Question 1

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.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) Federal income tax. 
B) Tax-exempt interest income. 
C) Excess capital losses. 
D) 80% dividends received deduction. 
E) None of the above. 
A) Federal income tax. 
B) Tax-exempt interest income. 
C) Excess capital losses. 
D) 80% dividends received deduction. 
E) None of the above.

Question 3

Yvonne Corporation manufactures and sells ceramic dinnerware.The company also sells dinnerware that is purchased from unrelated foreign producers.During tax year 2012,Yvonne had a U.S.profit of $1.3 million (QPAI)and a loss from the imported merchandise of $200,000.What is Yvonne's DPAD?

Accepted Answer

A) $33,000. 
B) $66,000. 
C) $99,000. 
D) $1,080,000. 
E) None of the above. 
A) $33,000. 
B) $66,000. 
C) $99,000. 
D) $1,080,000. 
E) None of the above.

Question 4

What amount of accumulated earnings of a service type 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 5

Ecru Corporation sells customized outdoor grills.The company purchases various parts and materials from foreign sources for $750 and incurs $240 in labor costs at a factory in North Carolina to fabricate and assemble the product.Ecru also incurs packaging,selling,and other costs of $60 and sells the grill for $1,200.If tax year 2012 is involved,calculate Ecru's per unit:

Accepted Answer

The answer of Ecru Corporation sells customized outdoor grills.The company...

Question 6

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 $70,000 from the imported goods.

Accepted Answer

The answer of Chase Corporation manufactures and sells birdhouses and...

Question 7

In each of the following independent situations,determine the DPAD for 2012 for the corporation involved.

Accepted Answer

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

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Emeline Corporation,a calendar year corporation,has alternative minimum taxable income (before any exemption)of $1.28 million for 2012.The company is not a small corporation.If the regular corporate tax is $223,600,Emeline's alternative minimum tax for 2012 is:

Accepted Answer

A) $32,400. 
B) $209,000. 
C) $256,000. 
D) $1,280,000. 
E) None of the above. 
A) $32,400. 
B) $209,000. 
C) $256,000. 
D) $1,280,000. 
E) None of the above.

Question 10

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

Accepted Answer

A) $0. 
B) $7,555,800. 
C) $9,426,000. 
D) $18,251,000. 
E) None of the above. 
A) $0. 
B) $7,555,800. 
C) $9,426,000. 
D) $18,251,000. 
E) None of the above.

Question 11

Which entity is subject to the ACE provisions?

Accepted Answer

A) S corporation. 
B) Real estate investment trust (REITs). 
C) Regulated investment companies. 
D) Real estate mortgage investment conduits. 
E) None of the above. 
A) S corporation. 
B) Real estate investment trust (REITs). 
C) Regulated investment companies. 
D) Real estate mortgage investment conduits. 
E) None of the above.

Question 12

The AMT exemption amount of $40,000 phases out entirely once a corporation's average gross receipts exceeds $310,000.

Accepted Answer

A) True 
 B)False

Question 13

A manufacturing concern determines its DPAD on the profits from the sale of items produced,not on the cost of production.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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 not 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 not 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 16

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

Accepted Answer

A) Deduction from AGI. 
B) Deduction for AGI. 
C) Possible deduction from and deduction for. 
D) Not deductible. 
E) All of the above. 
A) Deduction from AGI. 
B) Deduction for AGI. 
C) Possible deduction from and deduction for. 
D) Not deductible. 
E) All of the above.

Question 17

If a corporation is subject to both the § 531 tax and the § 541 tax,the § 541 tax predominates.

Accepted Answer

A) True 
 B)False

Question 18

Grebe Corporation was formed in 2001.If in 2012,it has average gross receipts of under $7.5 million,the company cannot be subject to the AMT.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is added in arriving at ACE?

Accepted Answer

A) Tax-exempt income (net of expenses). 
B) Federal income tax. 
C) Premiums paid on key employees insurance. 
D) Loss on sale between related parties. 
E) None of the above. 
A) Tax-exempt income (net of expenses). 
B) Federal income tax. 
C) Premiums paid on key employees insurance. 
D) Loss on sale between related parties. 
E) None of the above.

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.

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

Yvonne Corporation manufactures and sells ceramic dinnerware.The company also sells dinnerware that is purchased from unrelated foreign producers.During tax year 2012,Yvonne had a U.S.profit of $1.3 million (QPAI)and a loss from the imported merchandise of $200,000.What is Yvonne's DPAD?

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

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 $70,000 from the imported goods.

In each of the following independent situations,determine the DPAD for 2012 for the corporation involved.

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

Emeline Corporation,a calendar year corporation,has alternative minimum taxable income (before any exemption)of $1.28 million for 2012.The company is not a small corporation.If the regular corporate tax is $223,600,Emeline's alternative minimum tax for 2012 is:

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

Which entity is subject to the ACE provisions?

The AMT exemption amount of $40,000 phases out entirely once a corporation's average gross receipts exceeds $310,000.

A manufacturing concern determines its DPAD on the profits from the sale of items produced,not on the cost of production.

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.

Which statement is false?

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

If a corporation is subject to both the § 531 tax and the § 541 tax,the § 541 tax predominates.

Grebe Corporation was formed in 2001.If in 2012,it has average gross receipts of under $7.5 million,the company cannot be subject to the AMT.

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

Which of the following is added in arriving at ACE?

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 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.

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

Yvonne Corporation manufactures and sells ceramic dinnerware.The company also sells dinnerware that is purchased from unrelated foreign producers.During tax year 2012,Yvonne had a U.S.profit of $1.3 million (QPAI)and a loss from the imported merchandise of $200,000.What is Yvonne's DPAD?

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

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 $70,000 from the imported goods.

In each of the following independent situations,determine the DPAD for 2012 for the corporation involved.

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

Emeline Corporation,a calendar year corporation,has alternative minimum taxable income (before any exemption)of $1.28 million for 2012.The company is not a small corporation.If the regular corporate tax is $223,600,Emeline's alternative minimum tax for 2012 is:

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

Which entity is subject to the ACE provisions?

The AMT exemption amount of $40,000 phases out entirely once a corporation's average gross receipts exceeds $310,000.

A manufacturing concern determines its DPAD on the profits from the sale of items produced,not on the cost of production.

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.

Which statement is false?

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

If a corporation is subject to both the § 531 tax and the § 541 tax,the § 541 tax predominates.

Grebe Corporation was formed in 2001.If in 2012,it has average gross receipts of under $7.5 million,the company cannot be subject to the AMT.

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

Which of the following is added in arriving at ACE?

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