ARE. Federal taxes – corporations

Question 0

In a corporate recognition with no boot involved what is the basis of the new stock to the shareholder?

Answer 0

The basis of the old stock

Question 1

When a subsidiary is completely liquidated what is a tax consequence of assets distributed to the parent

Answer 1

Tax-free

As long as a parent is an 80% or more owner

Question 2

How is an S Corporation text?

Answer 2

Basically, like a partnership

Question 3

Can an S Corporation have both common and preferred stock?

Answer 3

No

it may, however, have voting and nonvoting common stock

Question 4

How many shareholders are permitted in an S Corporation?

Answer 4

No more than 75

Question 5

When can an S Corporation make an election to be an S Corporation?

Answer 5

Any time during the previous taxable year or any time on or before the 15th day of the third month of the current taxable year

Question 6

True or false?

Charitable contributions should be used in calculating S corporation ordinary income.

Answer 6

False

It is a pass through item to the shareholder

Question 7

When is a calendar year S Corporation tax return due?

Answer 7

March 15

Question 8

What is the maximum deduction an S Corporation shareholder may take for an S corporation and NOL?

Answer 8

The loss is limited to bases in stock plus loan balance from shareholder to Corporation

Question 9

True or false?

Nontaxable income will increase a shareholders bases in an S corporation.

Answer 9

True

Question 10

True or false?

A C corporation may offset net capital losses against ordinary income to the extent of $3,000.

Answer 10

False

only an individual may do so

Question 11

What is the carryover period for corporate nondeductible charitable contributions?

Answer 11

Five years

Question 12

True or false?

Stock financed by debt will be eligible for a full dividends – received deduction.

Answer 12

False

It will be partially or totally lost

Question 13

When will a corporation that fails to elect to amortize “organizational cost” be able to deduct them?

Answer 13

Upon liquidation only

Question 14

What is the maximum business – gift amount a corporation may deduct?

Answer 14

$25

Question 15

True or false

The interest paid by the government on refunds is lower than the interest charged by the government on late payments.

Answer 15

True

Question 16

What is the dividends – received deduction when one owns less than 20% of another corporation?

Answer 16

70%

Question 17

True or false?

A full dividends – received deduction is allowed without regard to taxable income if creates a net operating loss.

Answer 17

True

Question 18

What is the corporate taxable income limitation for charitable contributions?

Answer 18

10%

Question 19

What is the minimum. During which a corporation may amortize organizational cost?

Answer 19

60 months

Question 20

True or false?
If a corporation is a beneficiary of a key man life insurance policy, the procedure are taxable and the premiums paid our deductible.

Answer 20

False

The proceeds are not taxable: the premiums are not deductible

Question 21

What is the carryback / carry-forward period For an NOL of a corporation?

Answer 21

Back 2 and forward 20

Question 22

When must a C corporation complete a schedule M – 1 (form 1120)?

Answer 22

If it’s corporate assets are $25,000 or more

Question 23

What is a calculation to determine foreign tax credit on business foreign income?

Answer 23

Foreign source income divided by worldwide income X tentative US liability = foreign tax credit (Limited to foreign taxes paid)

Question 24

What is the carryback /carry-forward period For a corporations capital gains/loss?

Answer 24

Back 3 and forward 5

Question 25

True or false?

Corporations recognized taxable income on the sale or exchange of their own stock.

Answer 25

False

Question 26

What percentage ownership is considered control for nonrecognition of gain or loss in a property for stock transfer?

Answer 26

80%

Question 27

True or false?
In a property for stock transfer, assumption of liabilities by the corporation will not be used to determine gain or loss but will be used to reduce stockholders basis in the stock.

Answer 27

True

Question 28

To what extent is a distribution from a corporation to a shareholder a taxable dividends?

Answer 28

To the extent of current and/or accumulated earnings and profits

Question 29

If a stockholders distribution reduces the stockholders bases in the stock, is the distribution taxable?

Answer 29

No

it is a return of capital: i.e., liquidating dividend

Question 30

Is the personal holding company tax self – assessed?

Answer 30

Yes

Question 31

What are the two test as to whether a corporation is considered a personal holding company?

Answer 31

1. Income test

2. Stock ownership test

Question 32

Are dividends that are paid between two corporations filings consolidated tax returns taxable?

Answer 32

No

Question 33

What is the maximum corporate exemption for alternative minimum tax?

Answer 33

$40,000

Question 34

What is the phaseout for the corporate AMT exemption?

Answer 34

25% of the excess of AMTI over $150,000

Question 35

True or false?

The ACE adjustment to ATMI can only be a positive amount

Answer 35

False

positive or negative

Question 36

True or false?

Municipal bond interest is added back to determine ACE.

Answer 36

True

net of expenses to generate such interest income

Question 37

Is the accumulated earnings tax self assessed?

Answer 37

No

levied by the IRS

Question 38

Can one be subject to both the personal holding company tax and accumulated earnings tax?

Answer 38

No

Question 39

What is the minimum accumulated earnings tax credit

Answer 39

$250,000

$150,000 for personal service Corporation

Question 40

When the shareholder receives cash or property for his/her stock in a corporate liquidation, what is generally the character of the gain or loss?

Answer 40

Capital