Question 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?

Accepted Answer

A)   $15,000.
B)   $16,850.
C)   $17,250.
D)   $19,450.
E)   None of the above.F) C) and E)
G) C) and D)

Question 2

Thrush Corporation files Form 1120, which reports taxable income of $110,000. The corporation's tax is $26,150.

Accepted Answer

A) True 
 B)False

Question 3

During the current year, Lavender Corporation, a C corporation in the business of manufacturing tangible research equipment, made charitable contributions to qualified organizations as follows:
  Lavender Corporation's taxable income (before any charitable contribution deduction) is $2.5 million.

Accepted Answer

The answer of During the current year, Lavender Corporation, a...

Question 4

Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2011. He also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn. How much income must Bjorn report from these businesses?

Accepted Answer

A)   $0 income from the S corporation and $30,000 income from the C corporation.
B)   $90,000 income from the S corporation and $30,000 income from the C corporation.
C)   $90,000 income from the S corporation and $0 income from the C corporation.
D)   $30,000 income from the S corporation and $30,000 of dividend income from the C corporation.
E)   None of the above.F) A) and D)
G) None of the above

Question 5

Albatross, a C corporation, had $125,000 net income from operations and a $10,000 short-term capital loss in 2011. Albatross Corporation's taxable income is $115,000.

Accepted Answer

A) True 
 B)False

Question 6

Ed, an individual, incorporates two separate businesses that he owns by establishing two new corporations. Each corporation generates taxable income of $50,000. Each corporation will have a tax liability of $7,500.

Accepted Answer

A) True 
 B)False

Question 7

During the current year, Shrike Company had $220,000 net profit from operations. Carlos, the sole owner of Shrike, is in the 35% marginal tax bracket. Determine the combined tax burden for Shrike and Carlos under the following two independent situations. (Ignore any employment taxes.)

Accepted Answer

The answer of During the current year, Shrike Company had...

Question 8

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

Accepted Answer

The answer of As a general rule, a personal service...

Question 9

Beige Company has approximately $250,000 in net income in 2011 before deducting any compensation or other payment to its sole owner, Janet (who is single). Assume that Janet is in the 35% marginal tax bracket. Discuss the tax aspects of each of the following arrangements. (Ignore any employment tax considerations.)

Accepted Answer

The answer of Beige Company has approximately $250,000 in net...

Question 10

During the current year, Coyote Corporation (a calendar year C corporation) has the following transactions:

Accepted Answer

The answer of During the current year, Coyote Corporation (a...

Question 11

What is the annual required estimated tax payment for a C corporation? What are the rules regarding payment of the estimated tax?

Accepted Answer

Estimated tax payments are required if t...

Question 12

Glen and Michael are equal partners in Trout Enterprises, a calendar year partnership. During the year, Trout Enterprises had gross income of $400,000 and operating expenses of $220,000. In addition, the partnership sold land that had been held for investment purposes for a long-term capital gain of $100,000. During the year, Glen withdrew $60,000 from the partnership, and Michael withdrew $60,000. Discuss the impact of this information on the taxable income of Trout, Glen, and Michael.

Accepted Answer

A)   Trout pays tax on $0 income, Glen's taxable income increases by $60,000, and Michael's taxable income increases by $60,000.
B)   Trout pays tax on $280,000 income, Glen's taxable income increases by $60,000, and Michael's taxable income increases by $60,000.
C)   Trout pays tax on $0 income, Glen's taxable income increases by $200,000, and Michael's taxable income increases by $200,000.
D)   Trout pays tax on $0 income, Glen's taxable income increases by $140,000, and Michael's taxable income increases by $140,000.
E)   None of the above.F) B) and C)
G) A) and E)

Question 13

Shaw, an architect, is the sole shareholder of Shaw Corporation, a professional association. The corporation paid Shaw a salary of $255,000 during its fiscal year ending October 31, 2011.

Accepted Answer

The answer of Shaw, an architect, is the sole shareholder...

Exam 2: Corporations: Introduction and Operating Rules

During the current year, Shrike Company had $220,000 net profit from operations. Carlos, the sole owner of Shrike, is in the 35% marginal tax bracket. Determine the combined tax burden for Shrike and Carlos under the following two independent situations. (Ignore any employment taxes.)

Correct Answer
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During the current year, Coyote Corporation (a calendar year C corporation) has the following transactions:

Correct Answer
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Thrush Corporation files Form 1120, which reports taxable income of $110,000. The corporation's tax is $26,150.

Correct Answer
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What is the annual required estimated tax payment for a C corporation? What are the rules regarding payment of the estimated tax?

Correct Answer
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Estimated tax payments are required if t...
View Answer

Shaw, an architect, is the sole shareholder of Shaw Corporation, a professional association. The corporation paid Shaw a salary of $255,000 during its fiscal year ending October 31, 2011.

Correct Answer
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Correct Answer
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During the current year, Lavender Corporation, a C corporation in the business of manufacturing tangible research equipment, made charitable contributions to qualified organizations as follows: Lavender Corporation's taxable income (before any charitable contribution deduction) is $2.5 million.

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

Correct Answer
verified

Correct Answer
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Albatross, a C corporation, had $125,000 net income from operations and a $10,000 short-term capital loss in 2011. Albatross Corporation's taxable income is $115,000.

Correct Answer
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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?

Correct Answer
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Ed, an individual, incorporates two separate businesses that he owns by establishing two new corporations. Each corporation generates taxable income of $50,000. Each corporation will have a tax liability of $7,500.

Correct Answer
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Correct Answer
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Exam 2: Corporations: Introduction and Operating Rules

During the current year, Shrike Company had $220,000 net profit from operations. Carlos, the sole owner of Shrike, is in the 35% marginal tax bracket. Determine the combined tax burden for Shrike and Carlos under the following two independent situations. (Ignore any employment taxes.)

Correct AnswerverifiedShow Answer

During the current year, Coyote Corporation (a calendar year C corporation) has the following transactions:

Correct AnswerverifiedShow Answer

Thrush Corporation files Form 1120, which reports taxable income of $110,000. The corporation's tax is $26,150.

Correct AnswerverifiedShow Answer

What is the annual required estimated tax payment for a C corporation? What are the rules regarding payment of the estimated tax?

Correct AnswerverifiedEstimated tax payments are required if t...View AnswerShow Answer

Shaw, an architect, is the sole shareholder of Shaw Corporation, a professional association. The corporation paid Shaw a salary of $255,000 during its fiscal year ending October 31, 2011.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the current year, Lavender Corporation, a C corporation in the business of manufacturing tangible research equipment, made charitable contributions to qualified organizations as follows: Lavender Corporation's taxable income (before any charitable contribution deduction) is $2.5 million.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Albatross, a C corporation, had $125,000 net income from operations and a $10,000 short-term capital loss in 2011. Albatross Corporation's taxable income is $115,000.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Ed, an individual, incorporates two separate businesses that he owns by establishing two new corporations. Each corporation generates taxable income of $50,000. Each corporation will have a tax liability of $7,500.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Estimated tax payments are required if t...
View Answer

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