Question 1

Arthur forms Catbird Corporation with the following investment:
​
  Arthur receives all of the stock of Catbird. 
a.What is Arthur's basis in the Catbird Corporation stock?
b.What is Catbird Corporation's basis in the marketable securities? The land?

Accepted Answer

The answer of Arthur forms Catbird Corporation with the following...

Question 2

As of January 1, 2017, Amanda, the sole shareholder of Tern (a calendar year S corporation), had a basis in her stock of $50,000. During 2017, Tern had a net operating loss of $100,000 and distributed a $70,000 dividend to Amanda. What is Amanda's basis in her Tern stock as of January 1, 2018?

Accepted Answer

A) ($120,000) 
B) ($20,000) 
C) $0 
D) $50,000 
E) None of the above

Question 3

Crimson Corporation owns stock in other C corporations as follows: 90% of Maize; 30% of Mocha; and 10% of Saffron. During the current year, it receives dividends from the corporations as follows: $80,000 from Maize; $60,000 from Mocha; and $100,000 from Saffron. Presuming no taxable income limitations, what is Crimson's dividends received deduction?

Accepted Answer

The answer of Crimson Corporation owns stock in other C...

Question 4

In return for a 10% interest in the Sapphire Partnership, Lily transfers cash of $50,000 and land (basis of $200,000; fair market value of $300,000). Lily's basis in her Sapphire Partnership interest is $250,000.

Accepted Answer

A) True 
 B)False

Question 5

If a corporation has no E & P, its shareholders will not have constructive dividends.

Accepted Answer

A) True 
 B)False

Question 6

Elijah contributes land (basis of $80,000; fair market value of $400,000) for a 20% interest in a partnership. The land is subject to a mortgage of $50,000 which the partnership assumes. As a result of the transfer, Elijah:

Accepted Answer

A) Must recognize a gain of $40,000. 
B) Has a basis in the partnership of $40,000. 
C) Has a basis in the partnership of $70,000. 
D) Has a basis in the partnership of $360,000. 
E) None of the above.

Question 7

Laurie is a 70% shareholder in Martin Ltd., a calendar year S corporation. As of January 1, 2017, Laurie's basis in her stock investment was $400,000. During 2017, she made an additional capital contribution to Martin of $90,000 and also loaned the corporation $80,000. During 2017, Martin Ltd. had an operating loss of $900,000. One of the results of these transactions as to 2017 is that:

Accepted Answer

A) Laurie can recognize a loss of $400,000. 
B) Laurie can recognize a loss of $490,000. 
C) Laurie can recognize a loss of $630,000. 
D) As of January 1, 2018, Laurie's basis in her stock is a negative $60,000. 
E) None of the above.

Question 8

In determining a partner's basis in the partnership interest, which of the following reflects a correct adjustment?

Accepted Answer

A) Add capital losses. 
B) Subtract tax-exempt income. 
C) Subtract for decrease in partnership liabilities. 
D) Add partnership operating loss. 
E) None of the above.

Question 9

Taxpayers who want both limited liability and the passthrough of losses should choose either the Subchapter S or the LLC entity form of doing business.

Accepted Answer

A) True 
 B)False

Question 10

Using the legend provided, classify each statement accordingly.
a.Applies only to the income taxation of individuals
b.Applies only to the income taxation of C corporations
c.Applies to both the income taxation of individuals and of C corporations
d.Applies to neither the income taxation of individuals nor of C corporations
-Tax rates are progressive.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 11

Is there a logical explanation why S corporations are not allowed a dividends received deduction when computing taxable income?

Accepted Answer

The answer of Is there a logical explanation why S...

Question 12

Using the legend provided, classify each statement accordingly.
a.Applies only to the income taxation of C corporations.
b.Applies only to the income taxation of S corporations.
c.Applies to both the income taxation of C corporations and S corporations.
d.Applies to neither the income taxation of C corporations nor of S corporations.
-Cannot be a shareholder in another corporation.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 13

The domestic production activities deduction of an S corporation can be passed through to its shareholders.

Accepted Answer

A) True 
 B)False

Question 14

Using the legend provided, classify each statement accordingly.
a.Applies only to the income taxation of C corporations.
b.Applies only to the income taxation of S corporations.
c.Applies to both the income taxation of C corporations and S corporations.
d.Applies to neither the income taxation of C corporations nor of S corporations.
-The corporation may utilize an NOL carryover from a prior year.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 15

Using the legend provided, classify each statement accordingly.
a.Applies only to the income taxation of individuals
b.Applies only to the income taxation of C corporations
c.Applies to both the income taxation of individuals and of C corporations
d.Applies to neither the income taxation of individuals nor of C corporations
-Concept of itemized deductions is not relevant.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 16

During the current year, Goose Corporation (a calendar year, cash basis taxpayer) receives cash dividends as follows: ​
 Presuming the taxable income limitation does not apply, Goose Corporation's dividends received deduction for the current year is:

Accepted Answer

A) $126,000. 
B) $135,000. 
C) $141,000. 
D) $159,000. 
E) None of the above.

Question 17

In completing a Schedule M-1 of Form 1120, the Federal income tax per books is added to net income per books to arrive at taxable income. Why?

Accepted Answer

The answer of In completing a Schedule M-1 of Form...

Question 18

Skinner Corporation, a calendar year C corporation, had the following transactions during the current year: ​
 Skinner's taxable income (or NOL) for the current year is:

Accepted Answer

A) $100,000 taxable income. 
B) $40,000 NOL. 
C) $60,000 NOL. 
D) $100,000 NOL. 
E) None of the above.

Question 19

In comparing C corporations with individuals, which of the following, if any, relate only to individuals?

Accepted Answer

A) Excess long-term capital losses are carried forward as long-term capital losses. 
B) Excess charitable contributions can be carried forward. 
C) Excess charitable contributions can be carried back. 
D) Estimated income tax payments may have to be made. 
E) None of the above.

Question 20

Using the legend provided, classify each statement accordingly.
a.Applies only to the income taxation of C corporations.
b.Applies only to the income taxation of S corporations.
c.Applies to both the income taxation of C corporations and S corporations.
d.Applies to neither the income taxation of C corporations nor of S corporations.
-Cannot have a partnership as a shareholder.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Exam 20: Corporations and Partnerships

Arthur forms Catbird Corporation with the following investment: Arthur receives all of the stock of Catbird. a.What is Arthur's basis in the Catbird Corporation stock? b.What is Catbird Corporation's basis in the marketable securities? The land?

As of January 1, 2017, Amanda, the sole shareholder of Tern (a calendar year S corporation) , had a basis in her stock of $50,000. During 2017, Tern had a net operating loss of $100,000 and distributed a $70,000 dividend to Amanda. What is Amanda's basis in her Tern stock as of January 1, 2018?

In return for a 10% interest in the Sapphire Partnership, Lily transfers cash of $50,000 and land (basis of $200,000; fair market value of $300,000). Lily's basis in her Sapphire Partnership interest is $250,000.

If a corporation has no E & P, its shareholders will not have constructive dividends.

Elijah contributes land (basis of $80,000; fair market value of $400,000) for a 20% interest in a partnership. The land is subject to a mortgage of $50,000 which the partnership assumes. As a result of the transfer, Elijah:

In determining a partner's basis in the partnership interest, which of the following reflects a correct adjustment?

Taxpayers who want both limited liability and the passthrough of losses should choose either the Subchapter S or the LLC entity form of doing business.

Is there a logical explanation why S corporations are not allowed a dividends received deduction when computing taxable income?

The domestic production activities deduction of an S corporation can be passed through to its shareholders.

During the current year, Goose Corporation (a calendar year, cash basis taxpayer) receives cash dividends as follows: Presuming the taxable income limitation does not apply, Goose Corporation's dividends received deduction for the current year is:

In completing a Schedule M-1 of Form 1120, the Federal income tax per books is added to net income per books to arrive at taxable income. Why?

Skinner Corporation, a calendar year C corporation, had the following transactions during the current year: Skinner's taxable income (or NOL) for the current year is:

In comparing C corporations with individuals, which of the following, if any, relate only to individuals?

Exam 20: Corporations and Partnerships

Arthur forms Catbird Corporation with the following investment: ​ Arthur receives all of the stock of Catbird. a.What is Arthur's basis in the Catbird Corporation stock? b.What is Catbird Corporation's basis in the marketable securities? The land?

As of January 1, 2017, Amanda, the sole shareholder of Tern (a calendar year S corporation) , had a basis in her stock of $50,000. During 2017, Tern had a net operating loss of $100,000 and distributed a $70,000 dividend to Amanda. What is Amanda's basis in her Tern stock as of January 1, 2018?

In return for a 10% interest in the Sapphire Partnership, Lily transfers cash of $50,000 and land (basis of $200,000; fair market value of $300,000). Lily's basis in her Sapphire Partnership interest is $250,000.

If a corporation has no E & P, its shareholders will not have constructive dividends.

Elijah contributes land (basis of $80,000; fair market value of $400,000) for a 20% interest in a partnership. The land is subject to a mortgage of $50,000 which the partnership assumes. As a result of the transfer, Elijah:

In determining a partner's basis in the partnership interest, which of the following reflects a correct adjustment?

Taxpayers who want both limited liability and the passthrough of losses should choose either the Subchapter S or the LLC entity form of doing business.

Is there a logical explanation why S corporations are not allowed a dividends received deduction when computing taxable income?

The domestic production activities deduction of an S corporation can be passed through to its shareholders.

During the current year, Goose Corporation (a calendar year, cash basis taxpayer) receives cash dividends as follows: ​ Presuming the taxable income limitation does not apply, Goose Corporation's dividends received deduction for the current year is:

In completing a Schedule M-1 of Form 1120, the Federal income tax per books is added to net income per books to arrive at taxable income. Why?

Skinner Corporation, a calendar year C corporation, had the following transactions during the current year: ​ Skinner's taxable income (or NOL) for the current year is:

In comparing C corporations with individuals, which of the following, if any, relate only to individuals?

Arthur forms Catbird Corporation with the following investment: Arthur receives all of the stock of Catbird. a.What is Arthur's basis in the Catbird Corporation stock? b.What is Catbird Corporation's basis in the marketable securities? The land?

During the current year, Goose Corporation (a calendar year, cash basis taxpayer) receives cash dividends as follows: Presuming the taxable income limitation does not apply, Goose Corporation's dividends received deduction for the current year is:

Skinner Corporation, a calendar year C corporation, had the following transactions during the current year: Skinner's taxable income (or NOL) for the current year is: