Exam 3: Corporations: Special Situations

A large NOL carryover from a prior year when combined with large QPAI for the current year will substantially increase a corporation's DPAD for the current year.

Grey,Inc.,has $2 million in gross receipts of which $1.2 million is DPGR.CGS is $850,000 and other deductions (marketing,administrative)are $350,000.Using the small business simplified deduction method,determine Grey's QPAI.

Baker Corporation manufactures and sells birdhouses and feeders.The company also sells similar items that are imported from foreign countries.During the current year,Baker had a profit of $600,000 from its own products but a loss of $50,000 from the imported goods. a.What is Baker's QPAI? b.What is Baker's DPAD if the current year is 2006? 2008? 2010?

DPAD for 2008 is 6% of the greater of QPAI or TI,but not to exceed the W-2 wages limitation.

Chev Corporation,a calendar year corporation,has alternative minimum taxable income (before any exemption)of $1.28 million for 2008.The company is not a small corporation.If the regular corporate tax is $209,000,Chev's alternative minimum tax for 2008 is:

Which of the following items will be added to unadjusted AMTI in arriving at ACE?

The AMT rate for corporations is lower than the rates for individuals.

For purposes of the penalty tax on accumulated earnings under § 531,reasonable needs of the business does not include:

With respect to the AMT,what is the minimum tax credit?

If a corporation's income is solely from rents,it will not be subject to the § 541 penalty tax on personal holding companies.

AMTI may be defined as regular taxable income after AMT adjustments (other than the NOL and ACE adjustments)and after tax preferences.

A calendar year corporation reports the following information for the years listed: Compute the ACE adjustment for each year.

If QPAI cannot be used in any one year due to the TI limitation,it can be carried over to future years.

Andrew,a process engineer for an oil company,inherited a beachfront lot from an uncle.In his spare time,he builds a beach cottage on the lot and later sells the property through a realtor.The sale proceeds Andrew receives are not DPGR.

Silver Corporation has average gross receipts of $5.7 million,$4.6 million,and $4.8 million in 2006,2007,and 2008,respectively.Silver is:

DPGR cannot include the cost of an embedded service that is included in the sale of a manufactured product.

A corporation has the following items related to the AMT. The corporation's AMT,if any,is:

A positive ACE adjustment is beneficial to a corporation.

Gem Corporation,a calendar year taxpayer,has AMTI (before adjustment for adjusted current earnings)of $6 million for 2008.If Gem Corporation's ACE is $15 million,its tentative minimum tax for 2008 is:

The ACE adjustment can be a negative amount.