Question 1

With respect to the AMT, what is the minimum tax credit?

Accepted Answer

The AMT is a separate tax system that is

Question 2

Modified AGI means AGI without any DPAD allowance.

Accepted Answer

A) True 
 B)False

Question 3

The personal holding company tax rate in 2014 is 39.6%.

Accepted Answer

A) True 
 B)False

Question 4

Explain the expanded affiliated group (EAG) rules.

Accepted Answer

Special rules apply to corporations that

Question 5

Which of the following items will be an addition to AMTI in arriving at ACE?

Accepted Answer

A)  Tax-exempt income. 
B)  Federal income tax. 
C)  Excess capital loss. 
D)  Excess charitable contributions. 
E)  None of the above. 
A)  Tax-exempt income. 
B)  Federal income tax. 
C)  Excess capital loss. 
D)  Excess charitable contributions. 
E)  None of the above.

Question 6

Tax-exempt interest on state and local private activity bonds (issued in 2010) is a tax preference item.

Accepted Answer

A) True 
 B)False

Question 7

Which statement is false?

Accepted Answer

A)  The AMT is not limited to C corporations. 
B)  The DPAD is not limited to C corporations. 
C)  The penalty tax on PHCs is dependent on the existence of a tax avoidance motive. 
D)  In the case of a sole proprietor, the DPAD is a deduction for adjusted gross income. 
E)  All are true. 
A)  The AMT is not limited to C corporations. 
B)  The DPAD is not limited to C corporations. 
C)  The penalty tax on PHCs is dependent on the existence of a tax avoidance motive. 
D)  In the case of a sole proprietor, the DPAD is a deduction for adjusted gross income. 
E)  All are true.

Question 8

Explain the wages limitation that applies under the domestic production activities deduction (DPAD).

Accepted Answer

The DPAD is limited by 50% of an employe

Question 9

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.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  $0. 
B)  $755,580. 
C)  $1,868,080. 
D)  $2,055,100. 
E)  None of the above. 
A)  $0. 
B)  $755,580. 
C)  $1,868,080. 
D)  $2,055,100. 
E)  None of the above.

Question 11

Junco Corporation is a member of an expanded affiliated group (EAG) and has QPAI but no W-2 wages. Junco cannot claim a DPAD.

Accepted Answer

A) True 
 B)False

Question 12

Nickel Corporation, a calendar year corporation formed in 2012, has average gross receipts of $5.7 million, $4.2 million, and $4.8 million in 2012, 2013, and 2014, respectively. In 2014, Nickel is:

Accepted Answer

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

Question 13

Mayberry, Inc. engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL) of $600,000 in 2014. The company also has an NOL carryover to 2014 of $500,000 and qualified W-2 wages of $300,000. Calculate any DPAD.

Accepted Answer

$9,000. Multiply 9% by the lesser of QPA

Question 14

Stacey, Inc., has taxable income of $10 million in 2014. What is the maximum DPAD tax savings for this C corporation?

Accepted Answer

A)  None 
B)  $204,000 
C)  $306,000 
D)  $315,000 
E)  None of the above 
A)  None 
B)  $204,000 
C)  $306,000 
D)  $315,000 
E)  None of the above

Question 15

Tanweer, Inc., manufactures and sells glassware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2014 tax year, Tanweer had a U.S. profit of $1.3 million (QPAI) and a loss from the imported dinnerware of $300,000. What is Tanweer's DPAD?

Accepted Answer

A)  None 
B)  $33,000 
C)  $66,000 
D)  $90,000 
E)  None of the above 
A)  None 
B)  $33,000 
C)  $66,000 
D)  $90,000 
E)  None of the above

Question 16

In the case of an individual, modified AGI is substituted for taxable income in the DPAD formula.

Accepted Answer

A) True 
 B)False

Question 17

The formula in determining the DPAD for individual taxpayers is the same as that applicable to corporations.

