Corporate Taxable Income Flashcards
WHAT are the two main characteristics of a “personal service corporation?”
(1) Substantially all of its activities must involve the performance of services in the field of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; and
(2) substantially all of its stock must be owned by employees who perform the services
HOW may a corporation handle a net capital loss (i.e. what years’ can they use them)?
They can be carried back 3 years and forward 5 years
WHAT type of business entity has the most freely transferable ownership interest (entirely)?
A Corporation
Simply acquiring a corporation’s stock gives an individual an ownership interest
WHAT is your charitable contribution deduction based on?
10% of taxable income before any charitable contributions; and
- any dividends-received deduction (DRD)
HOW are capital gains taxed?
AT the corporation’s regular tax rate
WHO would be considered a “A disqualified individual” in a corporation?
AN employee who performs services for any corporation and is an officer, a shareholder, or other highly compensated individual
WHAT is a partnership?
A syndicate, group, pool, joint venture, or other unincorporated organization that carries on a business
They include - organizations that carry on a business, financial operation, or venture with a profit motive
WHAT is the holding period for a corporation to qualify for the dividends-received deduction?
46 Days.
i.e. the “distributee” corporation must own the distributing corporation’s stock for more than 46 days (91 days for dividends more than a year in arrears received on preferred stock)
WHAT corporate entity may adopt any tax year end?
C Corporations
i.e. A C Corporations may elect either a calendar or fiscal tax year
What is the maximum amount of capital losses a C corporation may deduct in a year?
Their capital losses against their capital gains
Note: They are NOT allowed to deduct for capital losses in excess of capital gains against ordinary income.
IN what year may a personal services corporation deduct payments made to owner-employees?
THE year Owner-employee includes it in their income
WHAT amount can a corporation deduct for their casualty losses?
THE property’s adjusted basis immediately before the loss
HOW are “Interest Expense(s) incurred on business borrowings” handled?
THEY are deductible in the period in which it is paid or accrued
HOW should a corporation treat repurchased bonds when the repurchase price is in excess of the issue price and the excess of the purchase price is over the issue price?
AS a deductible of interest expense for that taxable year
WHAT ‘Schedule’ does a corporation use to reconcile their retained earnings at the beginning of the year with retained earnings at the end of the year?
Schedule M-2
