REG mod 38a

Question 1

Both temporary and permanent differences may result in deferred tax liabilities. True / False

Answer 1

False. Only temporary differences will cause deferred tax liabilities or deferred tax assets. Permanent differences will never cause deferred tax items.

Question 2

What type of credit is comprised of numerous other credits?

Answer 2

The General Business Credit

Question 3

A corporation will avoid penalties related to the underpayment of estimated taxes if…

Answer 3

the corporation pays 100% of the current year’s tax or 100 % of the prior year’s tax.

Question 4

Does section 1244 allow for ordinary losses to be deducted on preferred stock?

Answer 4

Yes, both preferred and common stock losses may be deducted as ordinary losses if certain requirements are met.

Question 5

In general, not-for-profit entities file which annual information return with the IRS?

Answer 5

Form 990

Question 6

What tax form is used to file a tax return for a C corporation?

Answer 6

Form 1120

Question 7

A corporation’s total income tax expense is the sum of what two items?

Answer 7

Current income tax expense and deferred income tax expense

Question 8

When could the built-in gains tax applicable?

Answer 8

When the S Corporation was previously a C Corporation.

Question 9

Are the dividends on an entity’s treasury stock taxable income?

Answer 9

Treasury stock does not receive dividends. Therefore there is no taxable income from treasury stock.

Question 10

Name a type of entity that may not be a personal holding company.

Answer 10

A bank / financial institutions are prohibited from being personal holding companies.

Question 11

A corporation’s capital losses that are being carried forward or back are considered to be ______-term capital losses.

Answer 11

Short

Question 12

What are the advantages of filing a consolidated tax return?

Answer 12

Potential deferral of gain related to intercompany transactions and the offsetting of the operating / capital losses of one corporation against the operating / capital gains of another corporation.

Question 13

Corporations are limited to a contribution deduction of what percent?

Answer 13

10% of taxable income before the contribution deduction and before the dividends received deduction

Question 14

A corporation is barred by the IRS from being a partner in a general partnership. True / False

Answer 14

False. A corporation, or even another partnership, is permitted to be a partner in a general partnership.

Question 15

DPAD is 9% of the lesser of what two items?

Answer 15

Qualified production activities income and taxable income (before deductions)

Question 16

A corporation’s capital losses may only be deducted to the extent that there are capital gains. What is the treatment of any excess capital losses?

Answer 16

The excess capital losses are carried back three years and carried forward for five years. Note: This is not the same as individual taxation.