Question 1

The maximum marginal corporate tax rate is 35%.

Accepted Answer

A) True 
 B)False

Question 2

Schedule L is a reconciliation of net income per books to net income per the tax law.

Accepted Answer

A) True 
 B)False

Question 3

Teal Corporation has taxable income of $320,000.The corporation had total travel and entertainment expenses of $50,000,charitable contributions of $10,000,and tax depreciation in excess of book depreciation of $45,000.Without regard to tax expense for financial statement purposes,what is the book net income of Teal?

Accepted Answer

A) $215,000. 
B) $340,000. 
C) $305,000. 
D) None of these. 
A) $215,000. 
B) $340,000. 
C) $305,000. 
D) None of these.

Question 4

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 basis of $10,000).Which of the following statements is correct?

Accepted Answer

A) The basis of the truck to HH Company is $7,000. 
B) Howie will report a loss of $3,000. 
C) Howie will have a basis in his stock of $10,000. 
D) All of the statements are correct. 
A) The basis of the truck to HH Company is $7,000. 
B) Howie will report a loss of $3,000. 
C) Howie will have a basis in his stock of $10,000. 
D) All of the statements are correct.

Question 5

Black Company is a Subchapter S corporation.It reported book income of $100,000.Included in that amount is dividend income of $5,000,a net capital loss of $4,000,and a charitable contribution of $20,000.Determine the ordinary income/loss of the corporation and the nature and amount of any separately stated items.

Accepted Answer

The three items noted must be removed fr

Question 6

When are estimated income tax payments due for a corporation with a fiscal year-end of November? What if the fiscal year-end is June?

Accepted Answer

Estimated tax payments are due the 15^thday

Question 7

A shareholder's basis in Subchapter S stock is increased by his or her share of all of the following except:

Accepted Answer

A) Interest income. 
B) The shareholder's proportionate share of corporate debt. 
C) Loans from the shareholder to the corporation. 
D) Capital contributions. 
A) Interest income. 
B) The shareholder's proportionate share of corporate debt. 
C) Loans from the shareholder to the corporation. 
D) Capital contributions.

Question 8

Determine the basis of stock in the hands of the shareholder,the basis to the corporation of the contributed property,and the gain,if any,to the shareholder in each of the following independent cases.In all cases,assume that the 80% test is met.
a.Pierre contributes a vehicle with a FMV of $6,000 and basis of $8,000.
b.Marcus contributes land with a FMV of $500,000,basis of $300,000,and debt of $250,000.
c.Same as b.except Marcus also receives cash of $25,000.
d.Patricia contributes an apartment building with a FMV of $200,000,basis of $50,000,and debt of $125,000.

Accepted Answer

a.Shareholder basis in stock = $8,000; b

Question 9

If a corporation has a net capital loss,it can carry that loss back three years and then forward six.

Accepted Answer

A) True 
 B)False

Question 10

A C corporation has a fiscal year-end of November 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) January. 
B) February. 
C) March. 
D) April. 
A) January. 
B) February. 
C) March. 
D) April.

Question 11

Which of the following statements is incorrect?

Accepted Answer

A) Schedule L is prepared in accordance with the accounting method used to keep financial accounting records. 
B) Schedule M-1 is a reconciliation from book income to taxable income. 
C) Schedule M-1 shows all book/tax differences,regardless of whether they are permanent or temporary differences. 
D) Schedule M-3 is only prepared by corporations with total receipts and total assets of less than $250,000. 
A) Schedule L is prepared in accordance with the accounting method used to keep financial accounting records. 
B) Schedule M-1 is a reconciliation from book income to taxable income. 
C) Schedule M-1 shows all book/tax differences,regardless of whether they are permanent or temporary differences. 
D) Schedule M-3 is only prepared by corporations with total receipts and total assets of less than $250,000.

Question 12

A corporation can elect to be taxed as a Subchapter S corporation if it meets certain requirements including that it has 100 or fewer shareholders,all of whom are individuals,estates,and certain trusts.

Accepted Answer

A) True 
 B)False

Question 13

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 14

The basis of property received by a corporation is equal to the basis in the hands of the shareholder plus any gain recognized by the shareholder.

Accepted Answer

A) True 
 B)False

Question 15

When reconciling from book income to taxable income on Schedule M-1,which of the following statements is correct?

Accepted Answer

A) A charitable contribution carryforward realized in the current year is a positive adjustment. 
B) A charitable contribution above the 10% tax limitation is a positive adjustment. 
C) The difference between accelerated depreciation on the books and straight-line depreciation on the tax return in the later years of asset life is a negative adjustment. 
D) Federal income tax expense on the books is a positive adjustment. 
A) A charitable contribution carryforward realized in the current year is a positive adjustment. 
B) A charitable contribution above the 10% tax limitation is a positive adjustment. 
C) The difference between accelerated depreciation on the books and straight-line depreciation on the tax return in the later years of asset life is a negative adjustment. 
D) Federal income tax expense on the books is a positive adjustment.

Question 16

Corporate tax returns are due 3.5 months after the end of their tax year,the same as individual income tax returns.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is correct with respect to the formation of a corporation?

Accepted Answer

A) The basis of the stock in the hands of the shareholder will be equal to the basis of the property contributed plus any gain recognized minus any boot received. 
B) The transferor will record a gain if he or she contributes property subject to a liability. 
C) If the 80% test is met,the transferors may recognize a gain or a loss,depending on the facts and circumstances. 
D) To the corporation,the basis of property received is equal to the basis of the property in the hands of the transferor. 
A) The basis of the stock in the hands of the shareholder will be equal to the basis of the property contributed plus any gain recognized minus any boot received. 
B) The transferor will record a gain if he or she contributes property subject to a liability. 
C) If the 80% test is met,the transferors may recognize a gain or a loss,depending on the facts and circumstances. 
D) To the corporation,the basis of property received is equal to the basis of the property in the hands of the transferor.

Question 18

Barrie owns 100% of a Subchapter S corporation and her basis in the stock is $200,000.In the current year,the corporation reports an ordinary loss of $250,000 and interest income of $20,000.How much of the loss can Barrie claim in the current year?

Accepted Answer

A) $250,000. 
B) $200,000. 
C) $220,000. 
D) The amount cannot be determined with the information provided. 
A) $250,000. 
B) $200,000. 
C) $220,000. 
D) The amount cannot be determined with the information provided.

Question 19

A Subchapter S corporation must be a domestic corporation.

Accepted Answer

A) True 
 B)False

Question 20

When a corporation distributes property to shareholders that has a FMV in excess of basis,the corporation will recognize a gain.

Accepted Answer

A) True 
 B)False

The maximum marginal corporate tax rate is 35%.

Schedule L is a reconciliation of net income per books to net income per the tax law.

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 basis of $10,000).Which of the following statements is correct?

When are estimated income tax payments due for a corporation with a fiscal year-end of November? What if the fiscal year-end is June?

A shareholder's basis in Subchapter S stock is increased by his or her share of all of the following except:

If a corporation has a net capital loss,it can carry that loss back three years and then forward six.

A C corporation has a fiscal year-end of November 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:

Which of the following statements is incorrect?

A corporation can elect to be taxed as a Subchapter S corporation if it meets certain requirements including that it has 100 or fewer shareholders,all of whom are individuals,estates,and certain trusts.

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

The basis of property received by a corporation is equal to the basis in the hands of the shareholder plus any gain recognized by the shareholder.

When reconciling from book income to taxable income on Schedule M-1,which of the following statements is correct?

Corporate tax returns are due 3.5 months after the end of their tax year,the same as individual income tax returns.

Which of the following statements is correct with respect to the formation of a corporation?

Barrie owns 100% of a Subchapter S corporation and her basis in the stock is $200,000.In the current year,the corporation reports an ordinary loss of $250,000 and interest income of $20,000.How much of the loss can Barrie claim in the current year?

A Subchapter S corporation must be a domestic corporation.

When a corporation distributes property to shareholders that has a FMV in excess of basis,the corporation will recognize a gain.

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

The maximum marginal corporate tax rate is 35%.

Schedule L is a reconciliation of net income per books to net income per the tax law.

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 basis of $10,000).Which of the following statements is correct?

When are estimated income tax payments due for a corporation with a fiscal year-end of November? What if the fiscal year-end is June?

A shareholder's basis in Subchapter S stock is increased by his or her share of all of the following except:

If a corporation has a net capital loss,it can carry that loss back three years and then forward six.

A C corporation has a fiscal year-end of November 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:

Which of the following statements is incorrect?

A corporation can elect to be taxed as a Subchapter S corporation if it meets certain requirements including that it has 100 or fewer shareholders,all of whom are individuals,estates,and certain trusts.

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

The basis of property received by a corporation is equal to the basis in the hands of the shareholder plus any gain recognized by the shareholder.

When reconciling from book income to taxable income on Schedule M-1,which of the following statements is correct?

Corporate tax returns are due 3.5 months after the end of their tax year,the same as individual income tax returns.

Which of the following statements is correct with respect to the formation of a corporation?

Barrie owns 100% of a Subchapter S corporation and her basis in the stock is $200,000.In the current year,the corporation reports an ordinary loss of $250,000 and interest income of $20,000.How much of the loss can Barrie claim in the current year?

A Subchapter S corporation must be a domestic corporation.

When a corporation distributes property to shareholders that has a FMV in excess of basis,the corporation will recognize a gain.

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 November 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: