Exam 11: The Corporate Income Tax

Harry forms the Nectarine Corporation during the 2014 tax year. To form the corporation, Harry transfers assets having a fair market value of $650,000 to Nectarine Corporation for 100 percent of the corporation's stock. Harry's adjusted basis in the assets transferred was $375,000 and Nectarine Corporation assumed a $200,000 mortgage on the assets. If the fair market value of the stock received by Harry is $450,000, what is his basis in the stock received from the corporation?

During the current year, The Jupiter Company, which is an S corporation, had the following items of income and expenses: ​ a. Calculate the net ordinary income. b. List all the other items which must be separately reported. c. If the S corporation is on a calendar year, when is the corporation's tax return due?

The corporate tax rates favor large corporations.

Corporations may be subject to the alternative minimum tax.

Choose the correct statement:

The Peach Corporation is a regular corporation that contributes $25,000 cash to qualified charitable organizations during 2014. The corporation has net taxable income of $190,000 before deducting the contributions. a.​What is the amount of Peach Corporation's allowable deduction for charitable contributions for the current year? b.What may the corporation do with any excess amount of contributions?

A corporation may be found subject to both the accumulated earnings tax and the personal holding company tax in the same year.

In 2014, Parvifolia, Inc. had $400,000 of revenue from operations and $160,000 of dividends from non-affiliated 15 percent-owned domestic corporations. The corporation's deductible operating expenses totaled $410,000. What is Parvifolia, Inc.'s dividends received deduction for 2014?

Is it correct to state that the maximum corporate tax rate is 35 percent? Please describe the structure of the corporate tax rate schedule in your answer.

Which of the following companies is taxed at a flat rate of 35 percent?

The accumulated earnings tax will not be imposed on accumulations that can be shown to be necessary to meet the reasonable needs of the business.

If a corporation's status as an S corporation is involuntarily terminated in the middle of the tax year, the corporation must file as an S corporation for the first half of the tax year and a regular corporation for the second half of the tax year.

A corporation may elect to take a credit for dividends paid in lieu of claiming a dividends received deduction.

What is the maximum amount of accumulated earnings that a corporation is allowed to accumulate, without regard to business needs, before the accumulated earnings tax is imposed?

XYZ Corporation has a December 31 year-end. a. When is XYZ Corporation's tax return due? b. When does XYZ Corporation need to make its estimated tax payments? c. Assuming that XYZ Corporation owes $5,000 on the original tax return due date and it files for an extension and is granted an automatic extension to file tax returns, what is the extended tax return date and when should taxes be paid?

Which of the following statements is not true of S corporations?

To prevent triple taxation, a corporation is entitled to deduct 50 percent of the dividends received from other domestic corporations.

Which of the following is true with respect to capital gains and losses of a corporation?

For its year ended December 31, 2014, Cupressa Corporation, an S corporation, had net income of $216,000 which included $180,000 of ordinary income from operations and a $36,000 net long-term capital gain. During 2014, a total of $90,000 was distributed to the corporation's nine equal shareholders, all of whom are on a calendar-year tax basis. For 2014, each shareholder should report:

For 2014, what is the maximum tax rate for personal service corporations?