Question 1

Tester Corporation acquired all of the stock of Socco Corporation five years ago for $400,000.Socco Corporation has been completely liquidated this year,and all of its assets have been transferred to Tester Corporation.Immediately prior to the liquidation,Socco had an adjusted basis in its assets of $560,000,and the assets were worth $700,000.
a.How much gain or loss will Socco recognize due to the liquidation?
b.How much gain or loss will Tester recognize due to the liquidation?
c.What is Tester's adjusted basis in the assets received from Socco?

Accepted Answer

The answer of Tester Corporation acquired all of the stock...

Question 2

Sycamore Corporation's financial statements show the following items for the current year in its financial accounting records:
  
For tax purposes,depreciation is $22,000.Sycamore owns less than 20% of the company from which it received dividends.Calculate Sycamore's taxable income,tax liability,and carryforwards.

Accepted Answer

The answer of Sycamore Corporation's financial statements show the following...

Question 3

A corporation realizes a NSTCL this year of $43,000.It will only be able to deduct $3,000 this year.

Accepted Answer

A) True 
 B)False

Question 4

Topper Corporation makes a liquidating distribution of land to its sole shareholder Tonya.Topper purchased the land several years ago for $150,000,and the land was recently appraised at $120,000 of value.Tonya purchased her stock three years ago for $65,000.What is the amount of gains or losses recognized by Topper Corporation and Tonya?

Accepted Answer

A)   
B)   
C)   
D)

Question 5

Charades Corporation is a publicly held company listed on the New York Stock Exchange.During the current year,its chief executive officer,Samantha Chen,receives the following compensation from the corporation: salary,$1,500,000; commissions based on sales generated by Samantha,$200,000; payments to a qualified pension plan,$30,000; and tax-free fringe benefits,$20,000.What is the total amount that Charades may deduct?

Accepted Answer

A)  $1,000,000 
B)  $1,250,000 
C)  $1,500,000 
D)  $1,750,000

Question 6

Which of the statements is inaccurate regarding requirements for nonrecognition of gain or loss upon the transfer of assets to a corporation in exchange for stock?

Accepted Answer

A)  Depreciation recapture applies to a transfer which falls under Sec. 351. 
B)  Property must be transferred to the corporation solely in exchange for stock of the corporation. 
C)  The transferor-shareholders must be in control (80%) of the corporation immediately after the exchange. 
D)  If property or money is received by the transferor, gain (but not loss) is recognized to the extent of the lesser of the boot received or the realized gain.

Question 7

Ohio Corporation's taxable income for the current year is $300,000.Its tax liability is

Accepted Answer

A)  $78,000. 
B)  $100,250. 
C)  $102,000. 
D)  $117,000.

Question 8

A corporation distributes land worth $200,000 to its sole shareholder.The corporation had purchased the land several years ago for $120,000.The corporation has over $1 million of E&P.How much income will the corporation and the shareholder recognize?

Accepted Answer

A)   
B)   
C)   
D)

Question 9

Corporations that are members of a brother-sister affiliated group may file a consolidated return if the proper election is made.

Accepted Answer

A) True 
 B)False

Question 10

Musketeer Corporation has the following income and expense items during the current year:

The allowed dividends-received deduction is

Accepted Answer

A)  $120,000. 
B)  $168,000. 
C)  $192,000. 
D)  $240,000.

Question 11

Bartlett Corporation,a U.S.manufacturer,reports the following results in its financial accounting records:
  
The dividend income is from very minor holdings in U.S.stocks.Calculate Bartlett's taxable income,income tax liability and any carryovers generated.

Accepted Answer

The answer of Bartlett Corporation,a U.S.manufacturer,reports the following results in...

Question 12

Which corporations are required to file a Schedule M-3?

Accepted Answer

A)  S corporations with assets of $10,000,000 or more 
B)  C corporations with assets of $1,000,000 or more 
C)  publicly held C corporations with assets of $5,000,000 or more 
D)  C corporations with assets of $10,000,000 or more

Question 13

Manatee Corporation,a retailer,is owned equally by twelve unrelated individuals.Its taxable income this year is $100,000 and its regular federal income tax liability is $22,250.The company claims a $20,000 dividends-received deduction and pays $25,000 dividends to its shareholders.The corporation had accumulated earnings and profits of $200,000 at the end of the preceding year.The company has reasonable needs of the business at year-end of $210,000.The accumulated earnings tax is

Accepted Answer

A)  $413. 
B)  $3,413. 
C)  $4,550. 
D)  $7,735.

