Question 1

Match the following statements.
-Charitable contributions

Accepted Answer

A) For the corporate taxpayer, are taxed using the regular tax rates. 
B) Must be capitalized, but can be amortized over 180 months. 
C) For the corporate taxpayer, the rate is 20%. 
D) For the corporate taxpayer, cannot be deducted at all in the current tax year. 
E) For the corporate taxpayer, limited to 10% of taxable income before certain deductions. 
A) For the corporate taxpayer, are taxed using the regular tax rates. 
B) Must be capitalized, but can be amortized over 180 months. 
C) For the corporate taxpayer, the rate is 20%. 
D) For the corporate taxpayer, cannot be deducted at all in the current tax year. 
E) For the corporate taxpayer, limited to 10% of taxable income before certain deductions.

Question 2

A limited partnership can indirectly avoid unlimited liability of the general partner if the general partner is a corporation.

Accepted Answer

A) True 
 B)False

Question 3

Match the following attributes with the different forms.A particular attribute may apply to more than one entity form.
-General partnership

Accepted Answer

A) Ability of all owners to have limited liability. 
B) Ability to pass tax attributes through to the owners. 
C) Right of all owners to participate in the management of the business. 
D) Number of owners is limited.e.Ability to have multiple owners. 
A) Ability of all owners to have limited liability. 
B) Ability to pass tax attributes through to the owners. 
C) Right of all owners to participate in the management of the business. 
D) Number of owners is limited.e.Ability to have multiple owners.

Question 4

If the IRS reclassifies debt as equity, the repayment of the debt by the corporation to the shareholder automatically is treated as a dividend.

Accepted Answer

A) True 
 B)False

Question 5

An S corporation is not subject to the AMT, but its shareholders are in that the S corporation's AMT adjustments and preferences are passed through to them.

Accepted Answer

A) True 
 B)False

Question 6

The at-risk provisions and the passive activity loss provisions decrease the tax attractiveness of investments in real estate for partnerships and for limited liability companies.

Accepted Answer

A) True 
 B)False

Question 7

To which of the following entities does the AMT apply?
∙
Sole proprietorship.
∙
General partnership.
∙
Limited partnership.
∙
LLC.
∙
S corporation.
∙
C corporation.

Accepted Answer

The AMT applies directly to a sole propr

Question 8

When compared to a partnership, what additional requirement applies to keep a contribution of appreciated property to a corporation from causing recognized gain?

Accepted Answer

Section 351 applies for contributions to

Question 9

A benefit of an S corporation when compared with a C corporation is that it is subject to Federal income tax only in limited circumstances.

Accepted Answer

A) True 
 B)False

Question 10

Match the following statements.
-Sale of corporate stock by the C corporation shareholders.

Accepted Answer

A) Transaction in this form enables double taxation to be avoided. 
B) Gain or loss is calculated separately for each asset and is subject to single taxation. 
C) Subject to double taxation. 
D) The sale is treated as the sale of a capital asset under § 741, but subject to ordinary income potential under § 751. 
E) Not subject to double taxation on the sale of corporate stock. 
A) Transaction in this form enables double taxation to be avoided. 
B) Gain or loss is calculated separately for each asset and is subject to single taxation. 
C) Subject to double taxation. 
D) The sale is treated as the sale of a capital asset under § 741, but subject to ordinary income potential under § 751. 
E) Not subject to double taxation on the sale of corporate stock.

Question 11

Roger owns 40% of the stock of Gold, Inc.(adjusted basis of $800,000).Silver redeems 60% of Roger's shares for $900,000.If the stock redemption qualifies for return of capital treatment, Roger's recognized gain is $100,000.

Accepted Answer

A) True 
 B)False

Question 12

Match the following.
-General partnership

Accepted Answer

A) Contribution of appreciated property to the business entity by an owner is never subject to taxation. 
B) Realized gains on the contribution of appreciated property to the entity are not recognized by the contributor when an 80% control requirement is satisfied. 
C) Realized losses on the contribution of loss property to the entity are never recognized by the contributor. 
D) Realized losses on the contribution of loss property to the entity are recognized by the contributor unless an 80% control requirement is satisfied. 
E) Basis of ownership interest to the owner is dependent on whether gain or loss is recognized to the owner on the contribution of assets to the business entity. 
A) Contribution of appreciated property to the business entity by an owner is never subject to taxation. 
B) Realized gains on the contribution of appreciated property to the entity are not recognized by the contributor when an 80% control requirement is satisfied. 
C) Realized losses on the contribution of loss property to the entity are never recognized by the contributor. 
D) Realized losses on the contribution of loss property to the entity are recognized by the contributor unless an 80% control requirement is satisfied. 
E) Basis of ownership interest to the owner is dependent on whether gain or loss is recognized to the owner on the contribution of assets to the business entity.

Question 13

Match the following statements.
-S corporations

Accepted Answer

A) Usually subject to single taxation even if the entity is incorporated. 
B) Not making distributions to shareholders. 
C) Rate for a corporate taxpayer is 20%. 
D) Subject to double taxation. 
E) Eligible for special allocations. 
A) Usually subject to single taxation even if the entity is incorporated. 
B) Not making distributions to shareholders. 
C) Rate for a corporate taxpayer is 20%. 
D) Subject to double taxation. 
E) Eligible for special allocations.

Question 14

Fred and Ella are going to establish a business.They expect the business to be very successful in the long-run, but project losses of approximately $100,000 for each of the first five years.Due to potential environmental concerns, limited liability is a requisite for the owners.Which form of business entity should they select?

Accepted Answer

A) General partnership. 
B) Limited partnership. 
C) C corporation. 
D) S corporation. 
A) General partnership. 
B) Limited partnership. 
C) C corporation. 
D) S corporation.

Question 15

The AMT tax rate for a C corporation is greater than the regular tax rate for C corporations.

Accepted Answer

A) True 
 B)False

Question 16

Walter wants to sell his wholly-owned C corporation, Cream, Inc.The fair market value of his stock exceeds the corporation's adjusted basis for the assets.Should Walter sell his stock or have Cream sell its assets and make a liquidating distribution to him?

Accepted Answer

Selling the stock will result in single

Question 17

Arnold purchases a building for $750,000 which is going to be used by his wholly-owned corporation.Which of the following statements are correct?

Accepted Answer

A) If Arnold contributes the building to the corporation, there will be no gross income in the current year and a carryover basis of $750,000. 
B) If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in a $30,000 deduction for the corporation. 
C) If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in $30,000 of gross income for Arnold. 
D) Leasing the building to the corporation will contribute to the tax avoidance objective of minimizing double taxation. 
E) All of the above statements are correct. 
A) If Arnold contributes the building to the corporation, there will be no gross income in the current year and a carryover basis of $750,000. 
B) If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in a $30,000 deduction for the corporation. 
C) If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in $30,000 of gross income for Arnold. 
D) Leasing the building to the corporation will contribute to the tax avoidance objective of minimizing double taxation. 
E) All of the above statements are correct.

Question 18

All of the shareholders of an S corporation have limited liability with respect to their ownership interests in the corporation, whereas only limited partners in a limited partnership have such limited liability.

Accepted Answer

A) True 
 B)False

Question 19

Wally contributes land (adjusted basis of $30,000; fair market value of $100,000) to an S corporation in a transaction which qualifies under § 351.The corporation subsequently sells the land for $120,000, recognizing a gain of $90,000 ($120,000 - $30,000).If Wally owns 30% of the stock, $76,000 [$70,000 + 30%($20,000)] of the $90,000 recognized gain is allocated to Wally.

Accepted Answer

A) True 
 B)False

Question 20

Molly transfers land with an adjusted basis of $28,000 and a fair market value of $65,000 to the Sand Partnership for a 30% ownership interest.The land is encumbered by a mortgage of $18,000 which the partnership assumes.Her basis for her ownership interest is $10,000 ($28,000 - $18,000).

Accepted Answer

A) True 
 B)False

Match the following statements. -Charitable contributions

A limited partnership can indirectly avoid unlimited liability of the general partner if the general partner is a corporation.

Match the following attributes with the different forms.A particular attribute may apply to more than one entity form. -General partnership

If the IRS reclassifies debt as equity, the repayment of the debt by the corporation to the shareholder automatically is treated as a dividend.

An S corporation is not subject to the AMT, but its shareholders are in that the S corporation's AMT adjustments and preferences are passed through to them.

The at-risk provisions and the passive activity loss provisions decrease the tax attractiveness of investments in real estate for partnerships and for limited liability companies.

To which of the following entities does the AMT apply? ∙ Sole proprietorship. ∙ General partnership. ∙ Limited partnership. ∙ LLC. ∙ S corporation. ∙ C corporation.

When compared to a partnership, what additional requirement applies to keep a contribution of appreciated property to a corporation from causing recognized gain?

A benefit of an S corporation when compared with a C corporation is that it is subject to Federal income tax only in limited circumstances.

Match the following statements. -Sale of corporate stock by the C corporation shareholders.

Roger owns 40% of the stock of Gold, Inc.(adjusted basis of $800,000).Silver redeems 60% of Roger's shares for $900,000.If the stock redemption qualifies for return of capital treatment, Roger's recognized gain is $100,000.

Match the following. -General partnership

Match the following statements. -S corporations

The AMT tax rate for a C corporation is greater than the regular tax rate for C corporations.

Walter wants to sell his wholly-owned C corporation, Cream, Inc.The fair market value of his stock exceeds the corporation's adjusted basis for the assets.Should Walter sell his stock or have Cream sell its assets and make a liquidating distribution to him?

Arnold purchases a building for $750,000 which is going to be used by his wholly-owned corporation.Which of the following statements are correct?

All of the shareholders of an S corporation have limited liability with respect to their ownership interests in the corporation, whereas only limited partners in a limited partnership have such limited liability.

Molly transfers land with an adjusted basis of $28,000 and a fair market value of $65,000 to the Sand Partnership for a 30% ownership interest.The land is encumbered by a mortgage of $18,000 which the partnership assumes.Her basis for her ownership interest is $10,000 ($28,000 - $18,000).

Introduction to Taxation

Working With the Tax Law

Taxation on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Basis, Gain and Loss, and Nontaxable Exchanges

Capital Gains and Losses

Individuals As the Taxpayers

Income, Deductions and Credits

Individuals As Employees and Proprietors

Organization, Capital Structure, and Operating Rules

Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multi-Juris-Dictional Taxation

Tax Credits and Corporate Alternative Minimum Tax

Filters

Exam 18: Comparative Forms of Doing Business

Match the following statements. -Charitable contributions

A limited partnership can indirectly avoid unlimited liability of the general partner if the general partner is a corporation.

Match the following attributes with the different forms.A particular attribute may apply to more than one entity form. -General partnership

If the IRS reclassifies debt as equity, the repayment of the debt by the corporation to the shareholder automatically is treated as a dividend.

An S corporation is not subject to the AMT, but its shareholders are in that the S corporation's AMT adjustments and preferences are passed through to them.

The at-risk provisions and the passive activity loss provisions decrease the tax attractiveness of investments in real estate for partnerships and for limited liability companies.

To which of the following entities does the AMT apply? ∙ Sole proprietorship. ∙ General partnership. ∙ Limited partnership. ∙ LLC. ∙ S corporation. ∙ C corporation.

When compared to a partnership, what additional requirement applies to keep a contribution of appreciated property to a corporation from causing recognized gain?

A benefit of an S corporation when compared with a C corporation is that it is subject to Federal income tax only in limited circumstances.

Match the following statements. -Sale of corporate stock by the C corporation shareholders.

Roger owns 40% of the stock of Gold, Inc.(adjusted basis of $800,000).Silver redeems 60% of Roger's shares for $900,000.If the stock redemption qualifies for return of capital treatment, Roger's recognized gain is $100,000.

Match the following. -General partnership

Match the following statements. -S corporations

The AMT tax rate for a C corporation is greater than the regular tax rate for C corporations.

Walter wants to sell his wholly-owned C corporation, Cream, Inc.The fair market value of his stock exceeds the corporation's adjusted basis for the assets.Should Walter sell his stock or have Cream sell its assets and make a liquidating distribution to him?

Arnold purchases a building for $750,000 which is going to be used by his wholly-owned corporation.Which of the following statements are correct?

All of the shareholders of an S corporation have limited liability with respect to their ownership interests in the corporation, whereas only limited partners in a limited partnership have such limited liability.

Molly transfers land with an adjusted basis of $28,000 and a fair market value of $65,000 to the Sand Partnership for a 30% ownership interest.The land is encumbered by a mortgage of $18,000 which the partnership assumes.Her basis for her ownership interest is $10,000 ($28,000 - $18,000).

Introduction to Taxation

Working With the Tax Law

Taxation on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Basis, Gain and Loss, and Nontaxable Exchanges

Capital Gains and Losses

Individuals As the Taxpayers

Income, Deductions and Credits

Individuals As Employees and Proprietors

Organization, Capital Structure, and Operating Rules

Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multi-Juris-Dictional Taxation

Tax Credits and Corporate Alternative Minimum Tax

Filters