Corporate Tax Flashcards
if you put equipment into a corp worth 20k, you have basis of 6k, and it has a liability of 12k, how much gain do you recognize?
you recognize the amount of liability over your basis that you’re relieved of. So you had a 12k liability with basis of 6k, so your gain is 6k.
what basis does a corp take in land contributed by an owner?
it takes the owner’s basis plus any gain the owner recognized on the transaction.
If an owner contributes land with 40k of basis but the corp gives him 10k in cash, the corp’s basis in the property is 50k
for corporations, how long is goodwill amortized?
amortized over 15 years
how are premiums paid on a key-person life insurance policy treated on an M-1?
they reduce book income but not taxable income
how are corporate NOLs treated?
you can carry them back two years and ahead 20 years
for a corp, are life insurance premiums paid for its executives as part of their taxable compensation deductible to the corp?
yes, they are fully deductible
is interest expense on a loan used to purchase municipal bonds deductible?
since the loan is used to purchase bonds that generate tax-exempt income, the interest expense is NOT deductible
is interest on municipal arbitrage bonds and interest on US treasury notes taxable to a corp?
yes- both are taxable.
how long do you have to own a stock to qualify for dividends received deduction?
45 days
is a dividend received deduction allowed on a REIT investment?
no
what amount of a net capital loss can a corp deduct in one year?
none- capital losses are only used to offset capital gains. they can be carried back 3 years and forward 5
is interest on funds borrowed for working capital deductible?
yes.
which of these are qualified organizational expenses for a corporate startup:
- legal fees
- state incorporation fees
- commissions paid to broker on sale of stock
only the state incorporation fees and the legal fees. the broker fees aren’t deductible at all.
for a corp, how long can you carry forward excess charitable contributions?
up to five years
for dividends rec deduction questions, when the income is a net loss:
make sure to deduct it from the income amount before applying the DRD.
-20k in net income with 200k of 25% owned dividends = a DRD of 80% against 180k - NOT 200k