Corporate

Question 1

AMT Exemption

Answer 1

$40,000 - (25% * Excess AMT over $150,000)

Question 2

Shareholder Gain on Formation

Answer 2

Realized gain = FMV property contributed - Basis
Recognized gain = Lesser of realized & Boot received (No gain if no boot)

If debt attached to property is higher than basis, Recognize to extent liability exceeds basis

Question 3

Maximum income subject to Accumulated Earnings Credit

Answer 3

Taxable Income - Federal Income Taxes - $250,000 Accumulated Earnings Credit

Question 4

NOL

Answer 4

Carried back 2 forward 20 years

- DRD included in calculation of NOL

Question 5

Shareholder Basis in Dividend

Answer 5

FMV Property Received

Question 6

Shareholder Reorganization

Answer 6

Gain = 0 or boot received

Question 7

Liquidation of Sub

Answer 7

0 Gain recognized by parent

Question 8

Charitable Contribution

Answer 8

(Revenues - Expenses + Dividends) * 10%

Taxable Income calculated absent deduction for charitable contribution, dividends received, net operating loss, and capital loss

Taxable Income

Question 9

Section 351 transfer

Answer 9

Gain recognized = 0 if after transfer taxpayer or taxpayers own 80% or more of corporation’s stock, solely in exchange for stock

Question 10

Corporation Basis in Property

Answer 10

Shareholder’s Basis + Shareholder Gain Recognized

Question 11

Liquidation

Answer 11

Sell Assets & Distribute Cash
Corporation: Gain = Sale Price - Basis
Shareholder: Gain = Cash Proceeds - Stock Basis

Distributes Assets
Corporation: Gain = FMV - Adjusted Basis
Shareholder: Gain = Sale Price property recieved - Stock Basis

Question 12

Organizational Costs

Answer 12

(Organizational Costs - $5,000) / 180 Months * Months in year

Question 13

Shareholder Basis in Stock

Answer 13

Basis of Property Transferred
+ Gain Recognized
- Boot Received
- Liabilities Assumed by Corporation

Question 14

Corporate Gain on Distribution

Answer 14

FMV - Basis

Question 15

Shareholder Gain on Distribution

Answer 15

Current E&P + Gain = Taxable Dividend
Accumulated E&P = Taxable Dividend
Return of Capital (No E&P) = Tax free reduction of basis
No E&P or basis = Taxable income as capital gain

Question 16

M-1

Answer 16

Start with Book Income

• Add Nondeductible Expenses (federal tax expense, net capital loss, expenses in excess of limits)
• Add Taxable Income Excluded from Books (Prepaid)
• Subtract Nontaxable income included in books (municipal interest, life insurance proceeds)
• Subtract deductions not expensed in books (dividends received deduction, election to expense)

Question 17

Corporate Gain on Formation

Answer 17

No Gain or loss recognized