Question 1

In working with the W-2 wage limitation on DPAD, a partner can count any guaranteed payments he receives from the partnership.

Accepted Answer

A) True 
 B)False

Question 2

Nickel Corporation has average gross receipts of $5.6 million, $4.6 million, and $4.7 million in 2009, 2010, and 2011, respectively. Nickel is:

Accepted Answer

A)  Not subject to the corporate income tax. 
B)  A small corporation with respect to the AMT. 
C)  Subject to the AMT. 
D)  Not a small corporation with respect to the AMT. 
E)  None of the above. 
A)  Not subject to the corporate income tax. 
B)  A small corporation with respect to the AMT. 
C)  Subject to the AMT. 
D)  Not a small corporation with respect to the AMT. 
E)  None of the above.

Question 3

Grebe Corporation was formed in 2000. If in 2011, it has average gross receipts of under $5 million, the company cannot be subject to the AMT.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  $0. 
B)  $7,099,060. 
C)  $8,703,900. 
D)  $18,300,580. 
E)  None of the above. 
A)  $0. 
B)  $7,099,060. 
C)  $8,703,900. 
D)  $18,300,580. 
E)  None of the above.

Question 5

What amount of accumulated earnings of a manufacturing corporation is considered within the reasonable needs of a business without the corporation having to show a bona fide business reason for the accumulation?

Accepted Answer

A)  $150,000 or less. 
B)  $200,000 or less. 
C)  $250,000 or less. 
D)  $300,000 or less. 
E)  None of the above. 
A)  $150,000 or less. 
B)  $200,000 or less. 
C)  $250,000 or less. 
D)  $300,000 or less. 
E)  None of the above.

Question 6

Which statement is false?

Accepted Answer

A)  The overall tax effect of a DPAD is a rate reduction or a tax credit. 
B)  For a flow-through entity, modified AGI is substituted for taxable income. 
C)  FASB requires the DPAD to be reported as a special charge. 
D)  MPGE refers to a merge, paid, gain, and expense. 
E)  All of the above are correct. 
A)  The overall tax effect of a DPAD is a rate reduction or a tax credit. 
B)  For a flow-through entity, modified AGI is substituted for taxable income. 
C)  FASB requires the DPAD to be reported as a special charge. 
D)  MPGE refers to a merge, paid, gain, and expense. 
E)  All of the above are correct.

Question 7

DPGR cannot include the cost of an embedded service that is part of in the sale of a manufactured product.

Accepted Answer

A) True 
 B)False

Question 8

A taxpayer who prepares and sells Chinese food at several of its restaurant locations can qualify for DPAD as to the receipts only from take-out orders and home-delivery sales.

Accepted Answer

A) True 
 B)False

Question 9

Bow Corporation manufactures an exercise machine at a cost of $800 and sells the machine to Kite Corporation for $1,000 in 2011. Kite incurs TV advertising expenses of $300 and sells the machine by phone order for $1,600. If Bow and Kite corporations are members of an expanded affiliated group (EAG), their DPAD is:

Accepted Answer

A)  $30. 
B)  $45. 
C)  $72. 
D)  $500. 
E)  None of the above. 
A)  $30. 
B)  $45. 
C)  $72. 
D)  $500. 
E)  None of the above.

Question 10

The AMT rate for corporations is the same as for individuals.

Accepted Answer

A) True 
 B)False

Question 11

Explain the wages limitation.

Accepted Answer

The DPAD is limited by 50% of an employe

Question 12

The DPAD is not available to estates and trusts.

Accepted Answer

A) True 
 B)False

Question 13

Which reason is unlikely to cause a regular corporation to have to pay AMT?

Accepted Answer

A)  A service-type of company with little inventory. 
B)  A high level of investment in assets such as equipment and structures. 
C)  Low taxable income due to a cyclical downturn, strong international competition, a low-margin industry, or other factors. 
D)  Investment at low real interest rates, which increases the company's deductions for depreciation relative to those for interest payments. 
E)  None of the above. 
A)  A service-type of company with little inventory. 
B)  A high level of investment in assets such as equipment and structures. 
C)  Low taxable income due to a cyclical downturn, strong international competition, a low-margin industry, or other factors. 
D)  Investment at low real interest rates, which increases the company's deductions for depreciation relative to those for interest payments. 
E)  None of the above.

Question 14

In 2011, Fay Corporation (a calendar year taxpayer) had the following transactions:   For 2011, Fay Corporation's AMTI is:

Accepted Answer

A)  $6,300,000. 
B)  $7,150,000. 
C)  $7,250,000. 
D)  $7,300,000. 
E)  None of the above. 
A)  $6,300,000. 
B)  $7,150,000. 
C)  $7,250,000. 
D)  $7,300,000. 
E)  None of the above.

Question 15

Which of the following would not be a positive tax preference item in 2010?

Accepted Answer

A)  Accelerated depreciation on real property in excess of straight-line. 
B)  Intangible drilling costs. 
C)  Private activity bond interest income. 
D)  Percentage depletion in excess of adjusted basis. 
E)  None of the above. 
A)  Accelerated depreciation on real property in excess of straight-line. 
B)  Intangible drilling costs. 
C)  Private activity bond interest income. 
D)  Percentage depletion in excess of adjusted basis. 
E)  None of the above.

Question 16

Modified AGI means AGI without any DPAD allowance.

Accepted Answer

A) True 
 B)False

Question 17

a. Calculate the personal holding company tax in 2011 based upon the following information.

Accepted Answer

The answer of a. Calculate the personal holding company tax...

Question 18

One of the components of DPGR is qualified production property (QPP). The QPP must be manufactured, produced, grown, or extracted entirely within the U.S.

Accepted Answer

A) True 
 B)False

Question 19

In each of the following independent situations, determine the DPAD for 2011 for the corporation involved.

Accepted Answer

The answer of In each of the following independent situations,...

Question 20

Which AMT adjustment would only be negative?

Accepted Answer

A)  Passive activity losses. 
B)  AMT NOL deduction. 
C)  DPAD. 
D)  Completed contract method. 
E)  None of the above. 
A)  Passive activity losses. 
B)  AMT NOL deduction. 
C)  DPAD. 
D)  Completed contract method. 
E)  None of the above.

In working with the W-2 wage limitation on DPAD, a partner can count any guaranteed payments he receives from the partnership.

Nickel Corporation has average gross receipts of $5.6 million, $4.6 million, and $4.7 million in 2009, 2010, and 2011, respectively. Nickel is:

Grebe Corporation was formed in 2000. If in 2011, it has average gross receipts of under $5 million, the company cannot be subject to the AMT.

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

What amount of accumulated earnings of a manufacturing corporation is considered within the reasonable needs of a business without the corporation having to show a bona fide business reason for the accumulation?

Which statement is false?

DPGR cannot include the cost of an embedded service that is part of in the sale of a manufactured product.

A taxpayer who prepares and sells Chinese food at several of its restaurant locations can qualify for DPAD as to the receipts only from take-out orders and home-delivery sales.

The AMT rate for corporations is the same as for individuals.

Explain the wages limitation.

The DPAD is not available to estates and trusts.

Which reason is unlikely to cause a regular corporation to have to pay AMT?

In 2011, Fay Corporation (a calendar year taxpayer) had the following transactions: For 2011, Fay Corporation's AMTI is:

Which of the following would not be a positive tax preference item in 2010?

Modified AGI means AGI without any DPAD allowance.

a. Calculate the personal holding company tax in 2011 based upon the following information.

One of the components of DPGR is qualified production property (QPP). The QPP must be manufactured, produced, grown, or extracted entirely within the U.S.

In each of the following independent situations, determine the DPAD for 2011 for the corporation involved.

Which AMT adjustment would only be negative?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 3: Corporations: Special Situations

In working with the W-2 wage limitation on DPAD, a partner can count any guaranteed payments he receives from the partnership.

Nickel Corporation has average gross receipts of $5.6 million, $4.6 million, and $4.7 million in 2009, 2010, and 2011, respectively. Nickel is:

Grebe Corporation was formed in 2000. If in 2011, it has average gross receipts of under $5 million, the company cannot be subject to the AMT.

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

What amount of accumulated earnings of a manufacturing corporation is considered within the reasonable needs of a business without the corporation having to show a bona fide business reason for the accumulation?

Which statement is false?

DPGR cannot include the cost of an embedded service that is part of in the sale of a manufactured product.

A taxpayer who prepares and sells Chinese food at several of its restaurant locations can qualify for DPAD as to the receipts only from take-out orders and home-delivery sales.

The AMT rate for corporations is the same as for individuals.

Explain the wages limitation.

The DPAD is not available to estates and trusts.

Which reason is unlikely to cause a regular corporation to have to pay AMT?

In 2011, Fay Corporation (a calendar year taxpayer) had the following transactions: For 2011, Fay Corporation's AMTI is:

Which of the following would not be a positive tax preference item in 2010?

Modified AGI means AGI without any DPAD allowance.

a. Calculate the personal holding company tax in 2011 based upon the following information.

One of the components of DPGR is qualified production property (QPP). The QPP must be manufactured, produced, grown, or extracted entirely within the U.S.

In each of the following independent situations, determine the DPAD for 2011 for the corporation involved.

Which AMT adjustment would only be negative?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters