Question 1

Which of the following is an incorrect statement regarding the application of the § 318 stock attribution rules?

Accepted Answer

A) An individual is not deemed to own the shares owned by his or her siblings. 
B) Stock owned by an estate is deemed to be owned in full by a beneficiary. 
C) Stock owned by any shareholder owning 50% or more of a corporation's stock is deemed to be owned in full by the corporation. 
D) Stock owned by a partnership is deemed to be owned proportionately by a partner. 
E) None of the above. 
A) An individual is not deemed to own the shares owned by his or her siblings. 
B) Stock owned by an estate is deemed to be owned in full by a beneficiary. 
C) Stock owned by any shareholder owning 50% or more of a corporation's stock is deemed to be owned in full by the corporation. 
D) Stock owned by a partnership is deemed to be owned proportionately by a partner. 
E) None of the above.

Question 2

Use of MACRS cost recovery when computing taxable income does not require an E & P adjustment.

Accepted Answer

A) True 
 B)False

Question 3

When a corporation makes an installment sale, for E & P purposes the realized gain is recognized in the year of sale.

Accepted Answer

A) True 
 B)False

Question 4

The terms "earnings and profits" and "retained earnings" are identical in meaning.

Accepted Answer

A) True 
 B)False

Question 5

In June of the current year, Marigold Corporation declares a $4 dividend out of E & P on each share of common stock to shareholders of record on August 1.Ellen and Tim each purchase 100 shares of Marigold stock on July 1.On July 15, Ellen also purchases a short position in Marigold.Tim sells 50 of his shares on August 10 and continues to hold the remaining 50 shares through the end of the year.Ellen closes her short position in Marigold on October 15.With respect to the dividends, which of the following is correct?

Accepted Answer

A) Ellen will have $400 of qualifying dividends subject to reduced tax rates and $400 of ordinary income (from dividends paid on the short position of Marigold stock). 
B) Tim will have $200 of qualifying dividends subject to reduced tax rates and $200 of ordinary income. 
C) All $800 of Ellen's dividends will qualify for reduced tax rates. 
D) All $400 of Tim's dividends will qualify for reduced tax rates. 
E) None of the above. 
A) Ellen will have $400 of qualifying dividends subject to reduced tax rates and $400 of ordinary income (from dividends paid on the short position of Marigold stock). 
B) Tim will have $200 of qualifying dividends subject to reduced tax rates and $200 of ordinary income. 
C) All $800 of Ellen's dividends will qualify for reduced tax rates. 
D) All $400 of Tim's dividends will qualify for reduced tax rates. 
E) None of the above.

Which of the following is an incorrect statement regarding the application of the § 318 stock attribution rules?

Use of MACRS cost recovery when computing taxable income does not require an E & P adjustment.

When a corporation makes an installment sale, for E & P purposes the realized gain is recognized in the year of sale.

The terms "earnings and profits" and "retained earnings" are identical in meaning.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters

Exam 19: Corporations: Distributions Not in Complete Liquidation

Which of the following is an incorrect statement regarding the application of the § 318 stock attribution rules?

Use of MACRS cost recovery when computing taxable income does not require an E & P adjustment.

When a corporation makes an installment sale, for E & P purposes the realized gain is recognized in the year of sale.

The terms "earnings and profits" and "retained earnings" are identical in meaning.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters