Question 1

Which of the following statements regarding the rehabilitation credit is false?

Accepted Answer

A) After 2017,the credit is available only for costs incurred to rehabilitate certified historic structures. 
B) The credit is intended to encourage businesses to undertake urban renewal projects. 
C) The credit is claimed only in the year in which the rehabilitated property is placed in service. 
D) The credit equals 20 percent of qualified rehabilitation costs.

Question 2

The only alternative to double taxation of corporate earnings is to treat corporations as passthrough entities,similar to partnerships.

Accepted Answer

A) True 
 B)False

Question 3

In its first taxable year,Platform,Inc.generated a $100,000 net operating loss and made a $10,000 cash donation to a local charity.In its second year,Platform generated $350,000 operating income and made a $20,000 donation to the same charity.Compute Platform's taxable income for its second year.

Accepted Answer

A) $220,000 
B) $235,000 
C) $320,000 
D) $230,000

Question 4

For distributions prior to 2018,dividends-received deductions generally are not allowed for dividends from foreign corporations.

Accepted Answer

A) True 
 B)False

Question 5

Borough,Inc.is entitled to a rehabilitation credit of $500,000 for its current tax year.The corporation's regular tax liability is $450,000.No estimated tax payments have been made.Which of the following statements is true?

Accepted Answer

A) The corporation should receive a tax refund for the current year. 
B) The portion of the rehabilitation credit that cannot be used this year will be lost. 
C) The current year credit equals 20 percent of the total credit allowed for rehabilitation of a certified historic structure. 
D) The credit is available for restoration of a building that is at least ten years old.

Question 6

A significant advantage of issuing stock instead of debt financing is that payment of dividends is discretionary.

Accepted Answer

A) True 
 B)False

Question 7

What is the extended due date of the federal income tax return of a corporation with a tax year ended June 30,2019?

Accepted Answer

A) October 15,2019 
B) May 15,2020 
C) April 15,2020 
D) March 15,2020

Question 8

Palm Corporation has book income of $424,000.Book income reflects $130,000 federal income tax expense and $55,000 depreciation expense.Tax depreciation expense computed under MACRS is $65,000.Palm received $25,000 of prepaid rent not included in book income.Based only on these items,compute Palm's taxable income.

Accepted Answer

A) $569,000 
B) $539,000 
C) $589,000 
D) $519,000

Question 9

Which of the following is a primary legal characteristic of the corporate form of business?

Accepted Answer

A) The management of the business is centered in a Board of Directors elected by the shareholders. 
B) A shareholder must seek permission to sell his stock. 
C) The life of the corporation will terminate when a majority of the shareholders die or cease to exist. 
D) A shareholder is personally liable for the debts of the corporation.

Question 10

For a consolidated group of corporations,Schedule M-3 reconciles worldwide financial statement net income to the financial statement net income of those corporations permitted to be included in the U.S.consolidated tax return group.

Accepted Answer

A) True 
 B)False

Question 11

Mandrake,Inc.has book income of $569,300.Its income includes a $50,700 bad debt expense,determined by the allowance method.Actual write offs this year were $48,000.Based only on this information,compute Mandrake's taxable income.

Accepted Answer

A) $569,300 
B) $572,000 
C) $566,600 
D) $528,600

Question 12

Corporations with less than $1 million of taxable income are not required to make quarterly estimated tax payments.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements regarding Schedule M-1 is true?

Accepted Answer

A) The corporate dividends-received deduction is reported on Line 8 of Schedule M-1. 
B) A corporation incurring nondeductible fines and penalties would report those amounts on line 5 of Schedule M-1. 
C) Line 2 of schedule M-1 should reflect the corporation's actual federal income tax liability for the current year. 
D) A corporation realizing a current gain on a like-kind exchange that is deferred for tax purposes would not report that gain on Schedule M-1.

Question 14

With the exception of corporations whose fiscal year ends on June 30 and for tax years beginning after December 31,2015,which of the following statements regarding corporate tax filing requirements is false?

Accepted Answer

A) Corporations must file their annual federal income tax returns by the 15th day of the fourth month following the close of the taxable year. 
B) Most corporations may request an automatic six-month extension of time to file their federal income tax returns. 
C) An extension of the income tax filing deadline does not extend the payment deadline for any balance of tax due for the taxable year. 
D) Corporations must file their annual federal income tax returns by 15th day of the third month following the close of the taxable year.

Question 15

The burden of corporate taxation is often borne by corporate shareholders,customers,employees,and suppliers.

Accepted Answer

A) True 
 B)False

Question 16

Sonic Corporation has a 21% marginal tax rate and received $10,000 of dividends from Roller,Inc.,a U.S.corporation in which Sonic owns less than 2% of the outstanding stock.Sonic's effective tax rate on the Roller dividend is:

Accepted Answer

A) 21% 
B) 0% 
C) 10.5% 
D) None of the above

Question 17

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Accepted Answer

A) True 
 B)False

Question 18

Hearth,Inc.reported $30,000 of depreciation expense on its financial statements.For federal income tax purposes,it deducted depreciation of $35,000.This book/tax difference would result in an increase to net income per books on the Schedule M-1 or M-3.

Accepted Answer

A) True 
 B)False

Question 19

The dividends-received deduction is equal to 65% of any dividends-received by a corporate taxpayer.

Accepted Answer

A) True 
 B)False

Question 20

Harmon,Inc.was incorporated and began business on January 1,2018.Its tax liability for 2018 was $36,000.Its tax liability for 2019 was $50,000.Which of the following is a correct statement concerning the payment of estimated taxes for 2019?

Accepted Answer

A) Harmon must pay $12,500 on the 15th day of April,June,September,and December. 
B) Harmon must pay $9,000 on the 15th day of April,June,September and December.The $14,000 balance is payable by April 15,2020. 
C) Harmon may pay the $50,000 tax no later than April 15,2020. 
D) None of the above statements is correct.

Exam 11: The Corporate Taxpayer

Which of the following statements regarding the rehabilitation credit is false?

The only alternative to double taxation of corporate earnings is to treat corporations as passthrough entities,similar to partnerships.

In its first taxable year,Platform,Inc.generated a $100,000 net operating loss and made a $10,000 cash donation to a local charity.In its second year,Platform generated $350,000 operating income and made a $20,000 donation to the same charity.Compute Platform's taxable income for its second year.

For distributions prior to 2018,dividends-received deductions generally are not allowed for dividends from foreign corporations.

Borough,Inc.is entitled to a rehabilitation credit of $500,000 for its current tax year.The corporation's regular tax liability is $450,000.No estimated tax payments have been made.Which of the following statements is true?

A significant advantage of issuing stock instead of debt financing is that payment of dividends is discretionary.

What is the extended due date of the federal income tax return of a corporation with a tax year ended June 30,2019?

Which of the following is a primary legal characteristic of the corporate form of business?

For a consolidated group of corporations,Schedule M-3 reconciles worldwide financial statement net income to the financial statement net income of those corporations permitted to be included in the U.S.consolidated tax return group.

Mandrake,Inc.has book income of $569,300.Its income includes a $50,700 bad debt expense,determined by the allowance method.Actual write offs this year were $48,000.Based only on this information,compute Mandrake's taxable income.

Corporations with less than $1 million of taxable income are not required to make quarterly estimated tax payments.

Which of the following statements regarding Schedule M-1 is true?

With the exception of corporations whose fiscal year ends on June 30 and for tax years beginning after December 31,2015,which of the following statements regarding corporate tax filing requirements is false?

The burden of corporate taxation is often borne by corporate shareholders,customers,employees,and suppliers.

Sonic Corporation has a 21% marginal tax rate and received $10,000 of dividends from Roller,Inc.,a U.S.corporation in which Sonic owns less than 2% of the outstanding stock.Sonic's effective tax rate on the Roller dividend is:

Corporations report their taxable income and calculate the federal income tax on Form 1040.

Hearth,Inc.reported $30,000 of depreciation expense on its financial statements.For federal income tax purposes,it deducted depreciation of $35,000.This book/tax difference would result in an increase to net income per books on the Schedule M-1 or M-3.

The dividends-received deduction is equal to 65% of any dividends-received by a corporate taxpayer.

Harmon,Inc.was incorporated and began business on January 1,2018.Its tax liability for 2018 was $36,000.Its tax liability for 2019 was $50,000.Which of the following is a correct statement concerning the payment of estimated taxes for 2019?