Double check

Question 1

Is net capital loss deduction allowed for tax income?

Answer 1

No.

Question 2

Is net operating loss carry forward included for taxable income computation?

Answer 2

Yes.

Question 3

ACE adjustment: formula?

Answer 3

(ACE - AMT) x 75%.

Negative amount is allowed to the extent of previous positive amount.

Question 4

What is the exemption for AMT? Phase out?

Answer 4

$40,000 minus 25% of alternative minimum taxable income exceeding $150,000
AMT taxable income = or > of $310,000.

Question 5

Accumulated earnings tax: %? How is AET computed? Exemption?

Answer 5

20%.
Taxable income adjusted downward for federal income etc.
$250,000 ($150,000 for service corporation)

Question 6

Accumulated earnings tax: %? How is AET computed? Exemption?

Answer 6

20%.
Taxable income adjusted downward for federal income etc.
$250,000 ($150,000 for service corporation)

Question 7

How is the allowable accumulated earnings credit computed?

Answer 7

the greater of (1) the earnings and profits of the tax year retained for reasonable business needs; or (2) credit ($250,000 0r 150,000) less the accumulated earnings and profits at the end of the preceding year.

Question 8

What is the allowed deduction for accumulated earnings tax? Not allowed?

Answer 8

OK: Net capital loss for current year.
Not: A capital loss carryover from a prior year, a dividends received deduction, and a net operating loss deduction

Question 9

What deductions are allowed for undistributed personal holding company income?

Answer 9

taxable income for federal and foreign taxes; charitable contributions, excess capital gains.

Question 10

Must a corporation recognize G/L for non liquidating distribution? Liquidating?

Answer 10

Non: Just gains.
Liquidating: Yes to both.

Question 11

What is the amount of dividend reported for corporation?

Answer 11

Greater of FMV or AB of the property less any liability assumed.

Question 12

EX: How much does the dividend reduce earnings and profit?
Property: AB: 6,500, FMV: 14,000, Liability: 5,000.

Answer 12

EP will be first increased by gain of 7,500 (14,000-6,500) and reduced by dividend (greater of AB and FMV: 14,000-5,000). Therefore, 1,500.

Question 13

Redemption: in order to qualify as sale, what are 2 test must a shareholder meet?

Answer 13

Control test: less than 50% own after redemption.

Reduced interest test: must own less than 80% of the shares that were owned prior to the redemption.

Question 14

What is type E reorganization?

Answer 14

Preferred stock for bond.

Question 15

Reorganization: what is the amount of gain recognized?

Answer 15

Greater of boot or realized gain.

Question 16

What is type B reorganization?

Answer 16

Stock for stock.

Question 17

When is loss recognized by liquidating distribution of partnership?

Answer 17

Although no gain or loss is generally recognized upon the receipt of property in a proportionate liquidating distribution, a loss can be recognized if the distributee partner receives only cash, receivables, and inventory

Question 18

Property contributed: how is the amount computed for partnership and corporation?

Answer 18

P: AB of contributor.
C: AB of contributor + gain - Boot received - liability assumed.