Question 1

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

Question 2

Which of the following statements is true?

Accepted Answer

A)  All corporations are subject to AMT. 
B)  Small corporations with average annual gross receipts of less than $10 million are not subject to AMT. 
C)  The AMT rate is 25% of AMT income after exemption. 
D) The AMT exemption amount is $40,000 for corporations with AMT income of $150,000 or less. 
A)  All corporations are subject to AMT. 
B)  Small corporations with average annual gross receipts of less than $10 million are not subject to AMT. 
C)  The AMT rate is 25% of AMT income after exemption. 
D) The AMT exemption amount is $40,000 for corporations with AMT income of $150,000 or less.

Question 3

If a shareholder receives cash from a corporation in complete liquidation of his or her ownership interest and the cash received is less than the shareholder's basis in the stock, the shareholder will report a loss.

Accepted Answer

A) True 
 B)False

Question 4

The corporate AMT exemption amount is:

Accepted Answer

A)  $40,000. 
B)  $150,000. 
C)  $310,000. 
D) An amount that varies depending on corporate AMT income. 
A)  $40,000. 
B)  $150,000. 
C)  $310,000. 
D) An amount that varies depending on corporate AMT income.

Question 5

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 6

Which of the following items decrease basis for a stockholder of a Subchapter S corporation?

Accepted Answer

A)  Capital contributions. 
B)  Charitable contributions. 
C)  Loans from the shareholder to the corporation. 
D) Net income. 
A)  Capital contributions. 
B)  Charitable contributions. 
C)  Loans from the shareholder to the corporation. 
D) Net income.

Question 7

Which of the following will disqualify a corporation from electing Subchapter S status?

Accepted Answer

A)  The corporation has 80 shareholders. 
B)  The corporation has one class of stock. 
C)  The election form is signed by 80% of the shareholders. 
D) All shareholders are U.S. citizens except for 10% who are resident aliens. 
A)  The corporation has 80 shareholders. 
B)  The corporation has one class of stock. 
C)  The election form is signed by 80% of the shareholders. 
D) All shareholders are U.S. citizens except for 10% who are resident aliens.

Question 8

The corporate alternative minimum tax exemption begins to phase out for AMT income of _______, and is completely phased out at AMT income of _______ or more.

Accepted Answer

A)  $40,000; $150,000 
B)  $40,000; $310,000 
C)  $150,000; $300,000 
D) $150,000; $310,000 
A)  $40,000; $150,000 
B)  $40,000; $310,000 
C)  $150,000; $300,000 
D) $150,000; $310,000

Question 9

A corporation subject to AMT has AMT income of $190,000. What is the amount of alternative minimum tax?

Accepted Answer

A)  $30,000. 
B)  $32,000. 
C)  $37,500. 
D) $38,000. 
A)  $30,000. 
B)  $32,000. 
C)  $37,500. 
D) $38,000.

Question 10

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^th da

Question 11

PQR Corporation has taxable income before DRD of $60,000 that includes a dividend of $10,000 from a large publicly-traded domestic corporation. What is the tax liability of PQR Corporation?

Accepted Answer

A)  $7,500. 
B)  $8,000. 
C)  $8,250. 
D) $10,000. 
A)  $7,500. 
B)  $8,000. 
C)  $8,250. 
D) $10,000.

Question 12

Which of the following statements is correct?

Accepted Answer

A)  50% of travel and entertainment expenses are added to taxable income to arrive at book income. 
B)  Federal income tax expense is subtracted from book income to arrive at taxable income. 
C)  Tax-exempt interest income is subtracted from taxable income to arrive at book income. 
D) Charitable contributions in excess of the 10% limit are added to book income to arrive at taxable income. 
A)  50% of travel and entertainment expenses are added to taxable income to arrive at book income. 
B)  Federal income tax expense is subtracted from book income to arrive at taxable income. 
C)  Tax-exempt interest income is subtracted from taxable income to arrive at book income. 
D) Charitable contributions in excess of the 10% limit are added to book income to arrive at taxable income.

Question 13

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 14

What is the dividends received deduction (DRD) in each of the following independent cases?
a. Taxable income before DRD is $50,000. Dividend from a 30%-owned domestic corporation is $5,000.
b. Taxable income before DRD is $300,000. Dividend from a 10%-owned domestic corporation is $75,000.
c. Taxable income before DRD is $80,000. Dividend from a 60%-owned domestic corporation is $90,000.

Accepted Answer

a. The DRD is 80% of the dividend, or $4

Question 15

Corporate distributions to shareholders from earnings and profits are called dividends.

Accepted Answer

A) True 
 B)False

Question 16

Pricilla formed a corporation and owns all of the stock. She contributed property with a FMV of $60,000 and a basis of $55,000 and she received $10,000 cash from the corporation. Pricilla's taxable gain is:

Accepted Answer

A)  $0. 
B)  $5,000. 
C)  $10,000. 
D) $60,000. 
A)  $0. 
B)  $5,000. 
C)  $10,000. 
D) $60,000.

Question 17

A corporation subject to AMT has AMT income of $270,000. What is the amount of alternative minimum tax?

Accepted Answer

A)  $57,500. 
B)  $54,000. 
C)  $52,000. 
D) $46,000. 
A)  $57,500. 
B)  $54,000. 
C)  $52,000. 
D) $46,000.

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

Question 19

A corporation has a fiscal year-end of September 30. If the corporation receives an automatic extension to file its return, the return will be due on the 15th day of:

Accepted Answer

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

Question 20

If a domestic corporation receives a dividend from another domestic corporation, it is entitled to a dividends received deduction of 70%, 80%, or 100%.

Accepted Answer

A) True 
 B)False

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

Which of the following statements is true?

If a shareholder receives cash from a corporation in complete liquidation of his or her ownership interest and the cash received is less than the shareholder's basis in the stock, the shareholder will report a loss.

The corporate AMT exemption amount 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.

Which of the following items decrease basis for a stockholder of a Subchapter S corporation?

Which of the following will disqualify a corporation from electing Subchapter S status?

The corporate alternative minimum tax exemption begins to phase out for AMT income of _, and is completely phased out at AMT income of _ or more.

A corporation subject to AMT has AMT income of $190,000. What is the amount of alternative minimum tax?

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?

PQR Corporation has taxable income before DRD of $60,000 that includes a dividend of $10,000 from a large publicly-traded domestic corporation. What is the tax liability of PQR Corporation?

Which of the following statements is correct?

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^th day of:

Corporate distributions to shareholders from earnings and profits are called dividends.

Pricilla formed a corporation and owns all of the stock. She contributed property with a FMV of $60,000 and a basis of $55,000 and she received $10,000 cash from the corporation. Pricilla's taxable gain is:

A corporation subject to AMT has AMT income of $270,000. What is the amount of alternative minimum tax?

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 corporation has a fiscal year-end of September 30. If the corporation receives an automatic extension to file its return, the return will be due on the 15^th day of:

If a domestic corporation receives a dividend from another domestic corporation, it is entitled to a dividends received deduction of 70%, 80%, or 100%.

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

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

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

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

Which of the following statements is true?

If a shareholder receives cash from a corporation in complete liquidation of his or her ownership interest and the cash received is less than the shareholder's basis in the stock, the shareholder will report a loss.

The corporate AMT exemption amount 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.

Which of the following items decrease basis for a stockholder of a Subchapter S corporation?

Which of the following will disqualify a corporation from electing Subchapter S status?

The corporate alternative minimum tax exemption begins to phase out for AMT income of _______, and is completely phased out at AMT income of _______ or more.

A corporation subject to AMT has AMT income of $190,000. What is the amount of alternative minimum tax?

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?

PQR Corporation has taxable income before DRD of $60,000 that includes a dividend of $10,000 from a large publicly-traded domestic corporation. What is the tax liability of PQR Corporation?

Which of the following statements is correct?

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:

Corporate distributions to shareholders from earnings and profits are called dividends.

Pricilla formed a corporation and owns all of the stock. She contributed property with a FMV of $60,000 and a basis of $55,000 and she received $10,000 cash from the corporation. Pricilla's taxable gain is:

A corporation subject to AMT has AMT income of $270,000. What is the amount of alternative minimum tax?

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 corporation has a fiscal year-end of September 30. If the corporation receives an automatic extension to file its return, the return will be due on the 15th day of:

If a domestic corporation receives a dividend from another domestic corporation, it is entitled to a dividends received deduction of 70%, 80%, or 100%.

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

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

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

The corporate alternative minimum tax exemption begins to phase out for AMT income of _, and is completely phased out at AMT income of _ or more.

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^th day of:

A corporation has a fiscal year-end of September 30. If the corporation receives an automatic extension to file its return, the return will be due on the 15^th day of: