Deck 11

Question 1

Rent revenue under accrual basis =

Answer 1

cash received + difference in rent receivables + nonrefundable rent deposit

Question 2

When a corporation has an unused net capital loss that is carried back or carried forward to another tax year, it is treated as:

Answer 2

Short-term capital loss whether or not it was short-term when sustained

Question 3

Minimum accumulated earnings credit =

Answer 3

$250,000

Question 4

When tentative minimum tax > regular tax, excess amount is:

Answer 4

Payable in addition to the regular tax (this is AMT)

Question 5

A corporation will pay AMT to the extent that:

Answer 5

AMT exceeds regular tax

Question 6

Recognized gain for a corporation =

Answer 6

The lesser of the realized gain or boot received

Question 7

Amount realized for a corporation =

Answer 7

Greater of the FMV of an asset or amount of liability assumed by the shareholder

Question 8

What type of entity is entitled to a Net Operating Loss (NOL) deduction?

Answer 8

Trust and estates

Question 9

Schedule M-1 reports:

Answer 9

The reconciliation of income (loss) per books to income (loss) per the tax return;

Question 10

Basis of nontaxable dividend =

Answer 10

Divide the basis of the old stock by the number of new shares

Question 11

Dividends received deduction (20-80%)

Answer 11

Deduction of 80% of the dividends received

Question 12

What entity has the most flexibility in choosing an accounting period?

Answer 12

A C corporation

Question 13

The taxable amount of a dividend to a shareholder from a corporation’s earnings and profits is:

Answer 13

the amount received in cash or the fair market value of the property received

Question 14

The accrual basis method of accounting for tax purposes is required for the following:

Answer 14

1) the accounting for purchases and sales of inventory, 2) Tax shelters, 3) Certain farming corporations, 4) Greater than $5million average annual gross receipts for the three year period ending with the tax year

Question 15

Affiliated group means that a common parent owns

Answer 15

1) 80% or more of the voting power of all outstanding stock and 2) 80% or more of the value of all outstanding stock of each corporation

Question 16

Will there be a gain or loss to a corporation issuing stock in exchange for property for the issuance of stock?

Answer 16

No

Question 17

Amortize operating expenses over how many months?

Answer 17

180

Question 18

How are dividends reported as income?

Answer 18

Dividends come from current E&P first, then from accumulated E&p; if current E&P is positive and accumulated E&P is negative, distributions are dividends only to the extent of current E&P

Question 19

C corporations are allowed a maximum charitable contribution deduction of _______ of taxable income computed before the following deductions:

Answer 19

10%; any charitable contribution, DRD, net operating loss carryback, net capital loss carryback, US production activities deduction

Question 20

Business gifts are deductible up to a maximum deduction of:

Answer 20

$25 per recipient per year