Question 1

Corporate distributions to shareholders are called dividends.

Accepted Answer

The answer of Corporate distributions to shareholders are called dividends....

Question 2

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 basis of $10,000).Which of the following statements is correct?

Accepted Answer

Howie's basis in his stock is equal to the basis of the property he contributed, which is $10,000.

Question 3

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

Accepted Answer

The answer of Andre formed a corporation and owns all...

Question 4

Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

Accepted Answer

When Felix transfers the land with a FMV of $900,000 to the newly formed corporation in exchange for all of the stock, the corporation takes over the basis of the land, which is $300,000. However, the corporation also takes over the debt of $500,000, which increases the basis to $800,000. Therefore, the basis of the land in the hands of the corporation is $800,000, which is option B.

Question 5

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

Accepted Answer

A corporation can deduct charitable contributions up to 10% of its taxable income, not 50%.

Question 6

Schedule L is a reconciliation of net income per books to net income per the tax law.

Accepted Answer

The answer of Schedule L is a reconciliation of net...

Question 7

A C corporation has a fiscal year-end of August 30.It requests an automatic extension of time to file its income tax return.It must file its return no later than the 15^thday of:

Accepted Answer

The answer of A C corporation has a fiscal year-end...

Question 8

In 2013,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2014 and 2015,it had net capital gains of $5,000 and $8,000,respectively.In 2016,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2017?

Accepted Answer

The capital loss from 2013 can be carried forward indefinitely. Therefore, the net capital loss carryforward to 2017 is the total capital losses from 2013 and 2016 minus the total capital gains from 2014 and 2015, or ($3,000 + $12,000) - ($5,000 + $8,000) = $2,000. Therefore, the answer is D, $2,000.

Question 9

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Accepted Answer

A corporation may elect to become a Subchapter S corporation at any time after its formation, as long as it meets the eligibility requirements.

Question 10

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's taxable gain is:

Accepted Answer

The answer of Andre formed a corporation and owns all...

Question 11

Initially,corporations with average annual gross receipts for the last three years of $5 million or less are not subject to the corporate AMT rules.

Accepted Answer

According to the current tax laws, corporations with average annual gross receipts for the last three years of $5 million or less are not subject to the corporate AMT rules.

Question 12

A corporation can elect to be taxed as a Subchapter S corporation if it meets certain requirements including that it has 100 or fewer shareholders,all of whom are individuals,estates,and certain trusts.

Accepted Answer

This is a true statement. To elect to be taxed as a Subchapter S corporation, the corporation must meet several requirements, including having 100 or fewer shareholders, all of whom are individuals, estates, and certain trusts. The election is made by filing Form 2553 with the IRS.

Question 13

Which of the following statements is correct?

Accepted Answer

A net capital loss can be carried back three years and then forward five years for tax purposes.

Question 14

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^thday of:

Accepted Answer

A C corporation must file its income tax return by the 15th day of the 4th month after the end of its fiscal year. For a fiscal year ending November 30, the return is due by March 15.

Question 15

A corporation must file Form 1120 2½ months after the end of its fiscal year.

Accepted Answer

A corporation must file Form 1120 by the 15th day of the fourth month after the end of its fiscal year.

Question 16

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

Accepted Answer

As a pass-through entity, a Subchapter S corporation does not pay federal income tax. Instead, the corporation's net income or loss is passed through to its shareholders, who report their proportionate share of the corporate income or loss on their individual tax returns. This is known as pass-through taxation.

Question 17

Schedule M-1 reconciles from net income per books to net income per the tax law.

Accepted Answer

Schedule M-1 is a reconciliation of the net income or loss shown on a company's financial statements, also known as book income, to the taxable income or loss reported on the company's tax return. The purpose of Schedule M-1 is to reconcile differences between the two accounting methods and to adjust book income for tax preferences or adjustments required by the tax code.

Question 18

If a shareholder receives cash from a corporation in complete liquidation of his or her ownership interest and the cash received is less than the shareholder's basis in the stock,the shareholder will report a loss.

Accepted Answer

If the cash received is less than the shareholder's basis in the stock, the shareholder will report a loss on the exchange of the stock for cash. This loss can be deductible as a capital loss on the shareholder's tax return.

Question 19

Which of the following statements is incorrect?

Accepted Answer

The answer of Which of the following statements is incorrect?
...

Question 20

Basira transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

Accepted Answer

Under IRC Section 351, no gain or loss is recognized if property is transferred to a corporation solely in exchange for stock and the transferor is in control of the corporation immediately after the exchange. Since Basira receives all the stock, she is in control, and thus, no gain is recognized.

Quiz 15: Corporate Taxation

Corporate distributions to shareholders are called dividends.

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 basis of $10,000) .Which of the following statements is correct?

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

Schedule L is a reconciliation of net income per books to net income per the tax law.

A C corporation has a fiscal year-end of August 30.It requests an automatic extension of time to file its income tax return.It must file its return no later than the 15^thday of:

In 2013,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2014 and 2015,it had net capital gains of $5,000 and $8,000,respectively.In 2016,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2017?

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's taxable gain is:

Initially,corporations with average annual gross receipts for the last three years of $5 million or less are not subject to the corporate AMT rules.

A corporation can elect to be taxed as a Subchapter S corporation if it meets certain requirements including that it has 100 or fewer shareholders,all of whom are individuals,estates,and certain trusts.

Which of the following statements is correct?

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^thday of:

A corporation must file Form 1120 2½ months after the end of its fiscal year.

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

Schedule M-1 reconciles from net income per books to net income per the tax law.

If a shareholder receives cash from a corporation in complete liquidation of his or her ownership interest and the cash received is less than the shareholder's basis in the stock,the shareholder will report a loss.

Which of the following statements is incorrect?

Basira transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

Quiz 15: Corporate Taxation

Corporate distributions to shareholders are called dividends.

Heather and Howie form HH Company.In exchange for 50% of the stock,Heather contributes cash of $7,000.For the remaining 50%,Howie contributes a truck with a FMV of $7,000 basis of $10,000) .Which of the following statements is correct?

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's basis in his stock is:

Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.

Schedule L is a reconciliation of net income per books to net income per the tax law.

A C corporation has a fiscal year-end of August 30.It requests an automatic extension of time to file its income tax return.It must file its return no later than the 15th day of:

In 2013,the first year of its existence,Chartreuse Corporation had a net capital loss of $3,000.In 2014 and 2015,it had net capital gains of $5,000 and $8,000,respectively.In 2016,the company reported a net capital loss of $12,000.What is the amount of capital loss carryforward to 2017?

A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.

Andre formed a corporation and owns all of the stock.He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation.Andre's taxable gain is:

Initially,corporations with average annual gross receipts for the last three years of $5 million or less are not subject to the corporate AMT rules.

A corporation can elect to be taxed as a Subchapter S corporation if it meets certain requirements including that it has 100 or fewer shareholders,all of whom are individuals,estates,and certain trusts.

Which of the following statements is correct?

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15th day of:

A corporation must file Form 1120 2½ months after the end of its fiscal year.

A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.

Schedule M-1 reconciles from net income per books to net income per the tax law.

If a shareholder receives cash from a corporation in complete liquidation of his or her ownership interest and the cash received is less than the shareholder's basis in the stock,the shareholder will report a loss.

Which of the following statements is incorrect?

Basira transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

A C corporation has a fiscal year-end of August 30.It requests an automatic extension of time to file its income tax return.It must file its return no later than the 15^thday of:

A C corporation has a fiscal year-end of November 30.It does not request an extension of time to file its income tax return.It must file its return no later than the 15^thday of: