Exam 3: Corporations: Special Situations

During 2011, Gold Corporation (a calendar year taxpayer) has $4,000,000 of taxable income and the following transactions: Gold Corporation's alternative minimum tax (AMT) for 2011 is:

If mining exploration and development costs are capitalized and written off over 10 years, no adjustment is necessary for AMT purposes.

Primeline, Inc., has the following items related to the AMT: The corporation's AMT, if any, is:

Which of the following items will be a deduction from unadjusted AMTI in arriving at ACE?

Which of the following items will have an effect (add or subtract) on unadjusted AMTI to arrive at ACE?

A negative ACE adjustment is beneficial to a corporation.

In a sole proprietorship situation, a DPAD would be a:

Chase Corporation manufactures and sells birdhouses and feeders. The company also sells similar items that are imported from foreign countries. During the current year, Chase had a profit of $600,000 from its own products but a loss of $50,000 from the imported goods.

May Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the tax year 2011, May had a U.S. profit of $1.2 million (QPAI) and a profit from the imported merchandise of $100,000. What is May's DPAD?

Reasonable needs for purposes of the accumulated earnings tax include loans to shareholders.

For purposes of the penalty tax on accumulated earnings under § 531, reasonable needs of the business does not include:

Which of the following statements does not reflect the rules regarding pass-through entities and DPAD?

Ravi Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $6 million for 2011. If Ravi Corporation's ACE is $15 million, its tentative minimum tax for 2011 is:

Blue, Inc., a calendar year closely held corporation, is not a PHC. If the company reports the following items, the accumulated taxable income is:

The domestic production activities deduction is intended to preserve U.S. manufacturing jobs and discourage their outsourcing.

Why is the DPAD benefit somewhat unique?

Maroon Corporation incurred the following taxes for the year 2011: Maroon Corporation's total tax liability is:

Which statement, if any, is false?

Peggy's sole proprietorship consists of a bakery and retail food sales. The bakery's DPGR is $700,000, but after CGS, direct expenses, and a ratable portion of indirect expenses are deducted, QPAI is $100,000. W-2 wages related to DPGR are significant. The retail food sales have a loss of $1 million. If Peggy files a joint return and her modified AGI is $119,500, what is her allowable DPAD, if any, for 2011?

Explain the expanded affiliated group (EAG) rules.