Accepted Answer

A) True 
 B)False

Question 18

Which statement is false?

Accepted Answer

A)  The starting point for computing AMTI is taxable income. 
B)  A tax preference is added to taxable income. 
C)  The ACE adjustment can be a negative amount. 
D)  The starting point for computing ACE is taxable income. 
E)  None of the above. 
A)  The starting point for computing AMTI is taxable income. 
B)  A tax preference is added to taxable income. 
C)  The ACE adjustment can be a negative amount. 
D)  The starting point for computing ACE is taxable income. 
E)  None of the above.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

What are some of the differences (at least three) between the application of the AMT for individuals and corporations?

Accepted Answer

1. The corporate AMT rate is 20%, and th

With respect to the AMT, what is the minimum tax credit?

Modified AGI means AGI without any DPAD allowance.

The personal holding company tax rate in 2014 is 39.6%.

Explain the expanded affiliated group (EAG) rules.

Which of the following items will be an addition to AMTI in arriving at ACE?

Tax-exempt interest on state and local private activity bonds (issued in 2010) is a tax preference item.

Which statement is false?

Explain the wages limitation that applies under the domestic production activities deduction (DPAD).

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.

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

Junco Corporation is a member of an expanded affiliated group (EAG) and has QPAI but no W-2 wages. Junco cannot claim a DPAD.

Nickel Corporation, a calendar year corporation formed in 2012, has average gross receipts of $5.7 million, $4.2 million, and $4.8 million in 2012, 2013, and 2014, respectively. In 2014, Nickel is:

Mayberry, Inc. engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL) of $600,000 in 2014. The company also has an NOL carryover to 2014 of $500,000 and qualified W-2 wages of $300,000. Calculate any DPAD.

Stacey, Inc., has taxable income of $10 million in 2014. What is the maximum DPAD tax savings for this C corporation?

Tanweer, Inc., manufactures and sells glassware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2014 tax year, Tanweer had a U.S. profit of $1.3 million (QPAI) and a loss from the imported dinnerware of $300,000. What is Tanweer's DPAD?

In the case of an individual, modified AGI is substituted for taxable income in the DPAD formula.

The formula in determining the DPAD for individual taxpayers is the same as that applicable to corporations.

Which statement is false?

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

What are some of the differences (at least three) between the application of the AMT for individuals and corporations?

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

With respect to the AMT, what is the minimum tax credit?

Modified AGI means AGI without any DPAD allowance.

The personal holding company tax rate in 2014 is 39.6%.

Explain the expanded affiliated group (EAG) rules.

Which of the following items will be an addition to AMTI in arriving at ACE?

Tax-exempt interest on state and local private activity bonds (issued in 2010) is a tax preference item.

Which statement is false?

Explain the wages limitation that applies under the domestic production activities deduction (DPAD).

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.

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

Junco Corporation is a member of an expanded affiliated group (EAG) and has QPAI but no W-2 wages. Junco cannot claim a DPAD.

Nickel Corporation, a calendar year corporation formed in 2012, has average gross receipts of $5.7 million, $4.2 million, and $4.8 million in 2012, 2013, and 2014, respectively. In 2014, Nickel is:

Mayberry, Inc. engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL) of $600,000 in 2014. The company also has an NOL carryover to 2014 of $500,000 and qualified W-2 wages of $300,000. Calculate any DPAD.

Stacey, Inc., has taxable income of $10 million in 2014. What is the maximum DPAD tax savings for this C corporation?

Tanweer, Inc., manufactures and sells glassware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2014 tax year, Tanweer had a U.S. profit of $1.3 million (QPAI) and a loss from the imported dinnerware of $300,000. What is Tanweer's DPAD?

In the case of an individual, modified AGI is substituted for taxable income in the DPAD formula.

The formula in determining the DPAD for individual taxpayers is the same as that applicable to corporations.

Which statement is false?

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

What are some of the differences (at least three) between the application of the AMT for individuals and corporations?

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