Corporations Flashcards
Which of the following entities has the most flexibility in choosing an accounting period? A. Personal service corporation B. Partnership C. S Corporation D. C Corporation
D. C Corporation
The rules for the formation of an S Corporation are the same as for a C Corporation: TRUE or FALSE?
TRUE
C Corporations with greater than $25 million average annual gross receipts may use either cash basis or accrual basis of accounting for tax purposes: TRUE or FALSE?
FALSE. Must use Accrual Basis of Accounting for Tax purposes
A corporate charitable deduction that exceeds the limit for deduction in one year can be C/F and C/B as follows: A. 5 years C/F, 5y C/B B. No C/F, 5y C/B C. No C/F, No C/B D. 5y C/F, No C/B
D. 5y C/F, No C/B
Organization costs of a corporation may be amortized over a period of not less than how many months?
180 months
TP may elect to deduct organization costs of a corporation in Year 1 up to how much, subject to certain limitations?
$5,000
The corporate DRD requires that the investor corporation must own the investee;s stock for a specified minimum holding period of more than how many days?
More than 45 days
Excess charitable contribution over the limit cannot be carried-back but can be C/F for how many years?
5 years
For start-up costs, the amount that can be immediately expensed is phased out dollar for dollar if the business incurs more than how much of start-up costs?
$50,000
2 Criteria for a Personal Holding Company:
1) Stock ownership by 5 or fewer people at more than how many %?
2) at least what % of AOGI is composed of certain investment income (e.g., interest, dividends, etc.)?
50% ownership test
60% income test
For the PHC income test, interest earned on tax-exempt obligations is included: TRUE or FALSE?
FALSE. Not included in AOGI.
A personal holding corporation (PHC) is primarily involved in the performance of one of the following fields: accounting, law, consulting, engineering, architecture, health, and actuarial science: TRUE or FALSE?
FALSE.
A personal service corporation (PSC), not a personal holding corporation (PHC)
All business expenses for operating an illegal business are not permitted as deduction: TRUE or FALSE?
FALSE.
Cost of merchandise allowed as a deduction to determine the gain.
No underpayment of estimated tax penalty will be imposed if the total underpayment of tax for the year is less than what amount?
$500
The usual result to the shareholders of a distribution in complete liquidation of a corporation is a: CAPITAL GAIN/LOSS or ORDINARY GAIN/LOSS?
CAPITAL GAIN/LOSS
What is the maximum Section 1244 loss a single TP can deduct in any year and is it ordinary or capital?
$50,000 ordinary loss
Losses in excess of the threshold for Section 1244 stock is considered CAPITAL or ORDINARY?
Capital loss
When a C-Corp distributes assets to its shareholders in a non-liquidating distribution, losses are deductible: TRUE or FALSE?
FALSE. Losses are not deductible.
A dividend paid in property other than money is taxable to an individual taxpayer to the extent of the property’s FMV at all times: TRUE or FALSE?
FALSE.
Not in excess of the current and accumulated E&P
Section 1244 qualifying stock losses is available to both original and subsequent owners: TRUE or FALSE?
FALSE. Original owners only.
A stock redemption that is proportionate with respect to the shareholder is treated as an exchange of stock: TRUE or FALSE?
FALSE. Treated as a dividend.
C corporations are allowed a maximum charitable contribution deduction of how much % of taxable income?
10% of taxable income
When a corporation’s stock is sold or becomes worthless, an original stockholder can be treated as having an ordinary loss (fully deductible), instead of a capital loss, up to what amount for single and for married filing jointly for the year? Any loss(es) in excess of this amount is (are) a capital loss.
$50,000 for single
$100,000 if married filing jointly
A personal holding company deducts which of the following in computing undistributed personal holding company income:
A. Federal income taxes
B. Net long-term capital gain less related federal income taxes
C. Neither of them
D. Both of them
D. Both of them
