Exam 20: Corporations and Partnerships

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -Could be exempt from the AMT.

Jerry is the sole shareholder of Bluejay Corporation, a calendar year C corporation. As of January 1, 2017, Bluejay has a deficit of $50,000 in accumulated E & P. During 2017, it has current E & P of $300,000 and distributes a cash dividend of $400,000 to its shareholder. As of January 1, 2017, Jerry's basis in the Bluejay stock is $75,000. One result of these transactions is:

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -A cash basis taxpayer cannot deduct a charitable contribution until the year of payment.

In December 2017, Swallow Company's board authorizes a cash donation of $60,000 to the Hamilton County School District. The amount authorized is paid to the county in two $30,000 amounts in January and May 2018. Presuming a calendar year and accrual method taxpayer, when is the charitable contribution deduction available if Swallow Company is a: a.Partnership? b.C (regular) corporation?

Both individuals and corporations can carry over excess charitable contributions indefinitely.

In a § 351 transfer to a controlled corporation, the corporation's basis for the property it receives is the shareholder's basis increased by any boot given by the corporation.

In completing Schedule M-1 (reconciliation of income per books with income per tax return) of Form 1120, to net income per books:

A corporation's election to forego a net operating loss carryback is irrevocable and cannot later be changed.

Partners can carry over partnership losses that exceed the basis in their partnership interests.

In forming a corporation in the current year, organizational expenditures are incurred and paid. These expenditures must be amortized over a period of 180 months.

Like individuals, corporations can claim both deductions for and deductions from AGI.

If a partnership interest is received in exchange for services rendered, ordinary income must be recognized by the recipient of the capital interest.

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -Net long-term capital gains are subject to a preferential alternative tax rate.

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -Once taxable income reaches a certain level, the benefits of the lower tax brackets phase out.

Why were the check-the-box Regulations issued?

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -Dividends received deduction is not available.

Regarding the check-the-box Regulations, comment on each of the following: a.An entity is a corporation under state laws b.A limited liability company defaults (no election is made). c.A one-person business defaults (no election is made).

Organizational expenditures include the costs of transferring assets to the new corporation.

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of C corporations. b.Applies only to the income taxation of S corporations. c.Applies to both the income taxation of C corporations and S corporations. d.Applies to neither the income taxation of C corporations nor of S corporations. -A resident and citizen of Mexico can be a shareholder.

An S corporation makes a $20,000 cash distribution to a shareholder whose basis in the stock is $19,000. The distribution will result in a $1,000 negative basis in the stock.