FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Corporations: Introduction and Operating Rules

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

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?

A) Dividends received deduction.
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.

F) A) and C)
G) C) and D)

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

Gerald, a cash basis taxpayer, owns 70% of the stock of Black Corporation, a calendar year, accrual basis C corporation. On December 31, 2013, Black accrued a bonus of $80,000 to Gerald, and paid the bonus to Gerald on January 3, 2014. 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?

Correct Answer

verified

Gerald is a more than 50% shareholder of...

View Answer

Show Answer

Question 63

True/False

Review LaterAdd Note

Under the "check­the­box" Regulations, a two­owner LLC that fails to elect to be to treated as a corporation will be taxed as a sole proprietorship.

During the current year, Maroon Company had $125,000 net profit from operations. Belinda, the sole owner of Maroon, is in the 33% marginal tax bracket. Determine the combined tax burden for Maroon and Belinda under the following independent situations. (Ignore any employment taxes.) a. Maroon Company is a C corporation and all of its after-tax income is distributed to Belinda. b. Maroon Company is a proprietorship and all of its after-tax income is withdrawn by Belinda. c. Maroon Company is an S corporation and all of its after-tax income is distributed to Belinda.

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 a subtraction on Schedule M-1?

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

Orange Corporation owns stock in White Corporation and has net operating income of $400,000 for the year. White Corporation pays Orange a dividend of $60,000. What amount of dividends received deduction may Orange claim if it owns 45% of White stock (assuming Orange's dividends received deduction is not limited by its taxable income) ?

Flycatcher Corporation, a C corporation, has two equal individual shareholders, Nancy and Pasqual. In the current year, Flycatcher earned $100,000 net profit and paid a dividend of $10,000 to each shareholder. Regardless of any tax consequences resulting from their interests in Flycatcher, Nancy is in the 33% marginal tax bracket and Pasqual is in the 15% marginal tax bracket. With respect to the current year, which of the following statements is incorrect?

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

During the current year, Quartz Corporation (a calendar year C corporation) has the following transactions: Quartz owns 25% of ABC Corporation's stock. How much is Quartz Corporation's taxable income (loss) for the year?

During the current year, Skylark Company had operating income of $420,000 and operating expenses of $250,000. In addition, Skylark had a long-term capital loss of $20,000, and a charitable contribution of $5,000. How does Toby, the sole owner of Skylark Company, report this information on his individual income tax return under following assumptions? a. Skylark is an LLC, and Toby does not withdraw any funds from the company during the year. b. Skylark is an S corporation, and Toby does not withdraw any funds from the company during the year. c. Skylark is a regular (C) corporation, and Toby does not withdraw any funds from the company during the year.

Briefly discuss the requirements for the dividends received deduction.

Schedule M-2 is used to reconcile unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at the end of the year.