Question 1

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 2

A Subchapter S corporation is a corporation that is taxed in a manner similar to a partnership.

Accepted Answer

A) True 
 B)False

Question 3

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

Question 4

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

Question 5

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 taxable gain is:

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $3,000. 
D) $10,000. 
A)  $0. 
B)  $1,000. 
C)  $3,000. 
D) $10,000.

Question 6

Schedule M-1 reconciles from taxable income to book income.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Schedule M-1 reconciles from net income per books to net income per the tax law.

Accepted Answer

A) True 
 B)False

Question 9

Large C corporations must use the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

A corporation has taxable income of $400,000. What is its tax liability?

Accepted Answer

A)  $22,100. 
B)  $113,900. 
C)  $136,000. 
D) $140,000. 
A)  $22,100. 
B)  $113,900. 
C)  $136,000. 
D) $140,000.

Question 12

Corporations with total receipts and total assets less than $250,000 are not required to complete Schedule L or Schedule M-1.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  The excess of capital losses over capital gains. 
B)  Charitable contributions in excess of the 10% limit. 
C)  50% of travel and entertainment expenses. 
D) Interest received on tax-exempt bonds. 
A)  The excess of capital losses over capital gains. 
B)  Charitable contributions in excess of the 10% limit. 
C)  50% of travel and entertainment expenses. 
D) Interest received on tax-exempt bonds.

Question 14

Which of the following statements is incorrect?

Accepted Answer

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

Question 15

Parent-subsidiary corporations must file a consolidated tax return.

Accepted Answer

A) True 
 B)False

Question 16

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

Question 17

A Subchapter S corporation must be a domestic corporation.

Accepted Answer

A) True 
 B)False

Question 18

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 19

If a corporation would like a Subchapter S election to be valid for the current year, a Form 2553 must be filed:

Accepted Answer

A)  Before the 15th day of the third month of the current fiscal year. 
B)  Before the 15th day of the fourth month of the current fiscal year. 
C)  In the prior fiscal year. 
D) Before the 15th day of the third month of the current fiscal year or in the prior fiscal year. 
A)  Before the 15th day of the third month of the current fiscal year. 
B)  Before the 15th day of the fourth month of the current fiscal year. 
C)  In the prior fiscal year. 
D) Before the 15th day of the third month of the current fiscal year or in the prior fiscal year.

Question 20

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.

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

A Subchapter S corporation is a corporation that is taxed in a manner similar to a partnership.

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?

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 taxable gain is:

Schedule M-1 reconciles from taxable income to book income.

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

Schedule M-1 reconciles from net income per books to net income per the tax law.

Large C corporations must use the accrual basis of accounting.

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

A corporation has taxable income of $400,000. What is its tax liability?

Corporations with total receipts and total assets less than $250,000 are not required to complete Schedule L or Schedule M-1.

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

Which of the following statements is incorrect?

Parent-subsidiary corporations must file a consolidated tax return.

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?

A Subchapter S corporation must be a domestic corporation.

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.

If a corporation would like a Subchapter S election to be valid for the current year, a Form 2553 must be filed:

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^th day of:

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

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

A Subchapter S corporation is a corporation that is taxed in a manner similar to a partnership.

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?

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 taxable gain is:

Schedule M-1 reconciles from taxable income to book income.

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

Schedule M-1 reconciles from net income per books to net income per the tax law.

Large C corporations must use the accrual basis of accounting.

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

A corporation has taxable income of $400,000. What is its tax liability?

Corporations with total receipts and total assets less than $250,000 are not required to complete Schedule L or Schedule M-1.

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

Which of the following statements is incorrect?

Parent-subsidiary corporations must file a consolidated tax return.

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?

A Subchapter S corporation must be a domestic corporation.

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.

If a corporation would like a Subchapter S election to be valid for the current year, a Form 2553 must be filed:

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:

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

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^th day of: