation formed a new 100 percent owned subsidiary,Wing Corporation,with a $500,000 investment.Wing Corporation is completely liquidated this year,with all assets distributed to Finn Corporation.As of the liquidation date,Wing has a basis in its assets of $350,000,and the assets are valued at $550,000.What is the gain or loss recognized by Finn Corporation due to the liquidating distribution,and what is Finn Corporation's basis in the assets received from Wing Corporation?

Accepted Answer

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

Question 17

In order for the Sec.351 nonrecognition rules to apply,the transferor-shareholders in aggregate must control the transferee corporation by owning more than 50% of its stock immediately after the exchange.

Accepted Answer

A) True 
 B)False

Question 18

A corporation pays AMT in the current year.It will be able to get the AMT back in a future year when its regular tax exceeds is tentative minimum tax.

Accepted Answer

A) True 
 B)False

Question 19

Montrose Corporation is classified as a personal holding company.It is almost year-end.The company's taxable income and regular federal income tax liability are expected to be $100,000 and $22,250,respectively.The company will claim a $20,000 dividends-received deduction and earlier in the year paid $25,000 of dividends to its shareholders.How much in additional dividends must be paid to shareholders in order to avoid the personal holding company tax?

Accepted Answer

A)  $92,750 
B)  $52,750 
C)  $72,750 
D)  $97,750 
A)  $92,750 
B)  $52,750 
C)  $72,750 
D)  $97,750

Question 20

Daniel transfers land with a $92,000 adjusted basis and a $100,000 FMV to a corporation in a Sec.351 transfer.Immediately after the transfer,Daniel owns 100% of the corporation-stock with a FMV of $15,000.In addition,$85,000 of business-related liabilities are assumed by the corporation with respect to the transfer.No other property is transferred.Daniel's basis in the stock is

Accepted Answer

A)  $0. 
B)  $7,000. 
C)  $8,000. 
D)  $100,000. 
A)  $0. 
B)  $7,000. 
C)  $8,000. 
D)  $100,000.

Corporations may be taxed on less than 100% of dividends received due to the dividends-received deduction,while individuals are taxed on all of their dividend income.

In the current year,Bosc Corporation has taxable income of $100,000,and its regular tax liability is $22,250.Bartlett's AMT adjustments other than ACE are $70,000,and it has $320,000 of adjusted current earnings.What is the amount of Bosc Corporation's AMT liability?

For purposes of the accumulated earnings tax,reasonable needs of the business include providing working capital for the business.

If a corporation's charitable contributions exceed the deduction limitation in a particular year,the excess

A corporation has regular taxable income of $90,000 and its gross receipts have never exceeded $5,000,000.Tax preference items and positive adjustments total $70,000.Its regular tax liability is $15,450.The alternative minimum tax is

If certain requirements are met,Sec.351 permits deferral of recognition of gain or loss on the transfer of property to a corporation solely in exchange for stock of the corporation.

A family-owned corporation with substantial investment income could be subject to both the accumulated earnings tax and the personal holding company tax.

Corkie Corporation distributes $80,000 cash along with land having a $60,000 adjusted basis and a $40,000 FMV to its shareholder Josh.What are the tax consequences to Corkie Corporation?

Corporations may deduct 80% of dividends received from a domestic corporation if the recipient corporation owns 20% or more and less than 80% of the voting power and value of the stock of the issuing corporation.

Jenkins Corporation has the following income and expense items during the current year: The allowed dividends-received deduction is

Discuss the tax consequences of a complete liquidation to the liquidated corporation and to the shareholders.

A closely held corporation will generally prefer to pay higher salary and lower dividends to shareholders who are employed in the business.

In order for the Sec.351 nonrecognition rules to apply,the transferor-shareholders in aggregate must control the transferee corporation by owning more than 50% of its stock immediately after the exchange.

A corporation pays AMT in the current year.It will be able to get the AMT back in a future year when its regular tax exceeds is tentative minimum tax.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Partnerships and S Corporations

Taxes and Investment Planning

Filters

Exam 16: Corporations

Corporations may be taxed on less than 100% of dividends received due to the dividends-received deduction,while individuals are taxed on all of their dividend income.

In the current year,Bosc Corporation has taxable income of $100,000,and its regular tax liability is $22,250.Bartlett's AMT adjustments other than ACE are $70,000,and it has $320,000 of adjusted current earnings.What is the amount of Bosc Corporation's AMT liability?

For purposes of the accumulated earnings tax,reasonable needs of the business include providing working capital for the business.

If a corporation's charitable contributions exceed the deduction limitation in a particular year,the excess

A corporation has regular taxable income of $90,000 and its gross receipts have never exceeded $5,000,000.Tax preference items and positive adjustments total $70,000.Its regular tax liability is $15,450.The alternative minimum tax is

If certain requirements are met,Sec.351 permits deferral of recognition of gain or loss on the transfer of property to a corporation solely in exchange for stock of the corporation.

A family-owned corporation with substantial investment income could be subject to both the accumulated earnings tax and the personal holding company tax.

Corkie Corporation distributes $80,000 cash along with land having a $60,000 adjusted basis and a $40,000 FMV to its shareholder Josh.What are the tax consequences to Corkie Corporation?

Corporations may deduct 80% of dividends received from a domestic corporation if the recipient corporation owns 20% or more and less than 80% of the voting power and value of the stock of the issuing corporation.

Jenkins Corporation has the following income and expense items during the current year: The allowed dividends-received deduction is

Discuss the tax consequences of a complete liquidation to the liquidated corporation and to the shareholders.

A closely held corporation will generally prefer to pay higher salary and lower dividends to shareholders who are employed in the business.

In order for the Sec.351 nonrecognition rules to apply,the transferor-shareholders in aggregate must control the transferee corporation by owning more than 50% of its stock immediately after the exchange.

A corporation pays AMT in the current year.It will be able to get the AMT back in a future year when its regular tax exceeds is tentative minimum tax.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Partnerships and S Corporations

Taxes and Investment Planning

Filters