Chapter 14 - Corporate Income, Losses, and Deductions

Question 1

Which companies don’t apply to DRD?

Answer 1

1) Mutual savings banks
2) real estate investment trusts,
3) domestic international sales corporations
4) Public utilities on PF stock, 5) Corporation exempt from tax during the distribution year.

Question 2

Reconciliation of income ( loss ) per books of the corporation with income ( loss ) per tax is reported:

Answer 2

Schedule M - 1

Question 3

What is the criteria for not reporting Sch L?

Answer 3

Less than 250,000 in gross income and assets

Question 4

What is a Schedule M - 2 ?

Answer 4

an analysis of unappropriated RE per books.

Question 5

What is a Schedule M - 3?

Answer 5

reconciles book NI ( NL) for general financial reporting taxable income ( loss ) for tax accounting, indicating temporary and permanent differences by category and dollar amount.

Question 6

What are examples of temporary differences ?

Answer 6

1) Prepayments of income
2) Installment sales income
3) Accelerated depreciation ( e.g., 100% expensing , Sec 179, MACRS, lease type), Amortization, 4)Charitable contributions, 5)Reserves:
a) Credit losses / Bad debit
b) Bonus compensation
6)Capitalized inventory cost ( sec 263A )
7)Net Operating loss carryover
8)Net Capital loss Carryover

Question 7

What are Permanent Differences?

Answer 7

1) Tax-exempt income ( and associated expenses )
2) Life insurance proceeds ( and associated expenses )
3) tax credits
4) nondeductible penalties and fines
5) Nondeductible meals ( 50% ) and entertainment
6) Dividends received deduction
7) Lobbying and Political expenditures
8) Club dues