Assignment
1. Which of the following isfalsein regards to filing requirements?
a. Corporations file their tax returns on Form 1120.b. An automatic 6-month extension can be obtained by a corporation by filing Form 7004.c. Filing Form 7004 provides a 6-month extension for paying the corporation's tax due. A corporation can wait to pay its tax liability without penalty when the return is filed.d. None of the above is false.
Question 2
Which of the following corporations is allowed to make an S corporation election?
a. A U.S. owned and operated corporation with two individual owners.b. A U.S. corporation owned by a Brazilian corporation.c. A U.S. owned and operated corporation with 7,000 separate shareholders.d. None of the above could be an S corporation.
Question 3
For the year ended December 31, 2015, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items:
Interest income on tax-exempt municipal securities
$30,000
Loss on sale of land acquired in 1985 as an investment
$40,000
Interest expense on loan to purchase tax-exempt municipal securities
$10,000
What is the taxable income of Prunus, Inc. for 2015?
a. $800,000b. $820,000c. $830,000d. $870,000e. None of the above
Question 4
Ficus, Inc. began business on March 1, 2015, and elected to file its income tax return on a calendar-year basis. The corporation incurred $800 in organizational expenditures. Assuming the corporation does not elect to expense but chooses to amortize the costs over 180 months, the maximum allowable deduction for amortization of organizational expenditures in 2015 is:
a. $4.44b. $44.44c. $53.28d. $800.00e. None of the above
Question 5
ABC Company owns 40 percent of JMT Company and 95 percent of DEM Company. JMT pays a $80,000 dividend to ABC and DEM pays a $40,000 dividend to ABC in the current year. Assuming that ABC has $1,000,000 of taxable income, calculate ABC's dividends received deduction for the current year.
a. $96,000b. $104,000c. $120,000d. $140,000e. None of the above is correct
Question 6
The Bay Fig Corporation has $350,000 of taxable income from operations for the current year, and dividends of $50,000 received from 10 percent-owned domestic corporations. How much is the Bay Fig Corporation's dividends received deduction for the current year?
a. $35,000b. $40,000c. $70,000d. $80,000e. None of the above
Question 7
For the current year, the Beech Corporation has net income on its books of $60,000, including the following items:
Net capital losses
$15,000
Federal income tax expense
$25,000
Federal tax depreciation exceeds the depreciation deducted on the books by $5,000. What is the corporation's taxable income?
a. $66,000b. $90,000c. $95,000d. $103,000e. None of the above
Question 8
Which of the following items isnotgenerally a schedule M-1 adjustment?
a. Net capital lossesb. Interest on tax-exempt bondsc. Federal income tax expensed. Interest expense on a loan to purchase municipal bondse. All of the above are M-1 adjustments
Question 9
Which of the following statements is true of corporations?
a. Income of all corporations is taxed in the same way that income of partnerships is taxed.b. A corporation's charitable contribution deduction is limited to 25 percent of the corporation's taxable income.c. Capital losses of a corporation may be deducted from ordinary income, subject to an annual limitation.d. If a corporation has a long-term capital loss that is carried back, it is treated as a short-term capital loss.e. A corporation may deduct organizational expenditures as they are incurred.
Question 10
For 2015, what is the maximum tax rate for personal service corporations?
a. 25 percentb. 28 percentc. 34 percentd. 35 percente. None of the above.