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 -An excess long-term capital loss carryover is first used to offset current short-term capital gains.

Canary Corporation, a calendar year S corporation, issues some of its stock to a nonresident alien on March 4, 2017. Canary becomes a C corporation as of March 5, 2017.

In contrasting the tax treatment of excess capital losses of corporations with individual taxpayers: a.What advantages do corporate taxpayers enjoy? b.Disadvantages?

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 long-term capital losses are carried forward as short-term capital losses.

A corporation that claims the dividends received deduction may completely or only partly avoid any tax on the dividends involved. What accounts for the difference in tax consequences?

How does the domestic production activities deduction differ for corporations than for individuals?

Partnerships are not considered to be separate taxable entities and, consequently, are not taxed at the entity level.

In computing the taxable income (or loss) of an S corporation, a domestic production activities deduction (DPAD) is allowed.

In determining the taxable income (or loss) of a partnership, which, if any, of the following items must be considered?

The domestic production activities deduction (DPAD) is determined at the partnership level and then passed through to each individual partner based on his or her partnership interest.

Two unrelated, calendar year C corporations have the following taxable income for the current year: ​ Magenta Corporation is a qualified personal service corporation. Based on these facts, their corporate tax liability is:

Under the check-the-box Regulations, a multi-owner entity that defaults (i.e., makes no election) will be taxed as a partnership.

In terms of the pass-through of tax attributes to the owners, both partnerships and C corporations follow the conduit approach.

For various reasons, Bill would like to incorporate his very successful business. Before doing so, however, he has the following reservations: ​ Suggest a resolution of Bill's concerns.

Unlike regular dividends, constructive dividends need not be distributed to a corporation's shareholders on a pro rata basis.

Jenny contributes land (adjusted basis of $300,000; fair market value of $280,000) and cash of $40,000 to the newly formed Green Partnership. Green will have a basis in the land of $280,000.

In computing the taxable income (or loss) of an S corporation, an NOL carryover from a prior year is not allowed.

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 short-term capital gains are taxed as ordinary income.

Some corporations (e.g., personal service corporations) cannot use a calendar year for tax purposes.

Jordan and his two brothers are equal owners in Taupe Partnership. If Jordan sells business property (basis of $230,000; fair market value of $280,000) to Taupe for $280,000, he must recognize the $50,000 realized gain.