Question 14

A new start-up corporation is formed by three individuals.They expect the corporation will experience losses in its first few years.The shareholders will prefer to have the corporation taxed as a C corporation rather than making an S election.

Accepted Answer

A) True 
 B)False

Question 15

Trestle Corp.received $100,000 of dividend income from minor holdings (less than 20%) in U.S.publicly traded corporations.Determine the allowable dividend-received deduction under the following assumptions of net income from operations:
a. Net income from operations is $600,000.
b. Net income from operations is ($10,000).
c. Net income from operations is ($150,000).

Accepted Answer

The answer of Trestle Corp.received $100,000 of dividend income from...

Question 16

Atlantic Corporation,a calendar-year taxpayer,has $120,000 of accumulated E&P deficit as of January 1.Atlantic's current E&P is $40,000.The corporation makes a $50,000 distribution to its shareholders.Shareholders have stock basis of $60,000.What is the amount of Atlantic's E&P deficit at the end of the year?

Accepted Answer

The answer of Atlantic Corporation,a calendar-year taxpayer,has $120,000 of accumulated...

Question 17

A corporation which makes a charitable contribution of property for the care of the needy gets a deduction equal to the adjusted basis of the property.

Accepted Answer

A) True 
 B)False

Question 18

A corporation distributes land with a FMV of $85,000 (basis $50,000).The land has a mortgage of $95,000 assumed by the shareholder.Gain to the corporation is

Accepted Answer

A)  $0. 
B)  $10,000. 
C)  $35,000. 
D)  $45,000.

Question 19

Greg Corporation,an accrual method taxpayer,had accumulated earnings and profits of $300,000 as of December 31 last year.For its current tax year,Greg's books and records reflect the following:

Based on the above,what is the amount of Greg Corporation's current earnings and profits for this year?

Accepted Answer

A)  $120,500 
B)  $122,000 
C)  $124,500 
D)  $129,500

Question 20

A shareholder receives a distribution from a corporation in complete liquidation.The distribution will be taxed as a dividend to the extent of current or accumulated E&P.

Accepted Answer

A) True 
 B)False

Exam 16: Corporations

A corporation realizes a NSTCL this year of $43,000.It will only be able to deduct $3,000 this year.

Which of the statements is inaccurate regarding requirements for nonrecognition of gain or loss upon the transfer of assets to a corporation in exchange for stock?

Ohio Corporation's taxable income for the current year is $300,000.Its tax liability is

A corporation distributes land worth $200,000 to its sole shareholder.The corporation had purchased the land several years ago for $120,000.The corporation has over $1 million of E&P.How much income will the corporation and the shareholder recognize?

Corporations that are members of a brother-sister affiliated group may file a consolidated return if the proper election is made.

Musketeer Corporation has the following income and expense items during the current year: The allowed dividends-received deduction is

Bartlett Corporation,a U.S.manufacturer,reports the following results in its financial accounting records: The dividend income is from very minor holdings in U.S.stocks.Calculate Bartlett's taxable income,income tax liability and any carryovers generated.

Which corporations are required to file a Schedule M-3?

A new start-up corporation is formed by three individuals.They expect the corporation will experience losses in its first few years.The shareholders will prefer to have the corporation taxed as a C corporation rather than making an S election.

A corporation which makes a charitable contribution of property for the care of the needy gets a deduction equal to the adjusted basis of the property.

A corporation distributes land with a FMV of $85,000 (basis $50,000) .The land has a mortgage of $95,000 assumed by the shareholder.Gain to the corporation is

Greg Corporation,an accrual method taxpayer,had accumulated earnings and profits of $300,000 as of December 31 last year.For its current tax year,Greg's books and records reflect the following: Based on the above,what is the amount of Greg Corporation's current earnings and profits for this year?

A shareholder receives a distribution from a corporation in complete liquidation.The distribution will be taxed as a dividend to the extent of current or accumulated E&P.