Exam 17: Corporations: Introduction and Operating Rules

Rose is a 50% partner in Wren Partnership.During the year, Wren earned net profit of $100,000 ($210,000 gross income - $110,000 operating expenses) and distributed $20,000 to each partner.Rose must report Wren Partnership profit of $20,000 on her Federal income tax return.

Almond Corporation, a calendar year C corporation, had taxable income of $900,000, $1.1 million, and $1.2 million for 2009, 2010, and 2011, respectively. Almond's taxable income is $2 million for 2012. Compute the minimum estimated tax payments for 2012 for Almond Corporation.

During the current year, Kingbird Corporation (a calendar year C corporation) had the following income and expenses: On October 1, Kingbird Corporation made a contribution to a qualified charitable organization of $9,000 in cash (not included in any of the above items). Determine Kingbird's charitable contribution deduction for the current year.

Under the "check-the-box" Regulations, a two-owner LLC that fails to elect to be to treated as a corporation will be taxed as a sole proprietorship.

During the current year, Waterthrush Company had operating income of $510,000 and operating expenses of $400,000. In addition, Waterthrush had a long-term capital gain of $30,000. How does Lucinda, the sole owner of Waterthrush Company, report this information on her individual income tax return under following assumptions?

Ivory Corporation, a calendar year, accrual method C corporation, has two cash method, calendar year shareholders who are unrelated to each other. Craig owns 55% of the stock, and Oscar owns the remaining 45%. During 2012, Ivory paid a salary of $200,000 to each shareholder. On December 31, 2012, Ivory accrued a bonus of $50,000 to each shareholder. Assuming that the bonuses are paid to the shareholders on February 1, 2013, compute Ivory Corporation's 2012 deduction for the above amounts.

Grebe Corporation, a closely held corporation that is not a PSC, had $75,000 of active income, $60,000 of portfolio income, and a $105,000 passive loss during the year. How much of the passive loss can Grebe deduct in the current year?

If a C corporation uses straight-line depreciation on real estate (§ 1250 property), no gain on the sale of the property will be recaptured as ordinary income.

Elk, a C corporation, has $370,000 operating income and $290,000 operating expenses during the year.In addition, Elk has a $10,000 long-term capital gain and a $17,000 short-term capital loss.Elk's taxable income is: