Exam 2: Corporations: Introduction and Operating Rules

Norma formed Hyacinth Enterprises,a proprietorship,in 2012.In its first year,Hyacinth had operating income of $400,000 and operating expenses of $240,000.In addition,Hyacinth had a long-term capital loss of $10,000.Norma,the proprietor of Hyacinth Enterprises,withdrew $75,000 from Hyacinth during the year.Assuming Norma has no other capital gains or losses,how does this information affect her taxable income for 2012?

Discuss the purpose of Schedule M-1.Give two examples of an addition and two examples of a subtraction that could be reported on Schedule M-1.

Warbler Corporation,an accrual method regular corporation,was formed and began operations on March 1,2012.The following expenses were incurred during its first year of operations (March 1 - December 31,2012):

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.

What is the annual required estimated tax payment for a C corporation? What are the rules regarding payment of the estimated tax?

Hippo,Inc. ,a calendar year C corporation,manufactures golf gloves.For 2012,Hippo had taxable income (before DPAD)of $900,000,qualified domestic production activities income of $750,000,and W-2 wages related to qualified production activities income of $140,000.Hippo's domestic production activities deduction for 2012 is:

Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions - subtractions = taxable income.Which of the following items is an addition on Schedule M-1?

The corporate marginal income tax rates range from 10% to 35%,while the individual marginal income tax rates range from 15% to 39%.

What is the purpose of Schedule M-3? Which corporations are required to file Schedule M-3?

For purposes of the estimated tax payment rules,a "large corporation" is defined as a corporation that had an average taxable income of $1 million or more in any of the three preceding years.

During the current year,Owl Corporation (a C corporation),a retailer of children's apparel,made the following donations to qualified charitable organizations. How much qualifies for the charitable contribution deduction?

Which of the following statements is correct regarding the taxation of C corporations?

In the current year,Amber,Inc. ,a calendar C corporation,has income from operations of $200,000 and operating deductions of $225,000.Amber also had $30,000 of dividends from a 25% stock ownership in a domestic corporation.Which of the following statements is incorrect with respect to Amber's net operating loss deduction?