Question 1

Corporations that are members of a parent-subsidiary affiliated group may file a consolidated return if the proper election is made.

Accepted Answer

A) True 
 B)False

Question 2

Danielle transfers land with a $100,000 FMV (basis $95,000) and $85,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $15,000.The corporation qualifies as a 351 transfer.The corporation assumes the $85,000 mortgage.What is the adjusted basis of the property to the corporation?

Accepted Answer

A)  $0 
B)  $15,000 
C)  $95,000 
D)  $100,000 
A)  $0 
B)  $15,000 
C)  $95,000 
D)  $100,000

Question 3

A corporation has the following capital gains and losses during the current year:
 
The tax result to the corporation is

Accepted Answer

A)  deduct $3,000 of the STCL currently; carry forward the remaining $2,000 STCL and $6,000 LTCL. 
B)  deduct $5,000 STCL and $6,000 LTCL. 
C)  deduct nothing currently; carry back the $5,000 STCL and $6,000 LTCL for three years and carry forward for 5 years, if necessary. 
D)  deduct nothing currently; carry back the $11,000 STCL for three years and carry forward for 5 years, if necessary. 
A)  deduct $3,000 of the STCL currently; carry forward the remaining $2,000 STCL and $6,000 LTCL. 
B)  deduct $5,000 STCL and $6,000 LTCL. 
C)  deduct nothing currently; carry back the $5,000 STCL and $6,000 LTCL for three years and carry forward for 5 years, if necessary. 
D)  deduct nothing currently; carry back the $11,000 STCL for three years and carry forward for 5 years, if necessary.

Question 4

A shareholder transfers a building subject to a mortgage in a Sec.351 transfer.The corporation assumes the mortgage,and no gain is recognized on the transfer under Sec.351.The transfer of the liabilities has no effect on the shareholder's stock basis.

Accepted Answer

A) True 
 B)False

Question 5

Nguyen Corporation,a calendar-year corporation,has a $40,000 current E&P deficit and a $60,000 positive accumulated E&P balance.Also assume that shareholders of the corporation have a total basis in outstanding shares of $35,000.A $75,000 distribution is made to the shareholders on the last day of the year.What is the tax treatment of the $75,000 distribution to the shareholders?

Accepted Answer

The first $20,000 is a taxable

Question 6

In general,net operating losses of a corporation are carried back 3 years and forward for 20 years.

Accepted Answer

A) True 
 B)False

Question 7

A U.S.-based corporation produces cereal in Niagara Falls,NY,and in Niagara Falls,Ontario.The corporation will be allowed the qualified production activities deduction based on all of its production.

Accepted Answer

A) True 
 B)False

Question 8

Bob transfers assets with a $100,000 FMV (basis $60,000) and $70,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $30,000.The corporation assumes the $70,000 mortgage.The transfer qualifies under Sec.351.What is Bob's gain recognized on the transfer?

Accepted Answer

A)  $0 
B)  $10,000 
C)  $30,000 
D)  $40,000 
A)  $0 
B)  $10,000 
C)  $30,000 
D)  $40,000

Question 9

All of the following are accurate statements about corporations,except

Accepted Answer

A)  a corporation does not compute adjusted gross income. 
B)  a corporation is not allowed a standard deduction. 
C)  dividends received from a domestic corporation do not receive any preferential treatment. 
D)  the limit on the charitable contribution deduction is 10% of taxable income (with certain adjustments). 
A)  a corporation does not compute adjusted gross income. 
B)  a corporation is not allowed a standard deduction. 
C)  dividends received from a domestic corporation do not receive any preferential treatment. 
D)  the limit on the charitable contribution deduction is 10% of taxable income (with certain adjustments).

Question 10

If a corporation receives dividends from an 80% or more owned affiliated corporation,the dividends-received deduction is 100%.

Accepted Answer

A) True 
 B)False

Question 11

In computing a corporation's NOL,the dividends-received deduction is allowed in full.

Accepted Answer

A) True 
 B)False

Question 12

For corporations,NSTCLs and NLTCLs are treated as STCLs for purposes of the carryback and carryforward rules.

Accepted Answer

A) True 
 B)False

Question 13

Summer Corporation has the following capital gains and losses during the current year:
 
The tax result to the corporation is

Accepted Answer

A)  $6,000 NSTCG included in gross income. 
B)  $6,000 NLTCG included in gross income. 
C)  $10,000 NLTCG is included in gross income and $4,000 NSTCL is carried forward to the next year. 
D)  $10,000 NLTCG receives long-term capital gain treatment and $4,000 NSTCL included as ordinary loss. 
A)  $6,000 NSTCG included in gross income. 
B)  $6,000 NLTCG included in gross income. 
C)  $10,000 NLTCG is included in gross income and $4,000 NSTCL is carried forward to the next year. 
D)  $10,000 NLTCG receives long-term capital gain treatment and $4,000 NSTCL included as ordinary loss.

Question 14

Witte Corporation reported the following results for the current year:
 
What is the amount of the charitable contribution carryover to next year?

Accepted Answer

A)  $0 
B)  $14,000 
C)  $16,000 
D)  $30,000 
A)  $0 
B)  $14,000 
C)  $16,000 
D)  $30,000

Question 15

The term "thin capitalization" means that the corporation is financed primarily with capital stock rather than debt.

Accepted Answer

A) True 
 B)False

Question 16

DEF Corporation and MNO Corporation are both C corporations.To date,DEF has earned $100,000 of taxable income,and MNO has earned $1,000,000.Each corporation expects to earn another $100,000 of taxable income before year-end.DEF will pay more tax on its incremental $100,000 of taxable income than will MNO.

Accepted Answer

A) True 
 B)False

Question 17

Ron transfers assets with a $100,000 FMV (basis $60,000) and $70,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $30,000.The corporation assumes the $70,000 mortgage.The transfer qualifies under Sec.351.What is the adjusted basis of the stock received?

Accepted Answer

A)  $0 
B)  $30,000 
C)  $60,000 
D)  $70,000 
A)  $0 
B)  $30,000 
C)  $60,000 
D)  $70,000

Question 18

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

Accepted Answer

A)  increased by tax preference items. No decreases are allowed for preferences. 
B)  increased by adjustments. No decreases are allowed for 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)  increased by tax preference items. No decreases are allowed for preferences. 
B)  increased by adjustments. No decreases are allowed for 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 19

Mason Corporation is a personal service corporation in the legal field.Mason Corporation has taxable income of $100,000.Mason Corporation's tax is

Accepted Answer

A)  $15,000. 
B)  $34,000. 
C)  $35,000. 
D)  $22,250. 
A)  $15,000. 
B)  $34,000. 
C)  $35,000. 
D)  $22,250.

Question 20

Partnerships,limited liability partnerships,limited liability companies,and C corporations are considered flow-through entities for tax purposes.

Accepted Answer

A) True 
 B)False

Corporations that are members of a parent-subsidiary affiliated group may file a consolidated return if the proper election is made.

A corporation has the following capital gains and losses during the current year: The tax result to the corporation is

A shareholder transfers a building subject to a mortgage in a Sec.351 transfer.The corporation assumes the mortgage,and no gain is recognized on the transfer under Sec.351.The transfer of the liabilities has no effect on the shareholder's stock basis.

In general,net operating losses of a corporation are carried back 3 years and forward for 20 years.

A U.S.-based corporation produces cereal in Niagara Falls,NY,and in Niagara Falls,Ontario.The corporation will be allowed the qualified production activities deduction based on all of its production.

All of the following are accurate statements about corporations,except

If a corporation receives dividends from an 80% or more owned affiliated corporation,the dividends-received deduction is 100%.

In computing a corporation's NOL,the dividends-received deduction is allowed in full.

For corporations,NSTCLs and NLTCLs are treated as STCLs for purposes of the carryback and carryforward rules.

Summer Corporation has the following capital gains and losses during the current year: The tax result to the corporation is

Witte Corporation reported the following results for the current year: What is the amount of the charitable contribution carryover to next year?

The term "thin capitalization" means that the corporation is financed primarily with capital stock rather than debt.

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

Mason Corporation is a personal service corporation in the legal field.Mason Corporation has taxable income of $100,000.Mason Corporation's tax is

Partnerships,limited liability partnerships,limited liability companies,and C corporations are considered flow-through entities for tax purposes.

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 that are members of a parent-subsidiary affiliated group may file a consolidated return if the proper election is made.

A corporation has the following capital gains and losses during the current year: The tax result to the corporation is

A shareholder transfers a building subject to a mortgage in a Sec.351 transfer.The corporation assumes the mortgage,and no gain is recognized on the transfer under Sec.351.The transfer of the liabilities has no effect on the shareholder's stock basis.

In general,net operating losses of a corporation are carried back 3 years and forward for 20 years.

A U.S.-based corporation produces cereal in Niagara Falls,NY,and in Niagara Falls,Ontario.The corporation will be allowed the qualified production activities deduction based on all of its production.

All of the following are accurate statements about corporations,except

If a corporation receives dividends from an 80% or more owned affiliated corporation,the dividends-received deduction is 100%.

In computing a corporation's NOL,the dividends-received deduction is allowed in full.

For corporations,NSTCLs and NLTCLs are treated as STCLs for purposes of the carryback and carryforward rules.

Summer Corporation has the following capital gains and losses during the current year: The tax result to the corporation is

Witte Corporation reported the following results for the current year: What is the amount of the charitable contribution carryover to next year?

The term "thin capitalization" means that the corporation is financed primarily with capital stock rather than debt.

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

Mason Corporation is a personal service corporation in the legal field.Mason Corporation has taxable income of $100,000.Mason Corporation's tax is

Partnerships,limited liability partnerships,limited liability companies,and C corporations are considered flow-through entities for tax purposes.

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