Corporate Taxable Income Flashcards
Publically traded partnerships
Taxed as corporations
Cash method
PSC
S CORP
FARMS
C
Corp tax formula
Income - exclusions GROSS INCOME - deductions TAXABLE INCOME x tax rate GROSS REGILAR TAX LIABILITY - credits NET REGULAR TAX LIABILITY \+ AMT \+ FICA taxes \+ Special taxes TAX LIABILITY OR REFUND REC'VABLE
Organizational expense
Expense first $5k up to $50 reduce 1:1
AMORTIZE 180 mo (15 yrs)
Expenditures first yr (accrual basis - no matter when paid)
Distinct from start up costs - Legal fees Incorp fees Temp directors Org meeting costs
Start up costs
Asset transfer
Issuance and sale of stock
Corp deductions - possible = ridiculous
Organizational expens Charitable contributions Div recvd deduction Gifts Compensation Travel and meals Insuring employees R&E Bad debt Worthless securities Stock redemptions Original issue discount Repurchase premium Interest Casualty loss Taxes
Charitable contributions -food and book
During tax yr - board election to pay 2.5 mo after close of tax yr
MUST BE USED FOR Business exempt PURPOSE
AB OF INVENTORY
FOOD AND BOOK INVENTORY: Basis + 50% profits (lim 200% basis)
CGP - general FMV
Charitable contributions limit
Lim: 10% taxable income LESS: Charitable contributions DRD Div Paid deduction NOL carry back Cap Loss Carryback
Charitable contributions treatment
F5
- Current yr 1st
- FIFO treatment
DRD EXCLUSIONS -
Ownership of another entity requirements
Owns stock for 46/90 days
Not if performs similar business transactions
Ownership dictates deduction amt
PSC AND HOLDING CORP MUST INCLUDE 100% of DIV AS INCOME
PSC
Employee owners - own > 10% of stock
Taxed at a flat 35% rates
May allocate to emp ownership
Must use calendar year
In order to use DRD
Hold 45 days
Limited by 10% TI before: and MULTIPLY BY DRD RATE!
DRD , DPD, NOL, CapLoss CB,
No TI limit of NOL, OR NOL from DRD
Dis qualified DRD
Mutual savings Real estate trusts International sales Corp Public utilities on pref stock Any Corp tax exempt
Foreign DRD
10% owned by US
Subject to US TAX
Not a foreign personal holding Corp
Gifts min
Greater than $4
Signs
Unreasonable compensation to SH
Is considered at dividend - up to the extent of earnings and profits
Officer deduction limit
Cannot be over $1 mil
Key man insurance
Not deductible
Stock redemptions - related party
Not allowed
But allowed on interest
OID
Deductible interest expense Yr 1 Price x yield% x portion of year - Face x face% x portion of year tthat interest rolls over = interest year one Yr 2 (Paid+1yr interest) x yield x portion of year - Face x %face x portion of yr = interest year 2
Corp losses
NOL
Capital
Passive activity
Casualty - included in income
NOL
Include:
DRD - without limits
Modified:
Depreciation not create or increase?
Exclude:
Prior NOL
Charitable contributions
Charitable contributions
Applying NOL
B2 must
F20
Reduces TI to 0 - called ADJUSTED TI
Refund on taxes - file 1120X - 12 mo from close of the NOL YR
Charitable contribution is allowed on prior year
Capital gain-loss
Net ST = ordinary gain or loss
NET LT = lim by NST GAINS
NCL = 3/5
Not create or produce NOL
Passive activity loss
Same rules as sched e - 8810
DO NOT APPLY TO C CORPS
M-1
Difference btw books and tax
M-3
Corp > 10 mil assets
Taxable interest on Bond PREM when paying down bond
DEBENTURE
- Amt of interest accrued $264 AMORT /
- Less amount using to pay down
= greater bond interest used to to pay down = taxable income
Treasury stock resold
No capital gain or loss
Bad debt
Must be actual - not estimated in reserve acct
Stock expenditures
Capitalized
Except interest payments
DRD calc
Income + DIV REC - expenses
- DRD
Municipal bonds
No income and no expense
Amortization sec 197
Goodwill intangibles = 15 yr
