Question 1

Although a corporation may report a temporary book-tax difference for an item ofincome or deduction for a given year, over the long term the total amount of income or deduction it reports with respect to that item will be the same for both book and tax purposes.

Accepted Answer

A) True 
 B)False

Question 2

A nonqualified stock option will create a permanent book-tax difference in a given year if it accrues during the year but is exercised in a later year.

Accepted Answer

A) True 
 B)False

Question 3

Rapidpro Inc. had more than $1,000,000 of taxable income two years prior to the current year. It would like to use its prior year tax liability (which was very low but above zero)  to determine its quarterly estimated payments this year. Which of the followingstatements is true?

Accepted Answer

A)   To avoid penalty, the second quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first quarter estimated taxable income (assume it does not rely on its current year actual taxLiability to determine its estimated tax payment) .
B)   To avoid penalty, the third quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third quarter estimated taxable income (assume it does not rely on its current year actual tax liability to determine its estimated tax payment) .
C)   Rapidpro may use the prior year tax liability to determine its first and second quarter estimated tax payments only since it is a large corporation.
D)   None of the choices are true.E) All of the above
F) C) and D)

Question 4

In 2017, AutoUSA Inc. received $4,600,000 of book income, including $20,000 of interest income from tax-exempt municipal bonds. AutoUSA reported $3,600,000 of regular business expenses. If it made $350,000 of estimated tax payments (prepayments) throughout the tax year, what is its tax due or tax refund when it files its return? Assume AutoUSA pays taxes at a flat 34 percent rate anddisregard the alternative minimum tax.

Accepted Answer

The answer of In 2017, AutoUSA Inc. received $4,600,000 of...

Question 5

Three brothers each own 20% of the stock in three corporations. Because no single brother owns more than 50% of a corporation, the tax law would not treat thecorporations as a controlled group.

Accepted Answer

A) True 
 B)False

Question 6

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements regarding capital gains and losses is false?

Accepted Answer

A)   C corporations can carry back net capital losses three years and they can carry them forward for five years.
B)   In terms of tax treatment, corporations generally prefer capital gains to ordinary income.
C)   Corporations must apply capital loss carrybacks and carryovers in a particular order.
D)   Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year.E) A) and B)
F) A) and C)

Question 8

Which of the following statements is false regarding consolidated tax returns?

Accepted Answer

A)   For a group of corporations filing a consolidated tax return, losses from certain intercompany transactions are deferred until realized through a transaction outsideOf the group.
B)   To file a consolidated tax return, one corporation must own at least 50% of the stock of another corporation.
C)   For a group of corporations filing a consolidated tax return, an advantage is that losses of one group member may offset gains of another group member.
D)   An affiliated group can file a consolidated tax return only if it elects to do so.E) All of the above
F) A) and B)

Question 9

The dividends received deduction is designed to mitigate the extent to which corporate earnings are subject to more than two levels of taxation.

Accepted Answer

A) True 
 B)False

Question 10

In 2017, Webtel Corporation donated $50,000 to a qualifying charity. For the year, it reported taxable income of $310,000, which included the following: the $50,000 charitable contribution (before limitation), a $100,000 dividends received deduction, and a $20,000 net operating loss carryover. What is Webtel Corp.'s charitable contribution deduction?

Accepted Answer

$46,000, c...

Question 11

Which of the following is allowable as a deduction in calculating a corporation's net operating loss?

Accepted Answer

A)   Charitable contribution deduction.
B)   Net operating losses from other years.
C)   Net capital loss carryback.
D)   Domestic production activities deduction.E) A) and B)
F) A) and C)

Question 12

Which of the following statements regarding the dividends and/or the dividends received deduction (DRD)  is true?

Accepted Answer

A)   The DRD allows corporations to deduct the amount of dividends that they distribute.
B)   Dividends are taxed at preferential rates for corporations as well as for individuals.
C)   Corporations are allowed to deduct from a dividend received the product of the dividend and the percentage of the receiving corporation's ownership in the distributing corporation's stock.
D)   The DRD can increase the net operating loss of a corporation.E) A) and D)
F) All of the above

Question 13

Depreciation adjustments can increase or decrease the AMT base relative to taxable income.

Accepted Answer

A) True 
 B)False

Question 14

A C corporation reports its taxable income or loss on Form 1065.

Accepted Answer

A) True 
 B)False

Question 15

AB Inc. received a dividend from CD Corporation and is able to claim a dividends receiveddeduction without limitation. AB owns 10 percent of CD. What is AB's marginal tax rate (to the nearest tenth of a percent) on the dividends received (after taking the DRD into account) assuming its ordinary marginal tax rate is 34%?

Accepted Answer

10.2% [34%...

Question 16

Large corporations (corporations with more than $1,000,000 in taxable income in any of the three years prior to the current year) can use their prior tax year liability to determine all required estimated quarterly payments for the current year.

Accepted Answer

A) True 
 B)False

Question 17

XPO Corporation has a minimum tax credit of $51,000 from 2016. If its 2017 tentative minimum tax is $211,000 and its regular tax liability is $250,000, what is its minimum tax credit carryover to 2018?

Accepted Answer

A)   $51,000.
B)   $0.
C)   $12,000.
D)   $39,000.E) None of the above
F) A) and C)

Question 18

BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year. What is the nature of the book-tax difference created by the net operating loss carryover deduction in the current year?

Accepted Answer

A)   Permanent; favorable.
B)   Temporary; favorable.
C)   Temporary; unfavorable.
D)   Permanent; unfavorable.E) None of the above
F) B) and C)

Question 19

Which of the following does NOT create a permanent book-tax difference?

