Exam 13: Corporate Formations and Operations

Which of the following is allowable as a deduction in calculating a corporation's net operating loss?

Rachelle transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is Rachelle's tax basis in the stock received in the exchange?

In a given year, Adams Corporation has goodwill impairment in excess of the allowable amortization for tax purposes. It has a favorable temporary book-tax difference for that year.

Remsco has taxable income of $60,000 and a charitable contribution limit modified taxable income of $72,000. Its charitable contributions for the year were $7,500. What is Remsco's current-year charitable contribution deduction and contribution carryover?

Ashley transfers property with a tax basis of $5,000 and a fair market value of $3,000 to a corporation in exchange for stock with a fair market value of $2,000 and $500 cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $500 on the property transferred. What is Ashley's tax basis in the stock received in the exchange?

The adjusted current earnings (ACE) adjustment is 75% of the difference between a corporation's alternative minimum taxable income before the ACE adjustment and the corporation's ACE.

Minimum tax credits generated by the AMT can be carried forward indefinitely.

Corporations calculate adjusted gross income (AGI) in the same way as individuals.

Control as it relates to a section 351 transaction is strictly defined to be 80 percent or more of the voting power of the stock of the corporation to which property is transferred.

In general, a corporation can choose to use either the accrual or cash method of accounting no matter how large the corporation.

Amy transfers property with a tax basis of $900 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $450 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is Amy's tax basis in the stock received in the exchange?

TerraWise Inc. reported the following information for the year: FMN Tax Basis Building 180,000 150,000 Land Total \ 600,000 \ 650,000 What is TerraWise Inc.'s AMTI?

Income that is included in book income, but excluded from taxable income, results in a favorable, permanent book-tax difference.

Which of the following is deductible in calculating DRD modified taxable income?

The dividends received deduction cannot cause a net operating loss. The deduction can reduce income to zero but not below zero.

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

By default, an affiliated group must file a consolidated tax return.

Which of the following statements regarding charitable contributions is false?

The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes.

Large corporations (corporations with over $1,000,000 in taxable income in any of the three years prior to the current year) can use their prior tax year liability to determine all required estimated quarterly payments for the current year.