Exam 11: The Corporate Income Tax

Charitable contributions made by an S corporation are not deductible by the corporation;therefore,the shareholders receive no tax benefit from the contributions as itemized deductions.

For the current year,the Beech Corporation has net income on its books of $60,000,including the following items: Federal tax depreciation exceeds the depreciation deducted on the books by $5,000.What is the corporation's taxable income?

Rex and Marsha each own 50 percent of the Grandiflora Corporation,an S corporation with a calendar tax year.At the beginning of the tax year,Marsha and Rex both have a basis in the stock of the corporation of $25,000.On June 30,2017,Rex sells his interest in the corporation to George for $200,000,and for 2017 the Grandiflora Corporation has a loss of $90,000. a.Calculate the amount of the corporation's loss that may be deducted by Rex on his 2017 tax return. b.Calculate the amount of the corporation's loss that may be deducted by George on his 2017 tax return. c.Calculate the amount of the corporation's loss that may be deducted by Marsha on her 2017 tax return.

Ashwood Corporation has been in business for 20 years.For the previous 3 years,Ashwood Corporation had annual gross receipts of $3.3 million,$4.2 million and $5.4 million,respectively.For alternative minimum tax purposes,is Ashwood Corporation a small corporation? Give your reasoning and/or the calculation that you based your answer on.Also,why does it matter if they are a small corporation?

The Sapote Corporation is a manufacturing corporation.The corporation has accumulated earnings of $450,000 and the corporation cannot establish a reasonable business need for any of that amount.What is the amount of the accumulated earnings tax,if any,that will be imposed on the corporation?

The Birch Corporation has regular taxable income of $85,000 and a regular tax liability of $17,150.The corporation also has $45,000 of tax preference items.Calculate Birch Corporation's alternative minimum tax liability.Assume that the Birch Corporation is not a "small corporation."

In general,estimated payments for calendar-year corporations are due on:

Roberta and Sally formed the Alder Corporation on October 1,2017.On the same date,Roberta paid $75,000 cash to Alder Corporation for 1,500 shares of the corporation's common stock.Simultaneously,Sally received 100 shares of Alder Corporation's stock for services rendered.How much should Sally include in her taxable income for 2017,and what will be the basis of her Alder Corporation stock? ​ Taxable Income Basis of Stock

The income of an S corporation is computed in much the same manner as that of a partnership.

The Heal Yourself Health Care Corporation,a service corporation,has accumulated earnings of $375,000 and the corporation can establish a reasonable need for $125,000.Calculate the amount of the accumulated earnings tax,if any,that will be imposed on the corporation.

Harry forms the Nectarine Corporation during the current 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?

Robert,Kim,Tony,and Sharon decided to form the Cash Cow Corporation.In exchange for 40 percent of the stock,Robert contributed an apartment building with a fair market value of $700,000 and subject to a liability of $300,000.Robert's basis in the apartment building is $225,000.Kim contributed warehouse storage units worth $450,000 in exchange for 40 percent of the stock plus $50,000 in cash from the corporation.Her basis in the warehouse is $125,000.Tony contributed $100,000 cash for 10 percent of the stock.Sharon is performing services worth $100,000 for 10 percent of the stock. a.What is the recognized gain or recognized income for: 1.Robert 2.Kim 3.Tony 4.Sharon b.What is the basis in the stock for: 1.Robert 2.Kim 3.Tony 4.Sharon c.What is the corporation's basis in: 1.The apartment building 2.The warehouse

For its year ended December 31,2017,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 2017,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 2017,each shareholder should report:

The original due date for a tax return of a corporation filing a Form 1120 with a calendar tax year-end falls before the original due date of a return for an individual taxpayer with the same tax year.

Choose the correct statement:

The F.Repens Corporation has taxable income of $250,000 for the current year,including dividends of $60,000 received from 30 percent-owned domestic corporations.How much is the F.Repens Corporation's dividends received deduction for the current year?

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

Avocado Corporation paid $3,000 in estimated tax payments for the calendar year ended December 31,2017.The corporation has an actual tax liability of $4,000 for the year. a.If no extension is requested,when is the tax return due? b.If an extension of time to file is requested and approved,when is the tax return due? c.If an extension of time to file is requested and approved,when is the additional $1,000 of the 2017 tax due?

Which of the following is not a requirement for qualification as an S corporation?

Capital losses of a corporation must be used to offset capital gains and net capital losses may not be deducted from the ordinary income of a corporation.