Q1. Keckye Co. is a calendar year C Corporation. When is Keckye's tax return due?
March 15
June 15
April 15
October 15
Q2. A corporation that has both preferred and common stock has a deficit in accumulated earnings and profits at the beginning of the year. The current earnings and profits are $25,000. The corporation makes a dividend distribution of $20,000 to the preferred shareholders and $10,000 to the common shareholders. How will the preferred and common shareholders report these distributions?
Preferred - $20,000 dividend income; common - $10,000 dividend income.
Preferred - $15,000 dividend income; common - $10,000 dividend income.
Preferred - $20,000 return of capital; common - $10,000 return of capital.
Preferred - $20,000 dividend income; common - $5,000 dividend income, $5,000 return of capital.
Q3. A husband and wife agree to split monetary gifts to their relatives. The husband gives his daughter $20,500, and the wife gives her niece $17,000. The annual exclusion is $12,000. What amount is the taxable gift for the husband and wife?
$37,500
$13,500
$17,000
$0
Q4. Ordinary and necessary administration expenses paid by the fiduciary of an estate are deductible
On the fiduciary income tax return only if the estate tax deduction is waived for these expenses.
Only on the fiduciary income tax return (Form 1041) and never on the federal estate tax return (Form 706).
On both the fiduciary income tax return and on the estate tax return by adding a tax computed on the proportionate rates attributable to both returns.
Only on the federal estate tax return and never on the fiduciary income tax return.
Q5. The following chart shows ownership percentages of Devon Corp. in X, Y and Z Corporations, and dividends received by Devon from these corporations in 20X14. Devon's Ownership % Dividend Received
X Corp. 15% $100,000
Y Corp. 20% $120,000
Z Corp. 30% $200,000
Devon is a calendar-year corporation and received no other dividends in 20X14. What amount of dividend income must be included by Devon on its 20X14 corporate tax return?
$114,000
$94,000
$106,000
$126,000
Q6. Beck and Nilo are equal partners in B & N Associates, a general partnership. B & N borrowed $10,000 from a bank on an unsecured note, thereby increasing each partner's share of partnership liabilities. As a result of this loan, the basis of each partner's interest in B & N was Dependent on each partner's ability to meet the obligation if called upon to do so.
Increased.
Unaffected.
Decreased.
Q7. When a shareholder contributes property to obtain stock, what will determine the valuation of the investment, when the total shares owned by contributors of cash and property is greater than 80%?
I. The adjusted basis of the property.
II. The fair market value of the property.
I only
The lesser of I and II.
The greater of I and II.
II only
Q8. Harold gives one share of stock in Harold Corp., an S Corp, to each the following
individuals:
His nephew
- His son
- His adopted step-daughter
- His grandson
- His cousin
What is the minimum number of additional S-Corp shareholders under Code Section 1361 that will result from this distribution of stock?
Four
Two
Three
Five
Q9. Tapper Corp., an accrual-basis calendar-year corporation, was organized on January 2, 20X3. During 20X3, revenue was exclusively from sales proceeds and interest income.
The following information pertains to Tapper:
Taxable income before charitable contributions for the year ended
December 31, 20X3
$500,000
Tapper's matching contribution to employee designated qualified universities made during 20X3
10,000
Board of Directors' authorized contribution to a qualified charity (authorized December 1, 20X3, made February 1, 20X4)
30,000
What is the maximum allowable deduction that Tapper may take as a charitable contribution on its tax return for the year ended December 31, 20X3?
$40,000
$0
$10,000
$30,000
Q10. At the beginning of the year, Cable, a C corporation, had accumulated earnings and profits of $100,000. Cable reported the following items on its current-year tax return:
Taxable income $50,000
Federal income taxes paid $ 5,000
Charitable contributions carry forward $ 1,000
Capital loss carry forward $ 2,000
What is Cable's accumulated earnings and profits at the end of the year?
$148,000
$146,000
$150,000
$145,000
Q11. The adjusted basis of Jody's partnership interest was $50,000 immediately before Jody received a current distribution of $20,000 cash and property with an adjusted basis to the partnership of $40,000 and a fair market value of $35,000.
What is Jody's basis in the distributed property?
$45,000
$40,000
$30,000
$0
Q12. Osha, a cash-basis calendar-year partnership, began business on April 1, 20X5. Osha incurred and paid the following during 20X5:
Legal work associated with formation of the partnership: $15,260
Accounting work associated with raising additional capital: $10,000
What is the maximum amount of organizational costs deductible on Osha's 20X5 partnership return?
$6,013
$5,684
$5,513
$5,000
Q13. Prairee partnership has four equal partners, Dodd, Crank, Pick, and Mack. Each of the partners had a tax basis of $320,000 as of January 1, 20X5. Prairee's 20X5 net business income was $152,000. During 20X5, Pairee paid Mack guaranteed payments of $4,000 for deductible services rendered. During 20X5, each of the four partners took a distribution of $50,000. What is Mack's tax basis in Prairee on December 31, 20X5?
$422,000
$307,000
$358,000
$472,000
Q14. Curry's adjusted basis in Vantage Partnership was $5,000 at the time he received a non-liquidating distribution of land. The land had an adjusted basis of $6,000 and a fair market value of $9,000 to Vantage. What was the amount of Curry's basis in the land?
$9,000
$6,000
$5,000
$1,000
Q15. The federal estate tax may be reduced by a credit for state
Gift taxes on gifts made two years before death.
Income taxes paid in the year of death.
Death taxes.
Intangible property taxes.
Q16. Identify the correct statement about Schedules M-1 and M-3: Reconciles Book Income (Loss) with Distinguishes Between Permanent and Income per Return Temporary Differences Both Schedule M-1 and Schedule M-3 Schedule M-3 Only Schedule M-1 Only Both Schedule M-1 and Schedule M-3
Both Schedule M-1 and Schedule M-3
Neither Schedule M-1
nor M-3
Both Schedule M-1 and Schedule M-3 Schedule M-1 Only
Q17. After a corporation's status as an S corporation is revoked or terminated, how many years is the corporation required to wait before making a new S election, in the absence of IRS consent to an earlier election?
10
3
1
5
Q18. The Hass Corp., a calendar year S corporation, has two equal shareholders. For the year ended December 31, 20X3, Haas had taxable income and current earnings and profits of $60,000, which included $50,000 from operations and $10,000 from investment interest income. There were no other transactions that year. Each shareholder's basis in the stock of Haas will increase by
$0
$30,000
$50,000
$25,000
Q19. What is the tax rate for an S corporation that pays tax on built-in gains?
The highest individual income tax rate.
The calculated income tax rate of the corporation.
The highest corporate income tax rate.
The income tax rate of the shareholder.
Q20. Edge Corp. met the stock ownership requirements of a personal holding company. What sources of income must Edge consider to determine if the income requirements for a personal holding company have been met?