Question 1

Briefly describe the charitable contribution deduction rules applicable to C corporations.

Accepted Answer

Tax year of deduction: In general, a cha

Question 2

Canary Corporation, an accrual method C corporation, uses the calendar year for tax purposes. Leticia, a cash method taxpayer, is both a shareholder of Canary and the corporation's CFO. On December 31, 2018, Canary has accrued a $75,000 bonus to Leticia. Describe the tax consequences of the bonus to Canary and to Leticia under the following independent situations.
a. Leticia owns 35% of Canary Corporation's stock and the corporation pays the bonus to Leticia on February 4, 2019.
b. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to Leticia on May 6, 2019.
c. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to Leticia on April 12, 2019.

Accepted Answer

Under § 267(a)(2), an accrual method tax

Question 3

A personal service corporation must use a calendar year, and is not permitted to use a fiscal year.

Accepted Answer

A) True 
 B)False

Question 4

In working with Schedule M-2 (analysis of unappropriated retained earnings per books) of Form 1120, which of the following is an addition to beginning retained earnings?

Accepted Answer

A)  Cash dividends. 
B)  Net loss per books. 
C)  Property dividends. 
D)  Net income per books. 
E)  None of the above. 
A)  Cash dividends. 
B)  Net loss per books. 
C)  Property dividends. 
D)  Net income per books. 
E)  None of the above.

Question 5

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?

Accepted Answer

A)  Tax depreciation in excess of book depreciation. 
B)  Proceeds of life insurance paid on death of key employee. 
C)  Excess of capital losses over capital gains. 
D)  Tax-exempt interest. 
E)  None of the above. 
A)  Tax depreciation in excess of book depreciation. 
B)  Proceeds of life insurance paid on death of key employee. 
C)  Excess of capital losses over capital gains. 
D)  Tax-exempt interest. 
E)  None of the above.

Question 6

Gerald, a cash basis taxpayer, owns 70% of the stock of Black Corporation, a calendar year, accrual basis C corporation. On December 31, 2018, Black accrued a bonus of $80,000 to Gerald, and paid the bonus to Gerald on January 2, 2019. When does Gerald report the bonus, and when does Black Corporation deduct the bonus? Would your answers change if Gerald was a 40% shareholder of Black?

Accepted Answer

Gerald is a more than 50% shareholder of

Question 7

In the current year, Oriole Corporation donated a painting worth $30,000 to the Texas Art Museum, a qualified public charity. The museum included the painting in its permanent collection. Oriole Corporation purchased the painting five years ago for $10,000. Oriole's charitable contribution deduction is $30,000 (ignoring the taxable income limitation).

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  Schedule M-2 is used to reconcile net income computed for financial accounting purposes with taxable income reported on the corporation's tax return. 
B)  The corporate return is filed on Form 1120S. 
C)  Corporations can receive an automatic extension of nine months for filing the corporate return by filing Form 7004 by the due date for the return. 
D)  A corporation with total assets of $7.5 million or more is required to file Schedule M-3. 
E)  None of the above. 
A)  Schedule M-2 is used to reconcile net income computed for financial accounting purposes with taxable income reported on the corporation's tax return. 
B)  The corporate return is filed on Form 1120S. 
C)  Corporations can receive an automatic extension of nine months for filing the corporate return by filing Form 7004 by the due date for the return. 
D)  A corporation with total assets of $7.5 million or more is required to file Schedule M-3. 
E)  None of the above.

Briefly describe the charitable contribution deduction rules applicable to C corporations.

A personal service corporation must use a calendar year, and is not permitted to use a fiscal year.

In working with Schedule M-2 (analysis of unappropriated retained earnings per books) of Form 1120, which of the following is an addition to beginning retained earnings?

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?

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

An Introduction to Taxation and Understanding the Federal Tax Law

Working with the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: In General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Exam 17: Corporations: Introduction and Operating Rules

Briefly describe the charitable contribution deduction rules applicable to C corporations.

A personal service corporation must use a calendar year, and is not permitted to use a fiscal year.

In working with Schedule M-2 (analysis of unappropriated retained earnings per books) of Form 1120, which of the following is an addition to beginning retained earnings?

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?

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

An Introduction to Taxation and Understanding the Federal Tax Law

Working with the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: In General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters