Question 1

The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

Accepted Answer

A) True 
 B)False

Question 2

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.
-Amount the corporation borrows from a bank increases the basis its shareholders have in their stock.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 3

Which, if any, of the following rules relate only to the income taxation of C corporations?

Accepted Answer

A) A domestic production activities deduction is allowed. 
B) Like-kind exchanges are nontaxable. 
C) No deduction is available for inventory donated to charity. 
D) Net long-term capital gains are subject to a special alternative tax. 
E) None of the above. 
A) A domestic production activities deduction is allowed. 
B) Like-kind exchanges are nontaxable. 
C) No deduction is available for inventory donated to charity. 
D) Net long-term capital gains are subject to a special alternative tax. 
E) None of the above.

Question 4

Currently all C corporations must file a Schedule M-3 with Form 1120.

Accepted Answer

A) True 
 B)False

Question 5

Under the check-the-box Regulations, an entity is allowed an annual election on how it will be treated (e.g., corporation, partnership) for Federal income tax purposes.

Accepted Answer

A) True 
 B)False

Question 6

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.
-The corporation's domestic production activities deduction is claimed by the corporation (not the shareholders).

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 7

Aiden and Addison form Dove Corporation with the following investments: ​
  Dove issues stock equally to Aiden and Addison. One of the tax consequences of these transfers is:

Accepted Answer

A) Dove has a basis in the building of $400,000. 
B) Addison has a recognized loss on the building of $100,000. 
C) Addison has a basis in the Dove stock of $800,000. 
D) Addison has a recognized gain on land of $300,000 but no recognized loss on the building. 
E) None of the above. 
A) Dove has a basis in the building of $400,000. 
B) Addison has a recognized loss on the building of $100,000. 
C) Addison has a basis in the Dove stock of $800,000. 
D) Addison has a recognized gain on land of $300,000 but no recognized loss on the building. 
E) None of the above.

Question 8

The domestic production activities deduction (DPAD) for a corporation is 9% of the greater of QPAI or TI.

Accepted Answer

A) True 
 B)False

Question 9

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
-Estimated tax payments may have to be made.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 10

On March 4, 2017, all of the shareholders of Kingfisher Corporation (a calendar year entity) voluntarily revoke the S election (effective as soon as possible). For all of 2017, Kingfisher Corporation will be a C corporation.

Accepted Answer

A) True 
 B)False

Question 11

The amount of the dividends received deduction is affected by the percentage of ownership held by the recipient corporation in the paying corporation.

Accepted Answer

A) True 
 B)False

Question 12

Like S corporations, partnerships serve as conduits for their owners.

Accepted Answer

A) True 
 B)False

Question 13

If the shareholders of a calendar year C corporation elect S status on Friday, March 11, 2017, the election is effective for all of 2017.

Accepted Answer

A) True 
 B)False

Question 14

The AMT tax rate applicable to corporations is the same as that applicable to individuals.

Accepted Answer

A) True 
 B)False

Question 15

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
-Gain on an involuntary conversion cannot be deferred.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 16

Teal Corporation is incorporated in November 2017. The following formation expenses are incurred in 2017: ​
  Except for the legal and accounting expenses which are paid in 2018, all other expenses are paid in 2017. If Teal Corporation uses the cash basis and adopts a calendar year for tax purposes, the amount of organizational expenditures it can elect to expense for 2017 is:

Accepted Answer

A) $2,000. 
B) $5,000. 
C) $6,000. 
D) $9,000. 
E) None of the above. 
A) $2,000. 
B) $5,000. 
C) $6,000. 
D) $9,000. 
E) None of the above.

Question 17

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
-All of the appreciation on ordinary income property donated to charity can be claimed as a deduction.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 18

Which, if any, of the following costs cannot be expensed or amortized as organizational expenses?

Accepted Answer

A) Cost of issuing or selling stock certificates. 
B) Cost of organizational meetings of the board of directors. 
C) Fee paid to the state for incorporating. 
D) Legal fees incurred for preparing the corporate charter and by-laws. 
E) None of the above. 
A) Cost of issuing or selling stock certificates. 
B) Cost of organizational meetings of the board of directors. 
C) Fee paid to the state for incorporating. 
D) Legal fees incurred for preparing the corporate charter and by-laws. 
E) None of the above.

Question 19

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
-The foreign tax credit is not available.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 20

Changes in the liabilities (trade accounts payable, bank loans, etc.) of a partnership will not affect the basis of a partnership interest.

Accepted Answer

A) True 
 B)False

The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

Which, if any, of the following rules relate only to the income taxation of C corporations?

Currently all C corporations must file a Schedule M-3 with Form 1120.

Under the check-the-box Regulations, an entity is allowed an annual election on how it will be treated (e.g., corporation, partnership) for Federal income tax purposes.

Aiden and Addison form Dove Corporation with the following investments: Dove issues stock equally to Aiden and Addison. One of the tax consequences of these transfers is:

The domestic production activities deduction (DPAD) for a corporation is 9% of the greater of QPAI or TI.

On March 4, 2017, all of the shareholders of Kingfisher Corporation (a calendar year entity) voluntarily revoke the S election (effective as soon as possible). For all of 2017, Kingfisher Corporation will be a C corporation.

The amount of the dividends received deduction is affected by the percentage of ownership held by the recipient corporation in the paying corporation.

Like S corporations, partnerships serve as conduits for their owners.

If the shareholders of a calendar year C corporation elect S status on Friday, March 11, 2017, the election is effective for all of 2017.

The AMT tax rate applicable to corporations is the same as that applicable to individuals.

Which, if any, of the following costs cannot be expensed or amortized as organizational expenses?

Changes in the liabilities (trade accounts payable, bank loans, etc.) of a partnership will not affect the basis of a partnership interest.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Filters

Exam 20: Corporations and Partnerships

The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

Which, if any, of the following rules relate only to the income taxation of C corporations?

Currently all C corporations must file a Schedule M-3 with Form 1120.

Under the check-the-box Regulations, an entity is allowed an annual election on how it will be treated (e.g., corporation, partnership) for Federal income tax purposes.

Aiden and Addison form Dove Corporation with the following investments: ​ Dove issues stock equally to Aiden and Addison. One of the tax consequences of these transfers is:

The domestic production activities deduction (DPAD) for a corporation is 9% of the greater of QPAI or TI.

On March 4, 2017, all of the shareholders of Kingfisher Corporation (a calendar year entity) voluntarily revoke the S election (effective as soon as possible). For all of 2017, Kingfisher Corporation will be a C corporation.

The amount of the dividends received deduction is affected by the percentage of ownership held by the recipient corporation in the paying corporation.

Like S corporations, partnerships serve as conduits for their owners.

If the shareholders of a calendar year C corporation elect S status on Friday, March 11, 2017, the election is effective for all of 2017.

The AMT tax rate applicable to corporations is the same as that applicable to individuals.

Which, if any, of the following costs cannot be expensed or amortized as organizational expenses?

Changes in the liabilities (trade accounts payable, bank loans, etc.) of a partnership will not affect the basis of a partnership interest.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Filters

Aiden and Addison form Dove Corporation with the following investments: Dove issues stock equally to Aiden and Addison. One of the tax consequences of these transfers is: