Question 1

Which of the following statements is correct?

Accepted Answer

A) A corporation is entitled to a charitable deduction of 10% of its gross income before certain items. 
B) If a corporation has a net operating loss,it can carry the loss back three years and then forward twenty years. 
C) A net capital loss can be carried back three years and then forward five years. 
D) The first estimated payment of a corporation is due on the 15th day of the third month of the fiscal year. 
A) A corporation is entitled to a charitable deduction of 10% of its gross income before certain items. 
B) If a corporation has a net operating loss,it can carry the loss back three years and then forward twenty years. 
C) A net capital loss can be carried back three years and then forward five years. 
D) The first estimated payment of a corporation is due on the 15th day of the third month of the fiscal year.

Question 2

A C corporation has a fiscal year-end of August 30.It requests an automatic extension of time to file its income tax return.It must file its return no later than the 15th day of:

Accepted Answer

A) March. 
B) April. 
C) May. 
D) June. 
A) March. 
B) April. 
C) May. 
D) June.

Question 3

Which of the following statements is incorrect with respect to parent-subsidiary corporations?

Accepted Answer

A) With a consolidated return,net losses of one company can offset net income from another company. 
B) A parent-subsidiary group must file a consolidated tax return. 
C) A parent-subsidiary group is one where a common parent corporation owns,directly or indirectly,at least 80% of one or more other corporations. 
D) If a consolidated tax return is filed,losses on intercompany sales cannot be immediately recognized. 
A) With a consolidated return,net losses of one company can offset net income from another company. 
B) A parent-subsidiary group must file a consolidated tax return. 
C) A parent-subsidiary group is one where a common parent corporation owns,directly or indirectly,at least 80% of one or more other corporations. 
D) If a consolidated tax return is filed,losses on intercompany sales cannot be immediately recognized.

Question 4

A corporation has a fiscal-year end of February 28.If the corporation receives an automatic extension to file its return,the return will be due on the 15th day of:

Accepted Answer

A) September. 
B) October. 
C) November. 
D) December. 
A) September. 
B) October. 
C) November. 
D) December.

Question 5

Determine the amount of taxable dividend,return of capital,and capital gain in each of the following independent cases.
a.Corporate earnings and profits of $100,000; stockholder basis in stock of $60,000; distribution of
$20,000.
b.Corporate earnings and profits of $25,000; stockholder basis in stock of $40,000; distribution of
$70,000.
c.Corporate earnings and profits of $300,000; stockholder basis in stock of $450,000; distribution of $350,000.

Accepted Answer

a.Dividend = $20,000; return of capital

Question 6

Sunrise Corporation owns 30% of Sunset Corporation.Both are domestic corporations.Sunset pays a $10,000 dividend to Sunrise.What amount of dividend income will be included in the taxable income of Sunrise Corporation?

Accepted Answer

A) $2,000. 
B) $3,000. 
C) $10,000. 
D) $8,000. 
A) $2,000. 
B) $3,000. 
C) $10,000. 
D) $8,000.

Question 7

Arturo 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 $600,000 and debt of $400,000.The basis of the land,in the hands of the corporation is:

Accepted Answer

A) $900,000. 
B) $600,000. 
C) $400,000. 
D) $300,000. 
A) $900,000. 
B) $600,000. 
C) $400,000. 
D) $300,000.

Question 8

A C corporation can become a Subchapter S corporation by filing a statement with its corporate income tax return.

Accepted Answer

A) True 
 B)False

Question 9

When a corporation is formed,if the sole shareholder contributes property and receives,in return,stock plus property,the individual will report a taxable gain equal to the FMV of the property received.

Accepted Answer

A) True 
 B)False

Question 10

Basira 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 $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

Accepted Answer

A) $500,000. 
B) $400,000. 
C) $0. 
D) $300,000. 
A) $500,000. 
B) $400,000. 
C) $0. 
D) $300,000.

Question 11

Certain items of income or expense are not included in income of a Subchapter S corporation but,instead,are separately stated on Schedule K-1.List some items that are separately stated.

Accepted Answer

Any income or expense item on Schedule K

Question 12

TTT Corporation has a fiscal year-end that ends on March 30.It is required to make quarterly estimated payments.The first estimated payment will be due on the 15th of:

Accepted Answer

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

Question 13

Saffron Corporation has book income of $200,000,which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:

Accepted Answer

A) $230,000. 
B) $240,000. 
C) $210,000. 
D) $250,000. 
A) $230,000. 
B) $240,000. 
C) $210,000. 
D) $250,000.

Question 14

Benedict 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 $500,000 and debt of $300,000.The basis of the land,in the hands of the corporation is:

Accepted Answer

A) $400,000. 
B) $900,000. 
C) $300,000. 
D) $500,000. 
A) $400,000. 
B) $900,000. 
C) $300,000. 
D) $500,000.

Question 15

Caesar owns 100% of Roman Company and his basis in its stock is $35,000.He receives cash of $10,000 and property with FMV of $30,000 and basis of $50,000 in complete liquidation of his ownership interest.As a result of this transaction,which of the following statements is incorrect?

Accepted Answer

A) Caesar has a nontaxable return of capital of $35,000. 
B) Roman Company records a loss of $20,000. 
C) Caesar reports a capital gain of $5,000. 
D) Caesar reports dividend income of $40,000. 
A) Caesar has a nontaxable return of capital of $35,000. 
B) Roman Company records a loss of $20,000. 
C) Caesar reports a capital gain of $5,000. 
D) Caesar reports dividend income of $40,000.

Question 16

A domestic corporation can receive a deduction for dividend income it receives from another domestic corporation.

