Exam 16: Corporations

Total Corporation has earned $75,000 current E&P and has an accumulated E&P deficit from prior year of $25,000.The corporation pays a $100,000 distribution to shareholders.Shareholders of the corporation have a total stock basis of $40,000.The tax results of the distributions to the shareholders will be

For corporations,both NLTCLs and NSTCLs are eligible for a 3-year carryback and a 5-year carryforward as an offset against capital gains for those years.

If a corporation distributes appreciated property to its shareholders,the corporation will recognize any realized gain.

With respect to charitable contributions by corporations,all of the following rules apply with the exception of

Chocolat Inc.is a U.S.chocolate manufacturer.Its domestic production income is $2,000,000.Taxable income before the domestic production deduction is $3,000,000.What is the amount of the production activities deduction?

Individuals Jimmy and Ellen form JE Corporation.Ellen transfers land and a building with a $175,000 adjusted basis and $200,000 FMV in exchange for 50% of the stock of the JE Corporation and a $20,000 note.Jimmy transfers cash of $200,000 for 50% of the stock and a $20,000 note.The transaction meets the terms of Sec.351.The JE stock has a fair market value of $360,000.What is: (a) the amount of Ellen's gain or loss recognized on the transfer? (b) the basis of her stock in JE Corporation? (c) JE Corporation's basis in the land and building (together) transferred by Ellen?

Star Corporation,in complete liquidation,makes distributions to its two shareholders.Tim surrenders his Star stock (adjusted basis of $70,000) to the corporation in exchange for land with a $90,000 adjusted basis and a $100,000 FMV.Lindsey receives $100,000 cash for her shares (adjusted basis $110,000).What is the amount of gains and or losses recognized by Tim and Lindsey as a result of these transactions?

A corporation redeems 10 percent of the stock of each shareholder in a family-owned corporation.The shareholders will recognize capital gains on the sale of their stock back to the corporation.

C corporations can choose between the cash-basis and accrual-basis methods of accounting.

A corporation is classified as a personal holding company.Its taxable income is $300,000 and its regular federal income tax liability is $100,250.The company claims a $40,000 dividends-received deduction and pays $30,000 dividends to its shareholders.The personal holding company tax is

One requirement of a personal holding company is that more than 50% of the value of the outstanding stock must be owned by five or fewer individuals at some time during the last 6 months of the tax year.

A corporation is owned 70% by Jones and 30% by Smith.Jones owns 70 shares with a cost of $100 each.Smith owns 30 shares with a cost of $100 per share.The company redeems 5 shares from Smith at a redemption price of $400 per share.No stock is redeemed from Jones.This is not a redemption to pay death taxes,and it is not a partial liquidation.What is the tax impact on Smith?

Individuals Bert and Tariq form Shark Corporation.Bert transfers equipment with a $290,000 adjusted basis and a $335,000 FMV for 50% of the stock worth $310,000 and a note of Shark Corporation valued at $25,000.Tariq transfers cash of $335,000 in exchange for 50% of the stock of Shark Corporation worth $310,000 and a $25,000 note.Bert's recognized gain is

Identify which of the following statements is true.

In a parent-subsidiary controlled group,the common parent corporation must own more than 50% of the stock of at least one subsidiary corporation.

Tara and Jeff wish to form TJ Corporation.They have determined that they need initial capitalization of $1,000,000.What tax issues should they consider when determining whether to issue stock only or some combination of debt and equity?

Individuals Terry and Jim form TJ Corporation.Terry transfers cash of $930,000 in exchange for 50% of the stock of the TJ Corporation worth $900,000 and a $30,000 note.Jim transfers equipment with a $890,000 adjusted basis and a $930,000 FMV for 50% of the stock worth $900,000 and a note of the TJ Corporation valued at $30,000.The basis of the equipment to TJ Corporation is

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

Johnson Corporation has $300,000 of AMTI before the exemption.What is the tax base for AMT?

A corporation is owned 70% by Jones and 30% by Smith.Jones owns 70 shares with a cost of $100 each.Smith owns 30 shares with a cost of $100 per share.The company redeems 20 shares from Jones at a redemption price of $400 per share.No stock is redeemed from Smith.This is not a redemption to pay death taxes,and it is not a partial liquidation.What is the tax impact on Jones?