FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Corporations: Introduction and Operating Rules

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Essay

Review LaterAdd Note

Review Later

Nicole owns and operates a sole proprietorship.She is considering incorporating the business as a C corporation and has asked you to explain how a corporate tax return differs from the return for a sole proprietorship.In addition,she has asked you to explain the nontax factors that she should consider in deciding whether to incorporate her business.

Correct Answer

verified

Differences between a proprietorship and...

View Answer

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Azul Corporation,a personal service corporation,had $300,000 of active income,$40,000 of portfolio income,and a $190,000 passive loss during the year.How much is Azul's taxable income?

A) $340,000.
B) $300,000.
C) $150,000.
D) $110,000.
E) None of the above.

F) B) and D)
G) D) and E)

Correct Answer

verified

Show Answer

Question 53

True/False

Review LaterAdd Note

Schedule M-1 is used to reconcile unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at the end of the year.

Compare the basic tax and nontax factors of doing business as a partnership,an S corporation,and a C corporation.Circle the correct answers.

In the current year,Plum Corporation,a computer manufacturer,donated 100 laptop computers to a local school district (a qualified educational organization) .The computers were constructed by Plum earlier this year,and the school district allocated the computers among its various schools where they will be used for educational purposes.Plum's basis in the computers is $70,000,and their fair market value is $250,000.What is Plum's deduction for the contribution of the computers (ignoring the taxable income limitation) ?

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

C corporations can elect fiscal years that are different from those of their shareholders,but personal service corporations (PSCs)are subject to substantial restrictions in the choice of a fiscal year.Why are the fiscal year choices of PSCs limited?

During the current year,Yellow Company had operating income of $380,000 and operating expenses of $300,000.In addition,Yellow had a long-term capital loss of $50,000.Based on this information,how does Alexandria,the sole owner of Yellow Company,report this information on her individual income tax return under following assumptions?

Unlike individual taxpayers,corporate taxpayers do not receive a preferential tax rate with respect to long-term capital gains.

Peach Corporation had $210,000 of active income,$45,000 of portfolio income,and a $230,000 passive loss during the year.If Peach is a closely held C corporation that is not a PSC,it can deduct $210,000 of the passive loss in the year.

Macayo,Inc. ,received $800,000 life insurance proceeds on the death of its president.The $800,000 will be a subtraction item on Macayo's Schedule M-1.

As a general rule,a personal service corporation (PSC)must use a fiscal year as its accounting period.

A corporation with $10 million or more in assets must file Schedule M-3 (instead of Schedule M-1).

Grocer Services Corporation (a calendar year taxpayer) ,a wholesale distributor of food,made the following donations to qualified charitable organizations during the year: How much qualifies for the charitable contribution deduction?

On April 8,2010,Oriole Corporation donated a painting worth $75,000 to the Texas Art Museum,a qualified public charity.The museum included the painting in its permanent collection.Oriole Corporation purchased the painting 5 years ago for $25,000.Oriole's charitable contribution deduction is $25,000 (ignoring the taxable income limitation).

Ted is the sole shareholder of a C corporation,and Sue owns a sole proprietorship.Both businesses were started in 2010,and each business sustained a $5,000 net capital loss for the year.Which of the following statements is correct?

Starling Corporation,a closely held personal service corporation,has $150,000 of active income,$60,000 of portfolio income,and a $165,000 passive loss during the year.How much of the passive loss can Starling deduct in the current year?

Income that is included in net income per books but not included in taxable income is an addition item on Schedule M-1.

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?

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?