Accepted Answer

A) True 
 B)False

Question 17

Ramona is a 50% shareholder in a Subchapter S corporation.At the beginning of the year,her basis in the stock was $100,000.The corporation reported total ordinary income of $60,000 and total dividend income of $20,000.The corporation also borrowed an additional $20,000 from a local bank.What is the basis of Ramona's stock at the end of the year?

Accepted Answer

A) $140,000. 
B) $150,000. 
C) $200,000. 
D) $180,000. 
A) $140,000. 
B) $150,000. 
C) $200,000. 
D) $180,000.

Question 18

Aqua Company has net income for financial statement purposes of $100,000.On its financial statements it recorded a charitable contribution of $20,000 and federal income tax expense of
$30,000.What is Aqua's taxable income?

Accepted Answer

First,determine the amount of taxable in

Question 19

Corporate distributions to shareholders are called dividends.

Accepted Answer

A) True 
 B)False

Question 20

Sunshine Company has book income of $250,000.It also has tax depreciation in excess of book depreciation of $30,000 and $10,000 of interest on tax-exempt bonds.Without regard to tax expense,what is Sunshine's taxable income?

Accepted Answer

A) $270,000. 
B) $210,000. 
C) $290,000. 
D) $230,000. 
A) $270,000. 
B) $210,000. 
C) $290,000. 
D) $230,000.

Which of the following statements is correct?

A C corporation has a fiscal year-end of August 30.It requests an automatic 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 with respect to parent-subsidiary corporations?

A corporation has a fiscal-year end of February 28.If the corporation receives an automatic extension to file its return,the return will be due on the 15^thday of:

Sunrise Corporation owns 30% of Sunset Corporation.Both are domestic corporations.Sunset pays a $10,000 dividend to Sunrise.What amount of dividend income will be included in the taxable income of Sunrise Corporation?

Arturo 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 $600,000 and debt of $400,000.The basis of the land,in the hands of the corporation is:

A C corporation can become a Subchapter S corporation by filing a statement with its corporate income tax return.

When a corporation is formed,if the sole shareholder contributes property and receives,in return,stock plus property,the individual will report a taxable gain equal to the FMV of the property received.

Basira 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 $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

Certain items of income or expense are not included in income of a Subchapter S corporation but,instead,are separately stated on Schedule K-1.List some items that are separately stated.

TTT Corporation has a fiscal year-end that ends on March 30.It is required to make quarterly estimated payments.The first estimated payment will be due on the 15^thof:

Saffron Corporation has book income of $200,000,which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:

Benedict 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 $500,000 and debt of $300,000.The basis of the land,in the hands of the corporation is:

Caesar owns 100% of Roman Company and his basis in its stock is $35,000.He receives cash of $10,000 and property with FMV of $30,000 and basis of $50,000 in complete liquidation of his ownership interest.As a result of this transaction,which of the following statements is incorrect?

A domestic corporation can receive a deduction for dividend income it receives from another domestic corporation.

Aqua Company has net income for financial statement purposes of $100,000.On its financial statements it recorded a charitable contribution of $20,000 and federal income tax expense of $30,000.What is Aqua's taxable income?

Corporate distributions to shareholders are called dividends.

Sunshine Company has book income of $250,000.It also has tax depreciation in excess of book depreciation of $30,000 and $10,000 of interest on tax-exempt bonds.Without regard to tax expense,what is Sunshine's taxable income?

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

Which of the following statements is correct?

A C corporation has a fiscal year-end of August 30.It requests an automatic 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 with respect to parent-subsidiary corporations?

A corporation has a fiscal-year end of February 28.If the corporation receives an automatic extension to file its return,the return will be due on the 15th day of:

Sunrise Corporation owns 30% of Sunset Corporation.Both are domestic corporations.Sunset pays a $10,000 dividend to Sunrise.What amount of dividend income will be included in the taxable income of Sunrise Corporation?

Arturo 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 $600,000 and debt of $400,000.The basis of the land,in the hands of the corporation is:

A C corporation can become a Subchapter S corporation by filing a statement with its corporate income tax return.

When a corporation is formed,if the sole shareholder contributes property and receives,in return,stock plus property,the individual will report a taxable gain equal to the FMV of the property received.

Basira 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 $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

Certain items of income or expense are not included in income of a Subchapter S corporation but,instead,are separately stated on Schedule K-1.List some items that are separately stated.

TTT Corporation has a fiscal year-end that ends on March 30.It is required to make quarterly estimated payments.The first estimated payment will be due on the 15th of:

Saffron Corporation has book income of $200,000,which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:

Benedict 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 $500,000 and debt of $300,000.The basis of the land,in the hands of the corporation is:

Caesar owns 100% of Roman Company and his basis in its stock is $35,000.He receives cash of $10,000 and property with FMV of $30,000 and basis of $50,000 in complete liquidation of his ownership interest.As a result of this transaction,which of the following statements is incorrect?

A domestic corporation can receive a deduction for dividend income it receives from another domestic corporation.

Aqua Company has net income for financial statement purposes of $100,000.On its financial statements it recorded a charitable contribution of $20,000 and federal income tax expense of $30,000.What is Aqua's taxable income?

Corporate distributions to shareholders are called dividends.

Sunshine Company has book income of $250,000.It also has tax depreciation in excess of book depreciation of $30,000 and $10,000 of interest on tax-exempt bonds.Without regard to tax expense,what is Sunshine's taxable income?

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 August 30.It requests an automatic extension of time to file its income tax return.It must file its return no later than the 15^thday of:

A corporation has a fiscal-year end of February 28.If the corporation receives an automatic extension to file its return,the return will be due on the 15^thday of:

TTT Corporation has a fiscal year-end that ends on March 30.It is required to make quarterly estimated payments.The first estimated payment will be due on the 15^thof: