Question 1

In arriving at the W-2 wages limitation,only the wages paid that are properly allocable to DPGR can be considered in 2008.

Accepted Answer

A) True 
 B)False

Question 2

The AMT rate for corporations is the same as for individuals.

Accepted Answer

A) True 
 B)False

Question 3

In connection with the construction of a housing project,a contractor pays an architect to design the homes being built.The architect's fee is an embedded service that does not qualify as DPGR.

Accepted Answer

A) True 
 B)False

Question 4

The exemption amount is phased out entirely when AMTI reaches:

Accepted Answer

A) $40,000. 
B) $310,000. 
C) $1,000,000. 
D) $5,000,000. 
E) Some other amount. 
A) $40,000. 
B) $310,000. 
C) $1,000,000. 
D) $5,000,000. 
E) Some other amount.

Question 5

The percentage applicable for computing DPAD will ultimately increase to 9%.

Accepted Answer

A) True 
 B)False

Question 6

The definition of an expanded affiliated group (EAG)for DPAD purposes is broader than that applicable to the filing of consolidated tax returns.

Accepted Answer

A) True 
 B)False

Question 7

Percentage depletion claimed in excess of the adjusted bases of property can be a tax preference item.

Accepted Answer

A) True 
 B)False

Question 8

The W-2 wages limitation as to DPAD encourages the use of independent contractors.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements does not reflect the rules regarding pass-through entities and DPAD?

Accepted Answer

A) Since the deduction is determined at the owner level, each owner must make the computation separately. 
B) The entity allocates to each owner his or her share of any QPAI. 
C) In the case of partnerships, guaranteed payments are not regarded as W-2 wages. 
D) A partner cannot be allocated any W-2 wages if the share of QPAI is zero. 
E) None of the above. 
A) Since the deduction is determined at the owner level, each owner must make the computation separately. 
B) The entity allocates to each owner his or her share of any QPAI. 
C) In the case of partnerships, guaranteed payments are not regarded as W-2 wages. 
D) A partner cannot be allocated any W-2 wages if the share of QPAI is zero. 
E) None of the above.

Question 10

Cordinal,Inc.engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL)of $600,000 in 2008.The company also has an NOL carryover to 2008 of $500,000 and qualified W-2 wages of $300,000.Calculate any DPAD.

Accepted Answer

$6,000.Multiply 6% by the less

Question 11

What is the accumulated earnings credit?

Accepted Answer

The accumulated earnings credit is the g

Question 12

Under some circumstances,the sale of prepared food at a taxpayer's retail facility can qualify as DPGR.

Accepted Answer

A) True 
 B)False

Question 13

For testing purposes as to DPAD,taxable income is replaced by modified adjusted gross income in the case of an individual.

Accepted Answer

A) True 
 B)False

Question 14

A business with taxable income less than $1 million cannot be subject to the AMT.

Accepted Answer

A) True 
 B)False

Question 15

Passive activity losses of certain closely held corporations and personal service corporations may be an AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 16

The AMT NOL deduction is limited to 80%.

Accepted Answer

A) True 
 B)False

Question 17

Maize Corporation has average gross receipts of $5.5 million,$4.7 million,and $4.6 million in 2005,2006,and 2007,respectively.Is the company a small corporation with respect to the AMT?

Accepted Answer

Yes,Maize is a small corporation because

Question 18

Swan Corporation has gross receipts of $3 million of which $1 million are non-DPGR.CGS identified with DPGR is $1.3 million,while overall selling and administrative expenses are $600,000.Under the simplified deduction method,determine Swan's QPAI.

Accepted Answer

$300,000.Amount of overall exp

Question 19

If a corporation is subject to the § 541 penalty tax on personal holding companies,it cannot also be subject to the penalty tax on unreasonable accumulations under § 531.

Accepted Answer

A) True 
 B)False

Question 20

Which entity is subject to the ACE provisions?

Accepted Answer

A) S corporation. 
B) Real estate investment trust (REITs). 
C) Real estate investment companies. 
D) Real estate mortgage investment conduits. 
E) None of the above. 
A) S corporation. 
B) Real estate investment trust (REITs). 
C) Real estate investment companies. 
D) Real estate mortgage investment conduits. 
E) None of the above.

In arriving at the W-2 wages limitation,only the wages paid that are properly allocable to DPGR can be considered in 2008.

The AMT rate for corporations is the same as for individuals.

In connection with the construction of a housing project,a contractor pays an architect to design the homes being built.The architect's fee is an embedded service that does not qualify as DPGR.

The exemption amount is phased out entirely when AMTI reaches:

The percentage applicable for computing DPAD will ultimately increase to 9%.

The definition of an expanded affiliated group (EAG)for DPAD purposes is broader than that applicable to the filing of consolidated tax returns.

Percentage depletion claimed in excess of the adjusted bases of property can be a tax preference item.

The W-2 wages limitation as to DPAD encourages the use of independent contractors.

Which of the following statements does not reflect the rules regarding pass-through entities and DPAD?

Cordinal,Inc.engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL)of $600,000 in 2008.The company also has an NOL carryover to 2008 of $500,000 and qualified W-2 wages of $300,000.Calculate any DPAD.

What is the accumulated earnings credit?

Under some circumstances,the sale of prepared food at a taxpayer's retail facility can qualify as DPGR.

For testing purposes as to DPAD,taxable income is replaced by modified adjusted gross income in the case of an individual.

A business with taxable income less than $1 million cannot be subject to the AMT.

Passive activity losses of certain closely held corporations and personal service corporations may be an AMT adjustment.

The AMT NOL deduction is limited to 80%.

Maize Corporation has average gross receipts of $5.5 million,$4.7 million,and $4.6 million in 2005,2006,and 2007,respectively.Is the company a small corporation with respect to the AMT?

Swan Corporation has gross receipts of $3 million of which $1 million are non-DPGR.CGS identified with DPGR is $1.3 million,while overall selling and administrative expenses are $600,000.Under the simplified deduction method,determine Swan's QPAI.

If a corporation is subject to the § 541 penalty tax on personal holding companies,it cannot also be subject to the penalty tax on unreasonable accumulations under § 531.

Which entity is subject to the ACE provisions?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 3: Corporations: Special Situations

In arriving at the W-2 wages limitation,only the wages paid that are properly allocable to DPGR can be considered in 2008.

The AMT rate for corporations is the same as for individuals.

In connection with the construction of a housing project,a contractor pays an architect to design the homes being built.The architect's fee is an embedded service that does not qualify as DPGR.

The exemption amount is phased out entirely when AMTI reaches:

The percentage applicable for computing DPAD will ultimately increase to 9%.

The definition of an expanded affiliated group (EAG)for DPAD purposes is broader than that applicable to the filing of consolidated tax returns.

Percentage depletion claimed in excess of the adjusted bases of property can be a tax preference item.

The W-2 wages limitation as to DPAD encourages the use of independent contractors.

Which of the following statements does not reflect the rules regarding pass-through entities and DPAD?

Cordinal,Inc.engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL)of $600,000 in 2008.The company also has an NOL carryover to 2008 of $500,000 and qualified W-2 wages of $300,000.Calculate any DPAD.

What is the accumulated earnings credit?

Under some circumstances,the sale of prepared food at a taxpayer's retail facility can qualify as DPGR.

For testing purposes as to DPAD,taxable income is replaced by modified adjusted gross income in the case of an individual.

A business with taxable income less than $1 million cannot be subject to the AMT.

Passive activity losses of certain closely held corporations and personal service corporations may be an AMT adjustment.

The AMT NOL deduction is limited to 80%.

Maize Corporation has average gross receipts of $5.5 million,$4.7 million,and $4.6 million in 2005,2006,and 2007,respectively.Is the company a small corporation with respect to the AMT?

Swan Corporation has gross receipts of $3 million of which $1 million are non-DPGR.CGS identified with DPGR is $1.3 million,while overall selling and administrative expenses are $600,000.Under the simplified deduction method,determine Swan's QPAI.

If a corporation is subject to the § 541 penalty tax on personal holding companies,it cannot also be subject to the penalty tax on unreasonable accumulations under § 531.

Which entity is subject to the ACE provisions?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters