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Yaeger REG > Mod 38 Wrong Answers > Flashcards

Mod 38 Wrong Answers Flashcards

1
Q

For a corporation to be exempt from AMT in 2nd year it’s…

A

First year’s gross receipts must be $5 million or less

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2
Q

For a corporation to be exempt from AMT in its 3rd year it’s…

A

Average gross receipts must be $7.5 or less for years 1 and 2

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3
Q

What is the portion of dividends received that is included in taxable income when a corporation is computing its maximum allowable deduction for charitable contributions?

A

Full amount of dividends received is included

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4
Q

In determining the NOL for 2013, given that deductions in the tax return exceed gross income, the dividends received deduction will be…

A

Fully allowed (no change necessary)

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5
Q

In determining the NOL for 2013, given that deductions in the tax return exceed gross income, the NOL deduction carryover from 2012 will…

A

Not be allowed and must be subtracted from the excess deductions

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6
Q

To reconcile book income to taxable income, interest paid on loan to purchase municipal bonds is…2

A

1 not deductible on the tax return

2 must be added back to arrive at taxable income

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7
Q

Schedule M-1 reconciles to taxable income before…2

A

1 dividends received deduction

2 NOL deduction

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8
Q

Dividends received deduction will not be reconciling item on…

A

Schedule M-1

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9
Q

On Schedule M-1, the $2,000 of interest expense incurred to carry municipal bonds is…2

A

1 not deductible

2 must be added back to book income

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10
Q

For a parent to qualify for filing of consolidated returns, at least what % of voting stock and total stock must the parent own of the sub?

A

80% voting

80% total

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11
Q

The election to file consolidated returns is limited to…

A

Affiliated corporations

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12
Q

Affiliated corporations are parent subsidiary corporations that are connected through stock ownership wherein at least 80% combined voting power and value all of stock is directly owned by…

A

Other includible corporations

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13
Q

If accumulated earnings is -$50,000 as of December 31, 2012. And current earnings for 2013 is $5,000, with a $15,000 cash distribution made to shareholders. What amount is taxable to shareholders as a dividend?

A

$5,000

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14
Q

Distributions of property to shareholders reduce E&P by the greater of…2

A

1 property’s adjusted basis or

2 FMV at date of distribution

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15
Q

What affect does gain recognized have on E&P?

A

Increases E&P

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16
Q

When a corporation distributes a liability to a shareholder, what affect does it have on E&P?

A

Increases E&P

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17
Q

General expenses incurred in the complete liquidation and dissolution of a corporation are…2

A

1 deductible by corporation as

2 ordinary and necessary business expenses

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18
Q

General expenses in a complete liquidation of a corporation include…3

A

1 filing fees

2 professional fees

3 other liquidation expenditures

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19
Q

When a parent corporation liquidated its 80% or more owned subsidiary, the parent corporation as a stockholder will ordinarily…

A

Not recognize gain or loss on receipt of liquidating distributions
From its sub

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20
Q

No gain or loss will be recognized by a parent corp on receipt of property in…

A

Complete liquidation of 80% owned sub

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21
Q

Adjustments which can be deducted from taxable income to arrive at corporation’s undistributed personal holding company income include…

A

Deduction for net long term capital gain which federal taxes can
Be subtracted from

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22
Q

Maximum amount of taxable income that would be exposed to Accumulated Earnings Tax calculation

A

Taxable income 2014 - income tax 2014 - minimum AEC

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23
Q

PHC tax should be…

A

Self-assessed

24
Q

PGC tax should be self assessed by filing a separate…

A

Form 1120-PH

25
Q

The personal holding company tax may be imposed if at least 60% of the corporation’s adjusted ordinary gross income for the year is…

2) and what test is met?

A

Personal holding company income

2) stock ownership test is met

26
Q

Personal holding company tax is a penalty tax imposed…

A

In addition to regular corporate income tax

27
Q

Every corporation is eligible for an accumulated earnings credit of at least…

A

$150,000

28
Q

Accumulated earnings tax can not be imposed on a corporation that has undistributed earnings and profits of…

A

Less than $150,000

29
Q

If an S corporation has no accumulated earnings and profits from C years, distributions to shareholders are generally…2

A

Nontaxable

And reduce a shareholder’s stock basis

30
Q

An S-Corporation can not deduct LT capital loss when…

2) the LT capital loss will be…

A

Cash distributions exceed basis

2) carried forward indefinitely

31
Q

A partnership is not permitted to…

A

Be a shareholder of an S-Corp

32
Q

An S-Corp is permitted to be a…

A

Partner in a partnership

33
Q

A subchapter S election that is filed on or before the 15th day of the third month is effective at…

A

The beginning of the taxable year

34
Q

If an S election is made after March 15th of 2014 it will be effective on…

A

January 1st of 2015

35
Q

A “party to the reorganization” does include the…

A

Consolidated company

36
Q

Corporate reorganizations:

Securities in corporations (not parties to reorganization) are always treated as…

A

Boot

37
Q

ACE adjustment calculation

A

ACE adjustment = 75% X (ACE AMTI - preACE AMTI)

38
Q

If a corporation has $15,000 in capital gains and $20,000 in capital losses, how much capital gains and capital losses would be included in the corporation’s gross income?

A

$15,000 capital gains included in gross income

$15,000 capital losses included

39
Q

When calculating taxable income for charitable contributions deduction interest expense and interest income (as well as capital gains and losses) would be…

A

Amounts included in tax return, rather than accrual basis financial statements

40
Q

Taxable income to determine charitable deduction is calculated before which 2 deductions?

A

1 DRD

2 charitable contributions deduction

41
Q

On schedule M-1, excess capital losses over capital gains goes on…

A

Line 3

42
Q

When there is $20,000 in dividend income, is a dividend received deduction taken into account on schedule M-1?

A

No

43
Q

Municipal arbitrage bond interest is…

A

Included in taxable interest

44
Q

Is there a deduction for $8,000 paid to a corporation’s shareholders?

A

No

45
Q

Dividends received deduction is allowed by corporation for receipt of dividends from what 3 entities?

A

1 real estate investment trust

2 mutual fund corp

3 money market fund

46
Q

Taxable income “over $100,000”, what does this mean for income that is exactly $100,000?

A

Pays the higher rate

47
Q

Net business income on schedule K of form 1120-S does not include…2

A

1 charitable contributions

2 portfolio income

48
Q

Interest income is considered…

A

Portfolio income

49
Q

Calculation for net business income per share, when there are 360 tax year days, 200 shares and $20,000 in net business income.

A

($20,000/200 shares)/360 days = $0.28/share

50
Q

What is the net business income when a partner owns 50 shares, purchased January 30th and net business income per share = $0.28?

A

$4,690 = (50 shares x 335 days x $0.28)

51
Q

If a shareholder purchases stock in an S-corp for $4,000 on January 31, 2013 and there is an ordinary business loss of $2,000 and bond interest of $300, what is the shareholder’s basis at year end?

A

$2,300 (doesn’t matter that it was purchased an 31, all income
included)

52
Q

The dividends received deduction is not an adjustment in computing AMTI…

A

Before the ACE adjustment

53
Q

A seven year property, for 200% declining balance method would be used under MACRS for regular tax purposes, while 150% declining balance must be used for AMT purposes…

A

Prior to ACE adjustment

54
Q

Allowable charitable contributions do not result in…

A

An adjustment in computing AMTI or ACE

55
Q

7 year personal property requires…

A

Pre ACE AMT adjustment

56
Q

Real property placed into service after December 31, 1998 does…

A

Not require AMT adjustment

Yaeger REG (77 decks)

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