Reg 4 - Corporate Taxable Income

Question 1

How many years is goodwill, covenants not-to-compete, franchises, trademarks, and trade name amortized?

Answer 1

Amortized on a straight-line basis over a 15-year period

Question 2

Are premiums paid by the corporation for life insurance policies on officers tax deductible?

Are premiums paid by the corporation for life insurance policies on employees (fringe benefits) tax deductible?

Answer 2

Are premiums paid by the corporation for life insurance policies on officers tax deductible? - NOT tax deductible

Are premiums paid by the corporation for life insurance policies on employees (fringe benefits) tax deductible? Tax deductible

Question 3

What is the maximum amount a business gift can be deducted per recipient?

Answer 3

$25 per recipient per year

Question 4

What percentage of business meals and entertainment is deductible?

Answer 4

50% business meals and entertainment is deductible

Question 5

Are penalties and illegal activities deductible?

Answer 5

Penalties and illegal activities are NOT deductible

Question 6

What three taxes are deductible? What tax is not deductible?

Answer 6

Deductible taxes:

1) State taxes
2) City taxes
3) Federal payroll taxes

Nondeductible taxes:
1) Federal income taxes

Question 7

Are lobbying and political expenditures tax deductible?

Answer 7

Lobbying and political expenditures are NOT tax deductible.

Question 8

How are capital losses deducted? How long can capital losses be carried back and carried forward?

Answer 8

• Capital losses are offset by capital gains.

- Excess capital losses are carried back three years or carried forward five years

Question 9

How do taxpayers record inventory? Accrual basis or cash basis?

Answer 9

Accrual basis

Question 10

Define the uniform capitalization rules as it relates to raw materials, direct labor, and factory overhead?

Answer 10

Section 263A - Raw materials, direct labor, and factory overhead must be capitalized and expensed when sold.