Accepted Answer

A)   Key employee death benefit income.
B)   Fines and penalties expenses.
C)   Organizational and start-up expenses.
D)   Municipal bond interest income.E) A) and B)
F) All of the above

Question 20

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 applies?

Accepted Answer

A)   Financial accounting-no expense; tax-deduct bargain element at exercise.
B)   Financial accounting-no expense; tax-no deduction.
C)   Financial-expense value over vesting period; tax-no deduction.
D)   Financial-expense value over vesting period; tax-deduct bargain element at exercise.E) All of the above
F) C) and D)

Exam 16: Corporate Operations

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Correct Answer
verified

Which of the following statements regarding the dividends and/or the dividends received deduction (DRD) is true?

Correct Answer
verified

XPO Corporation has a minimum tax credit of $51,000 from 2016. If its 2017 tentative minimum tax is $211,000 and its regular tax liability is $250,000, what is its minimum tax credit carryover to 2018?

Correct Answer
verified

Which of the following is allowable as a deduction in calculating a corporation's net operating loss?

Correct Answer
verified

Depreciation adjustments can increase or decrease the AMT base relative to taxable income.

Correct Answer
verified

BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year. What is the nature of the book-tax difference created by the net operating loss carryover deduction in the current year?

Correct Answer
verified

Which of the following statements is false regarding consolidated tax returns?

Correct Answer
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Correct Answer
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$46,000, c...
View Answer

Correct Answer
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Rapidpro Inc. had more than $1,000,000 of taxable income two years prior to the current year. It would like to use its prior year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year. Which of the followingstatements is true?

Correct Answer
verified

Three brothers each own 20% of the stock in three corporations. Because no single brother owns more than 50% of a corporation, the tax law would not treat thecorporations as a controlled group.

Correct Answer
verified

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 applies?

Correct Answer
verified

Which of the following statements regarding capital gains and losses is false?

Correct Answer
verified

The dividends received deduction is designed to mitigate the extent to which corporate earnings are subject to more than two levels of taxation.

Correct Answer
verified

Although a corporation may report a temporary book-tax difference for an item ofincome or deduction for a given year, over the long term the total amount of income or deduction it reports with respect to that item will be the same for both book and tax purposes.

Correct Answer
verified

Correct Answer
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10.2% [34%...
View Answer

Which of the following does NOT create a permanent book-tax difference?

Correct Answer
verified

Large corporations (corporations with more than $1,000,000 in taxable income in any of the three years prior to the current year) can use their prior tax year liability to determine all required estimated quarterly payments for the current year.

Correct Answer
verified

A nonqualified stock option will create a permanent book-tax difference in a given year if it accrues during the year but is exercised in a later year.

Correct Answer
verified

A C corporation reports its taxable income or loss on Form 1065.

Correct Answer
verified

Exam 16: Corporate Operations

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Correct AnswerverifiedShow Answer

Which of the following statements regarding the dividends and/or the dividends received deduction (DRD) is true?

Correct AnswerverifiedShow Answer

XPO Corporation has a minimum tax credit of $51,000 from 2016. If its 2017 tentative minimum tax is $211,000 and its regular tax liability is $250,000, what is its minimum tax credit carryover to 2018?

Correct AnswerverifiedShow Answer

Which of the following is allowable as a deduction in calculating a corporation's net operating loss?

Correct AnswerverifiedShow Answer

Depreciation adjustments can increase or decrease the AMT base relative to taxable income.

Correct AnswerverifiedShow Answer

BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year. What is the nature of the book-tax difference created by the net operating loss carryover deduction in the current year?

Correct AnswerverifiedShow Answer

Which of the following statements is false regarding consolidated tax returns?

Correct AnswerverifiedShow Answer

Correct Answerverified$46,000, c...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Rapidpro Inc. had more than $1,000,000 of taxable income two years prior to the current year. It would like to use its prior year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year. Which of the followingstatements is true?

Correct AnswerverifiedShow Answer

Three brothers each own 20% of the stock in three corporations. Because no single brother owns more than 50% of a corporation, the tax law would not treat thecorporations as a controlled group.

Correct AnswerverifiedShow Answer

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 applies?

Correct AnswerverifiedShow Answer

Which of the following statements regarding capital gains and losses is false?

Correct AnswerverifiedShow Answer

The dividends received deduction is designed to mitigate the extent to which corporate earnings are subject to more than two levels of taxation.

Correct AnswerverifiedShow Answer

Although a corporation may report a temporary book-tax difference for an item ofincome or deduction for a given year, over the long term the total amount of income or deduction it reports with respect to that item will be the same for both book and tax purposes.

Correct AnswerverifiedShow Answer

Correct Answerverified10.2% [34%...View AnswerShow Answer

Which of the following does NOT create a permanent book-tax difference?

Correct AnswerverifiedShow Answer

Large corporations (corporations with more than $1,000,000 in taxable income in any of the three years prior to the current year) can use their prior tax year liability to determine all required estimated quarterly payments for the current year.

Correct AnswerverifiedShow Answer

A nonqualified stock option will create a permanent book-tax difference in a given year if it accrues during the year but is exercised in a later year.

Correct AnswerverifiedShow Answer

A C corporation reports its taxable income or loss on Form 1065.

Correct AnswerverifiedShow Answer

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$46,000, c...
View Answer

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10.2% [34%...
View Answer

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Correct Answer
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