Exam 3: Corporations: Special Situations

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

Once a small corporation for AMT purposes, always a small corporation.

Some of the meals a food service company prepares for its chain of restaurants is frozen and shipped to supermarkets for resale. The proceeds from such sales will qualify as DPGR.

The domestic production activities deduction is limited to manufacturers.

AMTI may be defined as regular taxable income after AMT adjustments (other than the NOL and ACE adjustments) and after tax preferences.

A retail company has the following items related to AMT. Calculate the company's AMT, if any.

Which statement is false?

If QPAI cannot be used in any one year due to the TI limitation, it can be carried over for 5 years.

Cave Corporation, a calendar year taxpayer, has a beginning balance in accumulated E & P of $3.5 million and current earnings of $1 million. If Cave can justify accumulations for the needs of the business of $3.7 million, its accumulated earnings credit for ATI purposes is:

DPAD for 2011 is 9% of the greater of QPAI or TI, but not to exceed the W-2 wages limitation.

Lee, Inc., an S corporation, has taxable income of $15 million in 2011. Assume there are two shareholders, each in the top individual tax bracket. What is the maximum total DPAD tax savings for the S corporation shareholders?

In the case of corporations that are members of an expanded affiliated group (EAG), the DPAD is determined by treating the group as a single taxpayer.

The accumulated earnings credit for a personal service corporation is the greater of $150,000 or the current E & P for the year needed to meet the reasonable needs of the business.

The overall effect of the domestic production activities deduction is similar to a rate reduction.

Swan Corporation has average gross receipts of $5.5 million, $4.7 million, and $4.6 million in 2008, 2009, and 2010, respectively. Is the company a small corporation with respect to the AMT?

Which of the following is added in arriving at ACE?

Staff, Inc., has taxable income of $14 million in 2011. What is the maximum DPAD tax savings for this C corporation?

Maize Corporation has gross receipts of $3 million of which $1 million are non-DPGR. CGS identified with DPGR is $1.3 million, while overall selling and administrative expenses are $600,000. Under the simplified deduction method, determine Maize's QPAI.

The objective of the AMT is to force taxpayers that are more profitable than their taxable income reflects to pay additional income taxes.

Tanver Corporation, a calendar year corporation, has alternative minimum taxable income of $7 million in 2011 (before adjustment for adjusted current earnings). If Tanver's adjusted current earnings is $16 million, its tentative minimum tax for 2011 is: