Corporate Tax Flashcards

1
Q

What is the AMT calculation?

A

Regular taxable income
+ or - Adjustments
+ Tax preferences
= AMTI
- Exemption amount
= AMT base
x 26% under threshold (28% over threshold)
= Tentative tax before foreign credit
- Foreign tax credit
= Tentative minimum tax
- Regular tax (less foreign tax credit)
= Alternative minimum tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the 2019 AMT exemption amounts?

A
MFJ & Qualifying Widow - $117,700
Single - $71,700
MFS - $55,850
Estates & Trusts - $25,000
Phaseout Single - 510,300 MFJ - 1,020,600
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the AMT adjustments?

A

(a) Itemized deductions+
(b) Standard deduction+
(c) Excess ACRS deductions (accelerated depreciation)
(d) Circulation expenditures (magazines and newspapers)
(e) Research and experimental expenditures
(f) Mining exploration and development costs
(g) Passive activity losses+
(h) Certain installment sales
(i) Long-term construction contracts
(j) Incentive stock options
(k) Alternative tax net operating loss +

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the AMT Preferences?

A

(a) Percentage depletion
(b) Intangible drilling costs
(c) Seven percent (7%) of excluded gain on qualified small business stock
(d) Accelerated depreciation
(e) Certain tax-exempt interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the upward and downward adjustments to an S-corp Shareholder’s basis?

A

Upward adjustments:

(1) Taxable income
(2) Separately stated income items
(3) Depletion in excess of the property’s basis

Downward adjustments:

(1) Loss from operations
(2) Separately stated loss items
(3) Nontaxable distributions (return of capital)
(4) Nondeductible loss items

QBID has no effect either way.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What entities are exempt from DRD’s?

A
  1. REIT’s - Real Estate Investment Trusts
  2. 501 or 521 Companies
  3. Wash Transactions in Corps:
    (Stock or preferred Stock held less than 46 days during the 91 day period beginning 45 days before the stock became the ex-dividend.)
  4. Any Corp that is under an obligation to make related payments with respect to positions in substantially similar or related property.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the tax formula for a C-Corp?

A

Total income
- Exclusions
= Gross income
- Deductions (other than charitable contributions and the dividends-received deduction)
= Taxable income before special deductions
- Charitable contributions (limited to 10% of taxable income before charitable contribution deduction)
= Taxable income before the DRD.
- Dividends-received deduction
= Taxable income
x Tax rate - 21% flat
= Tax liability before additions and credits
+ Additions to tax
- Credits against tax
= Tax liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What institutions can use the Reserve Method for bad debts?

A

Small Banks
and Thrift Institutions.

Every other entity/institution uses the direct charge-off method.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What entities have to use PAL’s restrictions on losses and credits?

A
Individuals
Estates 
Trusts
Personal Service Corps
Closely Held C-corps

The passive activity loss rules are not applicable to partnerships, widely held C corporations, or S corporations. For partnerships and S corporations, the passive activity loss rules apply at the partner/shareholder level.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How are lobbying expenses legal?

A

Generally, lobbying expenses are not deductible.

However, there is a limited exception which allows a deduction for local lobbying expenses and up to $2,000 of in-house lobbying expenses.

Expenses incurred by a taxpayer engaged in the business of providing lobbying services are deductible by that taxpayer. (ex. $5,000 travel expense incurred by a professional lobbyist to lobby Congress)

Dues paid to a tax-exempt organization are generally not deductible to the extent they are used to fund lobbying activities (ex. $3,000 paid to a professional lobbyist to lobby Congress)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the dates and rates for the exclusion amounts for qualified small business stock (QSBS)?
What section?

A

Section 1202: can exclude gain if:

  • Holds more than 5 years.
  • Gain excluded is greater of 10M or 20x basis

Before Feb 18 2009 50%
Up to Sept 27. 2010 75%
After Sept 27, 2010 100%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly