Income Tax for Corporations Study Guide Questions
Course Introduction
Income Tax for Corporations is a comprehensive course that examines the principles, laws, and regulations governing the taxation of corporations. Students will learn about corporate tax structures, including the calculation of taxable income, tax compliance, reporting requirements, and various deductions and credits available to corporations. The course also discusses the tax implications of corporate formations, distributions, liquidations, mergers, and acquisitions. Through practical examples and case studies, students will gain an understanding of how corporate taxes impact financial decisions and overall business strategy, preparing them for roles in accounting, finance, or tax advisory services.
Recommended Textbook
South Western Federal Taxation 2013 Comprehensive Edition by William H. Hoffman
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Chapter 1: An Introduction to Taxation and Understanding
the Federal Tax Law
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Q1) Under a state inheritance tax, two heirs, a cousin and a son of the deceased, would be taxed at the same rate.
A)True
B)False
Answer: False
Q2) If more IRS audits are producing a greater number of no change results, this indicates increased compliance on the part of taxpayers.
A)True
B)False
Answer: False
Q3) In early July 2012, Gavin is audited by the IRS and a large deficiency is assessed.In October of the same year, his income tax return for the state is audited.What has probably happened?
Answer: The state has been notified by the IRS concerning the results of the July audit.
Q4) The objective of pay-as-you-go (paygo) is to achieve revenue neutrality.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Working With the Tax Law
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Q1) The U.S.Tax Court meets most often in Washington, D.C.
A)True
B)False
Answer: False
Q2) Which publisher offers Tax Center that provides the Code, Regulations, and material from Matthew Bender, CCH, Kleinrock, and the Bureau of National Affairs?
A)Research Institute of America.
B)Commerce Clearing House.
C)LexisNexis.
D)Prentice-Hall.
E)None of the above.
Answer: C
Q3) Which of the following is not published in the Cumulative Bulletin?
A)Revenue Rulings.
B)Proposed Regulations.
C)Actions on Decisions.
D)Letter Rulings.
E)General Counsel Memoranda.
Answer: D
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Chapter 3: Computing the Tax
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Q1) Because they appear on page 1 of Form 1040, itemized deductions are also referred to as "page 1 deductions."
A)True
B)False
Answer: False
Q2) In terms of the tax formula applicable to individual taxpayers, which, if any, of the following statements is correct?
A)In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
B)In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
C)If a taxpayer has deductions for AGI, the standard deduction is not available.
D)In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction.
E)None of the above.
Answer: E
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Page 5
Chapter 4: Gross Income: Concepts and Inclusions
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Q1) For purposes of determining gross income, which of the following is true?
A)A mechanic completed repairs on an automobile during the year and collects money from the customer.The customer was not satisfied with the repairs and sued the mechanic for a refund.The mechanic can defer recognition of the income until the suit has been settled.
B)A taxpayer who finds a wallet full of money is not required to recognize income because someone will eventually ask for the return of the money.
C)Embezzlement proceeds are included in the embezzler's gross income because the embezzler has an obligation to repay the owner.
D)All of the above are true.
E)None of the above is true.
Q2) Norma's income for 2012 is $27,000 from part-time work and $9,000 of Social Security benefits.Norma is not married.A portion of her Social Security benefits must be included in her gross income.
A)True
B)False
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Chapter 5: Gross Income: Exclusions
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Q1) In 2012, Theresa was in an automobile accident and suffered physical injuries.The accident was caused by Ramon's negligence.In 2013, Theresa collected from his insurance company.She received $15,000 for loss of income, $25,000 punitive damages, and $8,000 for medical expenses which she had deducted on her 2012 tax return (the amount in excess of 7.5% of adjusted gross income).As a result of the above, Theresa's 2013 gross income is increased by $33,000.
A)True
B)False
Q2) Gull Corporation was undergoing reorganization under the bankruptcy laws.The shareholders, who had made loans of $300,000 to the corporation, agreed to accept additional stock with a value of $200,000 instead of repayment on the debt.The Old Line Insurance Company, which had a $400,000 mortgage on the building, agreed to reduce the principal to $250,000.A trade creditor with a receivable of $150,000 from the company agreed to accept $70,000 in full payment for the debt incurred to purchase goods that were still on hand.Finally, the company transferred some equipment with an adjusted basis of $90,000 in satisfaction of a liability for $120,000.Compute the corporation's gross income and other adjustments necessary as a result of the above transactions.
Q3) What Federal income tax benefits are provided for college students?
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Page 7
Chapter 6: Deductions and Losses: in General
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Q1) Which of the following is not a related party for constructive ownership purposes under § 267?
A)The taxpayer's cousin.
B)The taxpayer's brother.
C)The taxpayer's grandmother.
D)A corporation owned more than 50% by the taxpayer.
E)None of the above.
Q2) The only § 212 expenses that are deductions for AGI are those related to rent and royalty income.
A)True
B)False
Q3) Briefly discuss the two tests that an accrual basis taxpayer must apply before an expense can be deducted.
Q4) Briefly discuss the disallowance of deductions for capital expenditures.
Q5) Ralph wants to give his daughter $1,000 for Christmas. As an alternative, she suggests that he pay the property taxes on her residence. If Ralph pays the property taxes, he cannot deduct them.
A)True
B)False
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Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Q1) Research and experimental expenditures do not include expenditures for ordinary testing of materials for quality control.
A)True
B)False
Q2) A farming NOL may be carried back 2 years.
A)True
B)False
Q3) Which of the following events would produce a deductible loss?
A)Erosion of personal use land due to rain or wind.
B)Termite infestation of a personal residence over a several year period.
C)Damages to personal automobile resulting from a taxpayer's negligence.
D)A misplaced diamond ring.
E)None of the above.
Q4) A theft loss is taken in the year the theft is discovered.
A)True
B)False
Q5) A loss is not allowed for a security that declines in value.
A)True
B)False
Q6) Discuss the effect of alimony in computing a net operating loss. Page 9
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Page 10
Chapter 8: Depreciation, Cost Recovery, Amortization, and Depletion
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Q1) The key date for calculating cost recovery is the date the asset is placed in service. A)True
B)False
Q2) Rick purchased a uranium interest for $10,000,000 on January 3, 2012, when recoverable reserves were estimated at 200,000 units.A total of 10,000 units were extracted in 2012 and 7,000 units were sold in 2012.Gross income from the property was $2,800,000 and taxable income without the allowance for depletion was $1,000,000.Determine the depletion deduction for 2012.
Q3) An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate. A)True B)False
Q4) Motel buildings are classified as residential rental real estate. A)True B)False
Q5) Discuss the reason for the inclusion amount with respect to leased automobiles.
Q6) Discuss the difference between the half-year convention and the mid-quarter convention.
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Chapter 9: Deductions: Employee and Self-Employed
Related Expenses
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Q1) Logan, Caden, and Olivia are three unrelated parties who claim the standard deduction.All are married and attend Citron University and each pays tuition of $6,100.Of this payment, Logan can claim a deduction of $4,000; Caden a deduction of $2,000; and Olivia no deduction at all.Explain.
Q2) Under the actual cost method, which, if any, of the following expenses will not be allowed?
A)Car registration fees.
B)Auto insurance.
C)Interest expense on a car loan (taxpayer is an employee).
D)Dues to auto clubs.
E)None of the above.
Q3) Elsie lives and works in Detroit.She is the regional sales manager for a national fast-food chain.Due to unusual developments, she is compelled to work six straight weeks in the Cleveland area.Instead of spending the weekend there, she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $600.Had she stayed in Cleveland, deductible meals and lodging would have been $700.How much, if any, may Elsie deduct as to each weekend?
Q4) Once set for a year, when might the IRS change the rate for the automatic mileage method?
Page 12
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Chapter 10: Deductions and Losses: Certain Itemized
Deductions
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Q1) In order to dissuade his pastor from resigning and taking a position with a larger church, Michael, an ardent leader of the congregation, gives the pastor a new car. The cost of the car is deductible by Michael as a charitable contribution.
A)True
B)False
Q2) Frank, a widower, had a serious stroke and is no longer capable of caring for himself. He has three sons, all of whom live in different states. Because they are unable to care for Frank in their homes, his sons have placed him in a nursing home equipped to provide medical and nursing care facilities. Total nursing home expenses amount to $45,000 per year. Of this amount, $18,000 is directly attributable to medical and nursing care.Frank's Social Security benefits are used to pay for $12,000 of the nursing home charges. He has no other income. His sons plan to split the remaining medical expenses equally.
a. What portion of the nursing home charges is potentially deductible as a medical expense?
b. Can you provide Frank's sons with a tax planning idea for maximizing the deduction for his medical expenses?
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Chapter 11: Investor Losses
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Q1) Investment income can include gross income from interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business; income from a passive activity; and income from a real estate activity in which the taxpayer actively participates.
A)True
B)False
Q2) In the current year, Rich has a $40,000 loss from a business he owns.His at-risk amount at the end of the year, prior to considering the current year loss, is $24,000.He will be allowed to deduct the $40,000 loss this year if he is a material participant in the business.
A)True
B)False
Q3) Judy owns a 20% interest in a partnership (not real estate) in which her at-risk amount was $35,000 at the beginning of the year.The partnership borrowed $50,000 on a recourse note and made a $40,000 profit during the year.Her at-risk amount at the end of the year is $43,000.
A)True
B)False
Q4) What special passive loss treatment is available to real estate activities?
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Chapter 12: Tax Credits and Payments
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Q1) Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.
A)True
B)False
Q2) The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.
A)True
B)False
Q3) George and Jill are husband and wife, ages 67 and 65 respectively.During the year, they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000.Assuming they file a joint return, their tax credit for the elderly, before considering any possible limitation due to their tax liability, is:
A)$1,125.
B)$750.
C)$450.
D)$375.
E)None of the above.
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Chapter 13: Property Transactions: Determination of Gain or
Loss, Basis Considerations, and Nontaxable
Exchanges-Part 2
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Q1) Define qualified small business stock under § 1045.
Q2) Why is it generally undesirable to pass property by death when its fair market value is less than basis?
Q3) Under what circumstances will a distribution by a corporation to its only shareholder result in a capital gain?
Q4) Describe the relationship between the recovery of capital doctrine and the realized and recognized gain and loss concepts.
Q5) Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.
Q6) Don, who is single, sells his personal residence on October 5, 2012, for $380,000.His adjusted basis was $102,000.He pays realtor's commissions of $18,000.He owned and occupied the residence for 14 years.Having decided that he no longer wants the burdens of home ownership, he invests the sales proceeds in a mutual fund and enters into a 1-year lease on an apartment.The detriments of renting, including a crying child next door, cause Don to rethink his decision.Therefore, he purchases another residence on November 6, 2013, for $188,000.Is Don eligible for exclusion of gain treatment under § 121 (exclusion of gain on sale of principal residence)? Calculate Don's recognized gain and his basis for the new residence.
Page 16
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Chapter 13: A: Property Transactions: Determination of Gain
or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1
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Q1) During 2012, Ted and Judy, a married couple, decided to sell their residence, which had a basis of $225,000.They had owned and occupied the residence for 16 years.To make it more attractive to prospective buyers, they had the outside painted in April at a cost of $10,000 and paid for the work immediately.They sold the house in May for $795,000.Broker's commissions and other selling expenses amounted to $45,000.Since they both are age 68, they decide to rent an apartment. They purchase an annuity with the net proceeds from the sale.What is the recognized gain?
A)$0.
B)$15,000.
C)$25,000.
D)$525,000.
E)None of the above.
Q2) Katie sells her personal use automobile for $15,000.She purchased the car four years ago for $31,000.What is Katie's recognized gain or loss?
A)$0.
B)$15,000.
C)($16,000).
D)($31,000).
E)None of the above.
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Chapter 14: Property Transactions: Capital Gains and
Losses, 1231, Recapture Provisions
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Q1) When an individual taxpayer has a net long-term capital gain that includes both 25% gain and 0%/15% gain, which of these gains will be taxed first when the alternative tax on net long-term capital gain method is used and what difference does it make?
Q2) Section 1239 (relating to the sale of certain property between related taxpayers) does not apply unless the property:
A)Was depreciated by the transferor.
B)Is depreciable in the hands of the transferee.
C)Is a capital asset.
D)Is real property.
E)None of the above.
Q3) Tom has owned 40 shares of Orange Corporation stock for five years.He sells the stock short for a total of $1,100.One month later, he closes the short sale by purchasing and delivering 40 shares of Orange Corporation stock for a total of $600.Tom has a $500 short-term capital gain.
A)True
B)False
Q4) Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.
Page 19
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Chapter 15: Alternative Minimum Tax
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Q1) In 2012, Amber had a $100,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?
A)In 2012, Amber can deduct $100,000 for regular income tax purposes and for AMT purposes.
B)Amber will have a $100,000 tax preference in 2012 as a result of the passive activity.
C)For regular income tax purposes, none of the loss is allowed in 2012.
D)In 2012, Amber will have a positive adjustment of $25,000 as a result of the passive loss.
E)None of the above.
Q2) Andrea, who is single, has a personal exemption deduction in calculating her 2012 taxable income.She has no dependency deductions.What is the amount of the AMT adjustment in calculating AMTI?
Q3) If a taxpayer deducts the standard deduction in calculating regular taxable income, what effect does this have in calculating AMTI?
Q4) How can the positive AMT adjustment for research and experimental expenditures be avoided?
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Chapter 16: Accounting Periods and Methods
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Q1) Juan, not a dealer in real property, sold land that he owned.His adjusted basis in the land was $500,000 and it was encumbered by a mortgage for $200,000.The terms of the sale required the buyer to pay Juan $100,000 on the date of the sale.The buyer assumed Juan's mortgage and gave Juan a note for $600,000 (plus interest at the Federal rate) due in the following year.What is the gross profit percentage (gain ¸ contract price)?
A)300/900 = 33.3%.
B)400/700 = 57.14%.
C)400/600 = 66.67%.
D)500/900 = 55.55%.
E)None of the above.
Q2) Which of the following statements regarding a 52-53 week tax year is correct?
A)The year-end must be the same day of the week in all years.
B)The year cannot contain more than 366 calendar days.
C)Every four years, there will be only 51 weeks.
D)The year cannot end on a Sunday.
E)None of the above.
Q3) What incentives do the tax accounting rules provide for taxpayers to voluntarily change from an incorrect method of accounting that has reduced the company's tax liability in prior years?
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Chapter 17: Corporations: Introduction and Operating Rules
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Q1) Double taxation of corporate income results because dividend distributions are included in a shareholder's gross income but are not deductible by the corporation.
A)True
B)False
Q2) Red Corporation, which owns stock in Blue Corporation, had net operating income of $200,000 for the year.Blue pays Red a dividend of $40,000.Red takes a dividends received deduction of $28,000.Which of the following statements is correct?
A)Red owns 80% of Blue Corporation.
B)Red owns 20% or more, but less than 80% of Blue Corporation.
C)Red owns 80% or more of Blue Corporation.
D)Red owns less than 20% of Blue Corporation.
E)None of the above.
Q3) Lilac Corporation incurred $4,700 of legal and accounting fees associated with its incorporation. The $4,700 is deductible as startup expenditures on Lilac's tax return for the year in which it begins business.
A)True
B)False
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Chapter 18: Corporations: Organization and Capital Structure
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Q1) Stock in Merlin Corporation is held equally by Jane, Eve, and Fred.Merlin seeks additional capital to buy a valuable tract of land that will cost $6,000,000.Jane, Eve, and Fred propose to loan Merlin $2,000,000 each, taking from Merlin a $2,000,000 ten-year note with interest payable annually at five points above the prime rate.Merlin Corporation has current taxable income of $7,000,000.How are the payments on the notes treated for tax purposes?
Q2) Lucy transfers equipment (basis of $25,000 and fair market value of $120,000) to White Corporation. In return, Lucy receives 80% of White Corporation's stock (worth $70,000) and an automobile (fair market value of $15,000). In addition, there is an outstanding mortgage of $35,000 (taken out 5 years ago) on the equipment, which White Corporation assumes. With respect to this transaction:
A)Lucy's recognized gain is $25,000.
B)Lucy's recognized gain is $10,000.
C)Lucy has no recognized gain.
D)White Corporation's basis in the equipment is $25,000.
E)None of the above.
Q3) What is the rationale underlying the tax deferral treatment available under § 351?
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Chapter 19: Corporations: Distributions Not in Complete
Liquidation
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Q1) Goldfinch Corporation distributes stock rights to its shareholders. How is the basis of the stock rights received by Goldfinch's shareholders determined?
Q2) The tax treatment of corporate distributions at the shareholder level does not depend on:
A)The character of the property being distributed.
B)The earnings and profits of the corporation.
C)The basis of stock in the hands of the shareholder.
D)Whether the distributed property is received by an individual or a corporation. E)None of the above.
Q3) Scarlet Corporation is an accrual basis, calendar year corporation.Scarlet distributes inventory (basis of $20,000; fair market value of $40,000) to Frank, its shareholder.Assuming that Scarlet has $500,000 of current E & P, what is the impact of the distribution on Scarlet Corporation and on Frank?
Q4) Cash distributions received from a corporation with a positive balance in accumulated E & P at the beginning of the year will be taxed as dividend income.
A)True B)False
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Chapter 20: Corporations: Distributions in Complete
Liquidation and an Overview of Reorganizations
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Q1) In 1916, the Supreme Court decided that corporate reorganizations were substantially continuations of the prior entities and thus should not be subject to taxation.
A)True
B)False
Q2) The related-party loss limitation in a complete liquidation can apply to a distribution or sale of property while the built-in loss limitation applies only to distributions of property.
A)True
B)False
Q3) Explain whether shareholders are exempted from gain/loss recognition in nontaxable corporate reorganization or the gain/loss recognition is merely postponed.If postponed, what is the vehicle for ensuring the postponed gain/loss will be recognized in the future?
Q4) Obtaining a positive letter ruling from the IRS can ensure the desired tax treatment for parties contemplating a corporate reorganization.
A)True
B)False
Q5) Discuss the role of letter rulings in corporate reorganizations.
Page 25
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Chapter 21: Partnerships
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Q1) Andrew receives a proportionate nonliquidating distribution from the AEF Partnership. The distribution consists of $50,000 cash and property (adjusted basis to the partnership of $34,000 and fair market value of $42,000).Immediately before the distribution, Andrew's adjusted basis in the partnership interest was $40,000.His basis in the noncash property received is:
A)$0.
B)$34,000.
C)$42,000.
D)$50,000.
E)None of the above.
Q2) ABC, LLC is equally-owned by three corporations.Two corporations have June 30 fiscal year ends, the third is a calendar-year taxpayer.ABC will use a June 30 year end under the majority partners' tax year rule because more than 50% of the partnership's capital and profits is owned by partners with the same taxable year.
A)True
B)False
Q3) The "outside basis" is defined as a partner's basis in the partnership interest.
A)True
B)False
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Chapter 22: S: Corporations
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Q1) For Federal income tax purposes, taxation of S corporations resembles that of partnerships.
A)True
B)False
Q2) If an S corporation excludes cancellation of debt (COD) income from gross income, the excluded amount is applied to _________________ S corporation tax attributes.
Q3) Discuss the two methods of allocating tax-related items to S corporation shareholders.
Q4) A calendar year C corporation reports a $41,000 NOL in 2011, but it elects S status for 2012 and generates an NOL of $30,000 in that year. At all times during 2012, the stock of the corporation was owned by the same 10 shareholders, each of whom owned 10% of the stock. Kris, one of the 10 shareholders, holds an S stock basis of $2,300 at the beginning of 2012. How much of the 2012 loss, if any, is deductible by Kris?
A)$0.
B)$2,300.
C)$3,000.
D)$7,100.
Q5) Tax-exempt income is listed on Schedule ____________________ of Form 1120S.
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Chapter 23: Exempt Entities
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Q1) Why are some organizations exempt from Federal income tax?
Q2) If an exempt organization is required to file an annual information return, on what form is it filed?
Q3) Fourth Church operates a gift shop in its parish house.The total income of the church is $900,000.Of this amount, $400,000 comes from offerings and $500,000 comes from the net income of the gift shop.The gift shop operations are conducted by one full-time employee (the manager) and 50 volunteers.None of the volunteers works more than 15 hours per week.Which of the following statements is correct?
A)The $900,000 is unrelated business income.
B)The $500,000 of gift shop net income is unrelated business income.
C)The $400,000 is unrelated business income because the gift shop is a feeder organization.
D)None of the $900,000 is unrelated business income.
E)The unrelated business income tax does not apply to churches.
Q4) Which exempt organizations are not required to file an annual Federal tax return?
Q5) Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.
Q6) What tax forms are used to apply for exempt status?
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Chapter 24: Multistate Corporate Taxation
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Q1) Overall tax liabilities typically ____________________ (increase/decrease) if the members of a unitary group begin to include affiliates that generate net operating losses.
Q2) Bulky Company sold an asset on the first day of the tax year for $500,000.Bulky's Federal tax basis for the asset was $300,000.Because of differences in cost recovery schedules, the state regular-tax basis in the asset was $375,000.What adjustment, if any, should be made to Bulky's Federal taxable income in determining the correct taxable income for the typical state?
A)$75,000.
B)$25,000.
C)($75,000).
D)$0.
Q3) S corporations flow-through income amounts to its shareholders, and most states require a withholding of shareholder taxes on the allocated amounts.
A)True
B)False
Q4) P.L.86-272 ____________________ (does/does not) create nexus when the sales representative also makes credit decisions before approving a sale at the customer's location.
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Chapter 25: Taxation of International Transactions
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Sample Questions
Q1) A domestic corporation is one whose assets are primarily (> 50%) located in the U.S.
A)True
B)False
Q2) Copp, Inc., a domestic corporation, owns 30% of a CFC that has $50 million of earnings and profits for the current year.Included in that amount is $20 million of Subpart F income.Copp has been a CFC for the entire year and makes no distributions in the current year.Copp must include in gross income (before any § 78 gross-up):
A)$0.
B)$50 million.
C)$20 million.
D)$6 million.
Q3) An advance pricing agreement (APA) is used between:
A)Two or more governments.
B)Two related taxpayers.
C)The taxpayer and the IRS.
D)The IRS and U.S.taxing authorities.
Q4) With respect to income generated by non-U.S.persons, does the U.S.apply a "worldwide" or a "territorial" approach. Be specific.
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Page 30
Chapter 26: Tax Practice and Ethics
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Sample Questions
Q1) The usual three-year statute of limitations on additional tax assessments applies in the following situation(s).
A)No return at all is filed.
B)An investment in a marketable security is worthless.
C)Taxpayer inadvertently omits an amount of gross income equal to 30% of the gross income stated on the return.
D)Taxpayer discovers an inadvertent overstatement of deductions equal to 30% of gross income.
Q2) Which of the following is subject to tax return preparer penalties?
A)Lizzie, the firm's administrative assistant, makes copies of returns and assembles the mailings that the client must make to the taxing agencies.
B)Meredith is the director of Federal taxes for a C corporation.
C)Sammy is a volunteer who prepares returns at the retirement home under the IRS Tax Counseling for the Elderly program.
D)Abbie prepares her mother's tax returns for $50 a year.A CPA, Abbie would charge a client $750 for completing a similar return.
Q3) The IRS is a subsidiary agency of the Department of the ____________________.
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Chapter 28: Income Taxation of Trusts and Estates
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Q1) Harry, the sole income beneficiary, received a $40,000 distribution from the Lucy Trust, in a year when the trust's distributable net income was $50,000.Harry's AGI can increase by as much as $40,000.
A)True
B)False
Q2) The Whitmer Trust operates a manufacturing business. When Whitmer incurs a net operating loss, the current-year deduction passes through to the income beneficiaries.
A)True
B)False
Q3) A fiduciary entity computes its alternative minimum tax in a manner similar to that used for a(n) ____________________.
Q4) The distributable net income (DNI) of a fiduciary taxpayer:
A)Constitutes the maximum amount for the fiduciary's distribution deduction.
B)Specifies the character of the distributions in the hands of the year's income beneficiaries.
C)Marks the maximum amount of gross income that income beneficiaries must report when receiving distributions.
D)All of the above.
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