Exam 3: The Corporate Income Tax

Sparks Corporation receives a dividend of $100,000 from Jill Corporation,a C Corporation.Sparks owns 70% of Jill Corporation stock.Sparks' dividends-received deduction is $80,000.

Zerotech Corporation donates the following property to an elementary school: • Computer printer purchased three years ago for $1,000.The printer has a $500 FMV and $0 adjusted basis on contribution date. • Computer equipment acquired one year ago at a cost of $5,000.The equipment has an $8,000 FMV and $0 adjusted basis on contribution date. • Computer software acquired two months ago at a cost of $10,000.The software will be used in a prekindergarten program.Its FMV on the contribution date is $10,000 and it has an adjusted basis of $0. a)Identify any donation qualifying for special treatment. b)What is Zerotech's charitable contribution deduction?

Garth Corporation donates inventory having an adjusted basis of $40,000 and an FMV of $150,000 to a qualified public charity.The inventory will be used by the charity to care for the ill.The maximum charitable contribution deduction before consideration of the 10% limitation is

Identify which of the following is false.

Organizational expenses incurred after 2004 are amortized over five years.

Sun and Moon Corporations each have only one class of stock outstanding.Their stock ownership is shown below. Which of the four stock ownership changes that are illustrated is the minimum change that is needed if Sun and Moon Corporations are to be brother-sister corporations under the 50% requirements? (Assume the two corporations are equally valued. )

Webster,who owns all the Bear Corporation stock,purchases a dump truck from Bear Corporation in January.The truck cost $12,000 and has a $10,000 adjusted basis at the time of the sale.Webster pays Bear the truck's $8,000 FMV.Later in the same year,Webster sells the dump truck to an unrelated party for $6,000.Webster can recognize a loss of

Cricket Corporation has a $50,000 NOL in the current year.Cricket's taxable income in each of the previous two years was $25,000.Cricket expects its taxable income for next year to exceed $400,000.What issues should be considered with respect to the use of the NOL?

Corporations may deduct the adjusted basis of inventory plus one-half of the excess of the property's FMV over its adjusted basis if the inventory is used for the care of the ill,needy,or infants.

Bermuda Corporation reports the following results in 2009 and 2010: What is Bermuda's contribution deduction in 2011 and 2012? What is the disposition of any remaining amount?

Which of the following types of evidence indicate that a valuation allowance is needed to reduce the deferred tax asset?

Identify which of the following statements is true.

Identify which of the following statements is true.

On December 10,2011,Dell Corporation (a calendar-year taxpayer)accrues an obligation for a $100,000 bonus to Muriel,a sales representative who had had an outstanding year.Muriel owns no Dell Corporation stock.The bonus is paid on May 5,2012.What is Dell's deduction for 2011? What is Dell's deduction for 2012?

Dumont Corporation reports the following results in the current year: What is Dumont's taxable income?

Exam Corporation reports taxable income of $800,000 on its federal income tax return.Given the following information from the corporation's records,determine its book income. Deduction for federal income taxes per

James Corporation purchased residential real estate in 2007 for $225,000,of which $25,000 was allocated to land and $200,000 was allocated to the building.James Corporation took straight-line MACRS deductions of $30,000 during the years 2005-2009.In 2012,James corporation sold the property for $285,000,of which $60,000 is allocated to the land and $225,000 is allocated to the building.What are the amounts and character of James Corporation's recognized gain or loss on the sale?

Jackel,Inc.has the following information for the current tax year: What is Jackel's charitable contribution deduction? What is Jackel's taxable income?

Winter Corporation's taxable income is $500,000.In addition,Winter has the following items: What is Winter's financial accounting income?

Walter,who owns all of the Ajax Corporation stock,purchases a truck from Ajax Corporation in January.The truck cost $12,000 and has a $10,000 adjusted basis.Walter pays the truck's $8,000 FMV.Later in the same year,Walter sells the truck to an unrelated party for $13,000.With respect to these transactions,