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 -The tax return is due on or before the fifteenth day of the fourth month following the end of the tax year.

Auburn Corporation owns 6% of the stock in Cerulean Corporation. During the year, Auburn received cash dividends of $800,000 from this investment. Determine Auburn Corporation's dividends received deduction based on the following assumptions: a.Taxable income before the deduction is $960,000. b.Taxable income before the deduction is $720,000. c.Taxable income before the deduction is $480,000.

Which of the following, if any, incorrectly characterize the check-the-box Regulations?

A city donates land to a corporation in return for the corporation's construction of an assembly plant on the site. The fair market value of the land is taxed to the corporation as income.

Nick and Ava each own a 20% interest in the Tanager Partnership. For the current year, one of the pass-through items is a charitable contribution. On their individual income tax returns, Nick can deduct his share of the charitable contribution but Ava cannot. What could cause the disparity in results?

A corporation whose major source of income is tax-exempt interest probably will not have much E & P.

Qualified personal service corporations are subject to a flat income tax rate of 35% and are not allowed to use the graduated rates available to regular corporations.

When might an NOL carryback to prior years be ill-advised?

Describe how a Subchapter S election can be lost. ​ a.Voluntarily. b.Involuntarily.

If a shareholder in an S corporation makes a loan to the corporation, this increases the basis in his stock investment.

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 -Excess capital losses cannot be offset against ordinary income.

A C corporation donates inventory (basis of $9,000, fair market value of $10,000) to charity. Under certain circumstances, it can claim a charitable contribution deduction of $9,500.

Which of the following statements, if any, is characteristic of constructive dividends?

Like individuals, corporations can take advantage of § 1031 to elect to defer recognizing gain on like-kind exchanges.

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 dividends received deduction is not allowed.

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. -Tax-exempt income received by the corporation will pass through to its shareholders as tax-exempt income.

During the current year, Brown had taxable income of $200,000 and the following capital asset transactions: ​ How are these transactions handled if Brown is: a.An individual? b.A C corporation?

Isabella contributes land to the White Partnership for a 20% interest in capital and profits. The land (adjusted basis of $900,000 and fair market value of $1.4 million) is subject to a mortgage of $600,000 which the partnership assumes. What is Isabella's basis in the White Partnership?

In the current year, Mockingbird Corporation (a calendar year taxpayer) has the following income and expenses: ​ Mockingbird Corporation owns 10% of the stock of Hummingbird Corporation. The dividends received deduction for the current year is:

The holding period to the partnership of property contributed by a partner includes the period during which the property was held by the contributing partner.