Unit 12: C Corporations In General

Question 1

Double Taxation:

Answer 1

Earnings of a C corporation may be taxed twice: first at the corporate level and again at the shareholder level if they are distributed as dividends.

Question 2

Shareholder Meetings:

Answer 2

A corporation must maintain a list of all its shareholders and generally must conduct at least one shareholder meeting per year

Question 3

1120

Answer 3

U.S. Corporation Income Tax Return

Question 4

1120-F

Answer 4

Foreign corporation income tax return

Question 5

990

Answer 5

Tax-exempt corporation income tax return

Question 6

For tax year 2022, electronic filing is mandatory for C corporations with:

Answer 6

$10 million or more in assets and/or at least 250 or more returns of any type.

Question 7

When must a corporation file a tax return?

Answer 7

15th day of the 4th month after the end of it tax year.

Question 8

7004

Answer 8

Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns

Question 9

Penalty for late filing:

Answer 9

5% of any unpaid tax for each month the return is late, up to a maximum of 25%

Question 10

If a corporation files its form 1120 more than 60 days late, the penalty is:

Answer 10

$450 in 2022 or the amount of tax owed, whichever is smaller.

Question 11

Penalty for late payment of corporate income tax:

Answer 11

.5% of the unpaid tax each month that the tax is not paid, up to a maximum of 25% of the unpaid tax

Question 12

Corporations are required to make estimated tax payments if:

Answer 12

They expect their tax due to be $500 or more during the taxable year.

Question 13

EFTPS

Answer 13

Electronic Federal Tax Payment System

Question 14

Calendar year estimated payment dates:

Answer 14

• April 15
• June 15
• September 15
• December 15

Question 15

In general, each quarterly federal tax payment is 25% of the corporation’s “required annual payment” which is the lesser of two amounts:

Answer 15

• Current-year tax liability: 100% of the federal income tax reported on the return for the current taxable year of the payment
• Prior-year safe harbor: 100% of a corporation’s federal income tax reported on the return for the preceding year.

Question 16

What forms can a corporation use to apply for a refund of overpaid tax?

Answer 16

Either 1139 “Corporate Application for Tentative Refund” or 1120X “Amended U.S. Corporation Income Tax Return

Question 17

Generally, the corporation must file Form 1139:

Answer 17

Within 12 months of the end of the tax year an NOL, net capital loss, unused credit, or claim or right adjustment arose

Question 18

Generally, a corporation must file Form 1120X:

Answer 18

Within three years of the due date, including extensions, for filing the return for a year in which is sustains a loss.

Question 19

4446

Answer 19

Corporation Application for Quick Refund of Overpayment of Estimated Tax

• Used to obtain a quick refund of its estimated tax payments

NOTE: May be used if a corporation’s overpayment is at least 10% of its anticipated tax liability and at least $500

Question 20

Corporation flat tax

Answer 20

21%

Question 21

CAMT

Answer 21

Corporate Alternative Minimum Tax

Imposes a 15% minimum tax on the adjusted financial statement income of very large corporations for the taxable years beginning after 2022.

Question 22

Does a corporation receive a tax deduction for the distribution of dividends to its shareholders?

Answer 22

No

Question 23

Accumulated Earnings Tax

Answer 23

Levied at a rate of 20% of the excess amount accumulated.

It is not automatically applied; it is assessed only after an audit.

Question 24

Accumulated Earnings Tax Limits

Answer 24

• Most businesses $250,000
• Personal service corporations - $150,000

Question 25

“Reasonable needs” of a business include the following:

Answer 25

• Specific, definite, and feasible plans for the use of the earnings accumulation in the business such as:
  
  • The expansion of the company to a new area or new facility
  • Acquiring another business through the purchase of stock or
    assets
  • Providing for reasonable estimates of product liability losses
• The amount necessary to redeem the corporation’s stock is included in a deceased shareholder’s gross estate if the amount does not exceed the reasonably anticipated total estate and inheritance taxes and funeral and administration expenses incurred by the shareholder’s estate.

Question 26

A corporation may generally use the cash method of accounting if it has average annual gross receipts less than:

Answer 26

$27 million. After that, they must use the accrual; method

Question 27

Schedule M-1 & M-3

Answer 27

Used to reconcile bot-to-tax differences.

Question 28

Schedule L

Answer 28

Is the balance sheet, based on the corporation’s books and records

Question 29

Who is not required to file Schedule M-1, or Schedule L?

Answer 29

Very small corporations with less than $250,000 of gross receipts or total assets

Question 30

Schedule M-1

Answer 30

Only required when the corporation’s gross receipts or its total assets at the end of the year are greater than $250,000

Question 31

Schedule M-3

Answer 31

Used for corporations with assets (based on financial accounting-based book value) that exceed $10 million

Question 32

Section 351

Answer 32

If a taxpayer transfers property to a corporation in exchange for stock, and immediately afterward, the taxpayer controls the corporation, the exchange may not be taxable.

Question 33

351 does not apply in the following situations:

Answer 33

• The corporation is an investment company
• The taxpayer transfers the property in a bankruptcy proceeding in exchange for stock that is used to pay creditors
• The stock is received in exchange for the corporation’s debt (other than a security, such as a bond) or for interest on the corporation’s debt (including a security) that accrued while the taxpayer held the debt

Question 34

351: To be considered “In control”

Answer 34

The transferors must own at least 80% of the total voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock immediately after the transfer.