Question 1

Net capital loss carryovers but not carrybacks are deductible against capital gains in determining a corporation's net operating loss for the year.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation) by corporations is true?

Accepted Answer

A) Corporations may not carryover or carryback excess charitable contributions. 
B) Corporations can carry excess charitable contributions over to a future year or back to a prior year. 
C) Corporations can carry excess charitable contributions over to a future year but not back to a prior year. 
D) Corporations can carry excess charitable contributions back to a prior year but not over to a future year. 
A) Corporations may not carryover or carryback excess charitable contributions. 
B) Corporations can carry excess charitable contributions over to a future year or back to a prior year. 
C) Corporations can carry excess charitable contributions over to a future year but not back to a prior year. 
D) Corporations can carry excess charitable contributions back to a prior year but not over to a future year.

Question 3

Jazz Corporation owns 50% of the Williams Corp. stock. Williams distributed a $10,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income before the dividend was $100,000. What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Accepted Answer

A) $0 
B) $7,000 
C) $8,000 
D) $10,000 
A) $0 
B) $7,000 
C) $8,000 
D) $10,000

Question 4

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Accepted Answer

A) True 
 B)False

Question 5

The tax rate for the corporate alternative minimum tax is a flat 26%.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following describes the correct treatment of nonqualified stock options (NQOs) granted when ASC 718 did not apply?

Accepted Answer

A) Financial-no expense; tax-no deduction 
B) Financial-no expense; tax-deduct bargain element at exercise 
C) Financial-expense value over vesting period; tax-no deduction 
D) Financial-expense value over vesting period; tax-deduct bargain element at exercise 
A) Financial-no expense; tax-no deduction 
B) Financial-no expense; tax-deduct bargain element at exercise 
C) Financial-expense value over vesting period; tax-no deduction 
D) Financial-expense value over vesting period; tax-deduct bargain element at exercise

Question 7

Which of the following statements regarding capital gains and losses is false?

Accepted Answer

A) In terms of tax treatment, corporations generally prefer capital gains to ordinary income. 
B) Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year. 
C) C corporations can carryback net capital losses three years and they can carry them forward for five years. 
D) Corporations must apply capital loss carrybacks and carryovers in a particular order. 
A) In terms of tax treatment, corporations generally prefer capital gains to ordinary income. 
B) Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year. 
C) C corporations can carryback net capital losses three years and they can carry them forward for five years. 
D) Corporations must apply capital loss carrybacks and carryovers in a particular order.

Question 8

Which of the following is not an AMT adjustment?

Accepted Answer

A) Adjustment for depreciation 
B) Adjustment of gain or loss on sale of depreciable assets 
C) Adjustment for adjusted current earnings (AC
E)  
D) Adjustment for domestic production activities deduction 
A) Adjustment for depreciation 
B) Adjustment of gain or loss on sale of depreciable assets 
C) Adjustment for adjusted current earnings (AC
E)  
D) Adjustment for domestic production activities deduction

Question 9

Which of the following statements is false regarding consolidated tax returns?

Accepted Answer

A) An affiliated group can file a consolidated tax return only if it elects to do so. 
B) To file a consolidated tax return, one corporation must own at least 50% of the stock of another corporation. 
C) For a group of corporations filing a consolidated tax return, an advantage is that losses of one group member may offset gains of another group member. 
D) For a group of corporations filing a consolidated tax return, losses from certain intercompany transactions are deferred until realized through a transaction outside of the group. 
A) An affiliated group can file a consolidated tax return only if it elects to do so. 
B) To file a consolidated tax return, one corporation must own at least 50% of the stock of another corporation. 
C) For a group of corporations filing a consolidated tax return, an advantage is that losses of one group member may offset gains of another group member. 
D) For a group of corporations filing a consolidated tax return, losses from certain intercompany transactions are deferred until realized through a transaction outside of the group.

Question 10

In contrast to an individual, a corporation may deduct the entire amount of a net capital loss.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements regarding book-tax differences associated with purchased goodwill is false?

Accepted Answer

A) It is possible to have no book-tax difference in a year when there is no goodwill amortization for tax purposes. 
B) In a year when goodwill is impaired and yet fully amortized for tax purposes (so no tax amortization of the goodwill for that year), the book-tax difference will be unfavorable. 
C) Temporary book-tax differences associated with goodwill are always favorable. 
D) If goodwill has been fully amortized for tax purposes in a previous year, the book-tax difference is equal to the amount of impairment recognizeD.It is possible to have an unfavorable difference in a year when goodwill impairment exceeds the allowable amortization deduction. 
A) It is possible to have no book-tax difference in a year when there is no goodwill amortization for tax purposes. 
B) In a year when goodwill is impaired and yet fully amortized for tax purposes (so no tax amortization of the goodwill for that year), the book-tax difference will be unfavorable. 
C) Temporary book-tax differences associated with goodwill are always favorable. 
D) If goodwill has been fully amortized for tax purposes in a previous year, the book-tax difference is equal to the amount of impairment recognizeD.It is possible to have an unfavorable difference in a year when goodwill impairment exceeds the allowable amortization deduction.

Question 13

A corporation may carry a net capital loss forward five years to offset capital gains in future years but it may not carry a net capital loss back to offset capital gains in previous years.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following does NOT create a temporary book-tax difference?

Accepted Answer

A) Deferred compensation 
B) Bad-debt expense 
C) Depreciation expense 
D) Domestic production activities deduction 
A) Deferred compensation 
B) Bad-debt expense 
C) Depreciation expense 
D) Domestic production activities deduction

Question 15

Together, Kurt and Esmeralda own 60% of three corporations: RAZ, DVA, and TRE. The three corporations would be considered as what kind of controlled group for tax purposes?

Accepted Answer

A) Parent-subsidiary 
B) Brother-sister 
C) Combined 
D) The three corporations would not be considered to be a controlled group for tax purposes. 
A) Parent-subsidiary 
B) Brother-sister 
C) Combined 
D) The three corporations would not be considered to be a controlled group for tax purposes.

Question 16

For 2016, SRH's taxable income is $35,000 and JHH's taxable income is $45,000. Together, Scott and Jackson Howard own 100 percent of both corporations. What is the combined tax liability of the two corporations?

Accepted Answer

$15,450
Explanation: SRC and JHH are a b

Question 17

AR Systems Inc. (AR) had $120,000 of tax liability last year. It anticipates a current-year tax liability of $500,000. Assuming AR is considered a large corporation for purposes of estimating tax liability, what are the minimum estimated tax payments it should make to avoid underpayment penalties? Ignore the annualized income method.

Accepted Answer

Q1: $30,000, Q2: $220,000, Q3: $125,000,

Question 18

A C corporation reports its taxable income or loss on Form 1065.

Accepted Answer

A) True 
 B)False

Question 19

Omnidata uses the annualized income method to determine its quarterly federal income tax payments. It had $100,000, $50,000, and $90,000 of taxable income for the first, second, and third quarters, respectively ($240,000 in total through the first three quarters). What is Omnidata's annual estimated taxable income as of the end of the third quarter?

Accepted Answer

A) $300,000 
B) $320,000 
C) $400,000 
D) $480,000 
A) $300,000 
B) $320,000 
C) $400,000 
D) $480,000

Question 20

Which of the following is not calculated in the corporate income tax formula?

Accepted Answer

A) Gross income 
B) Adjusted gross income 
C) Taxable income 
D) Regular tax liability 
A) Gross income 
B) Adjusted gross income 
C) Taxable income 
D) Regular tax liability

Exam 16: Corporate Operations

Net capital loss carryovers but not carrybacks are deductible against capital gains in determining a corporation's net operating loss for the year.

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation) by corporations is true?

Jazz Corporation owns 50% of the Williams Corp. stock. Williams distributed a $10,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income before the dividend was $100,000. What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

The tax rate for the corporate alternative minimum tax is a flat 26%.

Which of the following describes the correct treatment of nonqualified stock options (NQOs) granted when ASC 718 did not apply?

Which of the following statements regarding capital gains and losses is false?

Which of the following is not an AMT adjustment?

Which of the following statements is false regarding consolidated tax returns?

In contrast to an individual, a corporation may deduct the entire amount of a net capital loss.

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.

Which of the following statements regarding book-tax differences associated with purchased goodwill is false?

A corporation may carry a net capital loss forward five years to offset capital gains in future years but it may not carry a net capital loss back to offset capital gains in previous years.

Which of the following does NOT create a temporary book-tax difference?

Together, Kurt and Esmeralda own 60% of three corporations: RAZ, DVA, and TRE. The three corporations would be considered as what kind of controlled group for tax purposes?

For 2016, SRH's taxable income is $35,000 and JHH's taxable income is $45,000. Together, Scott and Jackson Howard own 100 percent of both corporations. What is the combined tax liability of the two corporations?

A C corporation reports its taxable income or loss on Form 1065.

Which of the following is not calculated in the corporate income tax formula?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

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