Question 1

C corporations with average annual gross receipts over $5 million must use the accrual basis of accounting.

Accepted Answer

A) True 
 B)False  True

Question 2

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Accepted Answer

A) True 
 B)False  False

Question 3

The corporate alternative minimum tax exemption amount is $150,000.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following items is subtracted from book income to arrive at taxable income?

Accepted Answer

A) Book depreciation that is in excess of tax depreciation. 
B) Life insurance proceeds. 
C) Final month rent collected at lease signing. 
D) Federal income tax expense on the income statement. 
A) Book depreciation that is in excess of tax depreciation. 
B) Life insurance proceeds. 
C) Final month rent collected at lease signing. 
D) Federal income tax expense on the income statement.

Question 5

Purple Company makes and sells computer printers.It has taxable income of $1,300,000 before taking into account charitable contributions.The company contributed a parcel of unused land to an art museum to be used to construct a branch museum.The land had a FMV of $50,000 and a basis of $30,000.The company also donated 1,000 of its computer printers to the local community college for use in student computer labs.The printers have a FMV of $200 each and a basis of
$120 each.Determine the taxable income of Purple Company and its charitable contribution carryforward,if any.

Accepted Answer

Charitable contributions are limited to

Question 6

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

Accepted Answer

A) $8,000. 
B) $7,000. 
C) $10,000. 
D) Some other number. 
A) $8,000. 
B) $7,000. 
C) $10,000. 
D) Some other number.

Question 7

In 2013,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2014 and 2015,it had net capital gains of $5,000 and $8,000,respectively.In 2016,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2017?

Accepted Answer

A) $4,000). 
B) $1,000). 
C) $0. 
D) $2,000). 
A) $4,000). 
B) $1,000). 
C) $0. 
D) $2,000).

Question 8

Parent-subsidiary corporations must file a consolidated tax return.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is correct?

Accepted Answer

A) Distributions of appreciated property create a gain to the stockholder recipient. 
B) Earnings and profits are exactly the same as retained earnings. 
C) A distribution from earnings and profits is a dividend. 
D) Distributions paid in excess of earnings and profits are taxable to the extent of stockholder basis. 
A) Distributions of appreciated property create a gain to the stockholder recipient. 
B) Earnings and profits are exactly the same as retained earnings. 
C) A distribution from earnings and profits is a dividend. 
D) Distributions paid in excess of earnings and profits are taxable to the extent of stockholder basis.

Question 10

Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

Accepted Answer

A) $600,000. 
B) $500,000. 
C) $300,000. 
D) $900,000. 
A) $600,000. 
B) $500,000. 
C) $300,000. 
D) $900,000.

Question 11

Alabaster Company is a Subchapter S corporation.It properly reported net income of $250,000 for financial statement purposes.It had net capital gains of $60,000 and charitable contributions of $20,000.What is the ordinary business income loss)of Alabaster Company that will be reported to its shareholders on Schedule K-1?

Accepted Answer

A) $290,000. 
B) $210,000. 
C) $330,000. 
D) $270,000. 
A) $290,000. 
B) $210,000. 
C) $330,000. 
D) $270,000.

Question 12

There are four characteristics that a C Corporation must meet in order to elect Subchapter S status.List the characteristics.

Accepted Answer

To elect Subchapter S status a corporati

Question 13

C Corporations are not permitted to report a net capital loss.

Accepted Answer

A) True 
 B)False

Question 14

STU Corporation has taxable income before DRD of $27,000 that includes a dividend of $30,000 from a large publicly-traded domestic corporation.What is the taxable income of STU Corporation?

Accepted Answer

A) $3,000. 
B) $5,400. 
C) $8,100. 
D) $6,000. 
A) $3,000. 
B) $5,400. 
C) $8,100. 
D) $6,000.

Question 15

The basis of a shareholder in his or her Subchapter S stock is increased by his or her share of corporate charitable contributions.

Accepted Answer

A) True 
 B)False

Question 16

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15th day of:

Accepted Answer

A) June. 
B) August. 
C) July. 
D) September. 
A) June. 
B) August. 
C) July. 
D) September.

Question 17

When a corporation is formed,if the sole shareholder receives stock in exchange for property subject to a liability,the shareholder will recognize a gain.

Accepted Answer

A) True 
 B)False

Question 18

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

Accepted Answer

A) True 
 B)False

Question 19

Zeus owns 100% of Grecian Image Corporation and his basis in the stock is $105,000.He receives cash of $20,000 and property with FMV of $100,000 and basis of $140,000 in complete liquidation of his ownership interest.What amount of gain or loss should Zeus recognize as a result of this transaction?

Accepted Answer

A) $15,000 gain. 
B) $55,000 gain. 
C) $5,000 loss. 
D) Some other number. 
A) $15,000 gain. 
B) $55,000 gain. 
C) $5,000 loss. 
D) Some other number.

Question 20

A corporation can choose to voluntarily revoke a valid Subchapter S election.How do the shareholders accomplish a voluntary revocation and when will the revocation be effective?

Accepted Answer

If shareholders owning a majority of the

C corporations with average annual gross receipts over $5 million must use the accrual basis of accounting.

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

The corporate alternative minimum tax exemption amount is $150,000.

Which of the following items is subtracted from book income to arrive at taxable income?

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

In 2013,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2014 and 2015,it had net capital gains of $5,000 and $8,000,respectively.In 2016,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2017?

Parent-subsidiary corporations must file a consolidated tax return.

Which of the following statements is correct?

Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

There are four characteristics that a C Corporation must meet in order to elect Subchapter S status.List the characteristics.

C Corporations are not permitted to report a net capital loss.

STU Corporation has taxable income before DRD of $27,000 that includes a dividend of $30,000 from a large publicly-traded domestic corporation.What is the taxable income of STU Corporation?

The basis of a shareholder in his or her Subchapter S stock is increased by his or her share of corporate charitable contributions.

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^thday of:

When a corporation is formed,if the sole shareholder receives stock in exchange for property subject to a liability,the shareholder will recognize a gain.

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

Zeus owns 100% of Grecian Image Corporation and his basis in the stock is $105,000.He receives cash of $20,000 and property with FMV of $100,000 and basis of $140,000 in complete liquidation of his ownership interest.What amount of gain or loss should Zeus recognize as a result of this transaction?

A corporation can choose to voluntarily revoke a valid Subchapter S election.How do the shareholders accomplish a voluntary revocation and when will the revocation be effective?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Filters

Exam 15: Corporate Taxation

C corporations with average annual gross receipts over $5 million must use the accrual basis of accounting.

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

The corporate alternative minimum tax exemption amount is $150,000.

Which of the following items is subtracted from book income to arrive at taxable income?

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

In 2013,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2014 and 2015,it had net capital gains of $5,000 and $8,000,respectively.In 2016,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2017?

Parent-subsidiary corporations must file a consolidated tax return.

Which of the following statements is correct?

Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

There are four characteristics that a C Corporation must meet in order to elect Subchapter S status.List the characteristics.

C Corporations are not permitted to report a net capital loss.

STU Corporation has taxable income before DRD of $27,000 that includes a dividend of $30,000 from a large publicly-traded domestic corporation.What is the taxable income of STU Corporation?

The basis of a shareholder in his or her Subchapter S stock is increased by his or her share of corporate charitable contributions.

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15th day of:

When a corporation is formed,if the sole shareholder receives stock in exchange for property subject to a liability,the shareholder will recognize a gain.

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

Zeus owns 100% of Grecian Image Corporation and his basis in the stock is $105,000.He receives cash of $20,000 and property with FMV of $100,000 and basis of $140,000 in complete liquidation of his ownership interest.What amount of gain or loss should Zeus recognize as a result of this transaction?

A corporation can choose to voluntarily revoke a valid Subchapter S election.How do the shareholders accomplish a voluntary revocation and when will the revocation be effective?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Filters

A C corporation has a fiscal year-end of April 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^thday of: