Chapter 3 Flashcards
Charitable contribution deduction
limited to 10% of taxable income.
Excess deductions carry over to next 5 tax years.
Maximum deduction (including carryover is 10%)
taken in the year payment made, or year authorized if accrual and payment is made by March 15 of next year
Sequence of deductions
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All deductions Charitable contribution deduction Dividend received deduction NOL deduction US production activities deduction
Corporate capital loss carry back/forward
must carry back short term capital loss for three years, if not absorbed remainder carries forward for five years
Capital loss can only offset capital gain. Cannot offset ordinary income.
How are corp capital gains taxed
included in gross income.
No special treatment of capital gains for corp
How are organizational expenditures booked?
under Sec 248, up to $5,000 may be deducted, remainder is capitalized for 180 months
**if organizational expenses are >$50k, the amount allowed to deduct during year is reduced by dollar for each over $50k
Organizational expenditures include / don’t include
- legal services
- accounting services
- expenses for temporary directors
- state fees
do NOT include
- expenditures connected with issuing stock or securities
What is Sec 291
When corp sell Sec 1250 property at a gain - Corporations recapture lesser of 20% of the SL depreciation claimed or recognized gain as ordinary income
Corporation donates appreciated capital gain property
the contribution deduction is usually FMV - the gain does not have to be recognized
Dividends-Received Deduction general rule
Corp own 70/80% of taxable income
How is taxable income determined
Sales \+ Dividends = Gross Income - Expenses = Taxable income before DRD - 70% DRD = Taxable Income
DRD Holding Period
Must hold for at least 46 days
NOL Carryover
back two years, forward 20 years
can elect to forgo carry back & carry forward 20 years
Estimated tax payments must be made when
15th day of fourth, sixth, ninth & twelfth months
When must corporate returns be filed?
By the 15th day of the third month following the close of the tax year
Corporate tax filing extension form?
Form 7004
