Exam 20: Corporations and Partnerships

Alabaster Corporation, a calendar year taxpayer, was formed on July 1, 2017, and incurred organizational expenditures of $52,000. Its deduction for these expenditures for 2017 can be a:

Which of the following rules are the same as to the income taxation of individuals and C corporations?

As a separately stated item, the long-term capital losses of an S corporation will pass through to its shareholders as short-term capital losses.

Four unrelated, calendar year corporations are formed on January 1, 2017, and have the following qualified organizational expenditures: $4,000 for Rust Corporation; $15,000 for Orange Corporation; $53,000 for Pearl Corporation; and $56,000 for Chestnut Corporation. What is the maximum deduction each can claim for 2017?

In order to get the Cardinal Corporation to build a plant in the area, Union County gives it land worth $900,000. The land was purchased by the county many years ago for $50,000. a.How much income, if any, must Cardinal Corporation recognize for receiving the land? b.What basis will Cardinal Corporation have in the land?

An S corporation can be a shareholder in another corporation.

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 allowable deduction for charitable contributions is subject to percentage limitations.

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. -Corporation can have both common and preferred stock outstanding.

Which, if any, of the following transactions incurred by an S corporation is not a separately stated item?

Schedule M-2 of Form 1120 reconciles unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at year-end.

In what manner do the tax rules dealing with capital gains differ for corporations and individuals?

Snipe Corporation, a calendar year taxpayer, has total E & P of $800,000. During the current year, Snipe makes property distributions to Tracy (the sole shareholder) as follows: ​ As a result of these distributions:

Even though partnerships are not subject to income tax, they are required to file income tax returns.

In 2016, Creeper Corporation had a $4,000 net long-term capital loss which it could not carry back. For 2017, it had the following capital transactions: ​ As a result of these transactions, for 2017 Creeper has a:

As of January 1, 2017, Donald, the sole shareholder of Sandpiper (a calendar year C corporation), had a basis in his stock of $50,000. During 2017, Sandpiper had an operating loss of $100,000 and distributed a $70,000 dividend to Donald. As of January 1, 2017, Sandpiper had accumulated E & P of $200,000. What is Donald's basis in his Sandpiper stock as of January 1, 2018?

The domestic production activities deduction (DPAD) is handled differently for a partnership than for a C corporation. Explain

Guaranteed payments are deductible by the partnership and are taxable to the partner receiving the payments.

Gray is a calendar year taxpayer. In early December 2017, Gray's Board of Directors authorizes a pledge of an $80,000 donation to the Red Cross to help provide food and shelter to victims of natural disasters. The donation is paid as follows: $10,000 in late December 2017, $40,000 in February 2018, and $30,000 in early May 2018. Disregarding percentage limitations, the maximum deduction for 2017 is:

A shareholder's basis in property received as a dividend is its fair market value on the date of the distribution.

Spencer owns 50% of the stock of Crossbill Corporation, a calendar year taxpayer that has elected Subchapter S status. As of January 1, 2017, Spencer's basis in the stock is $40,000. Crossbill has an operating loss of $100,000 for 2017 and taxable income of $60,000 for 2018. a.What should Spencer report for 2017? b.What should Spencer report for 2018? c.What is Spencer's basis in Crossbill Corporation stock as of January 1, 2018? As of January 1, 2019?