FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Corporate Operations

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Essay

Review LaterAdd Note

Review Later

During 2017, Hughes Corporation sold a portfolio of stock it had held for five years at a loss of$200,000. It also sold some investment land and recognized a capital gain of $180,000. In 2015, Hughes reported a net capital gain of $12,000 and in 2016 it recognized a net capital gain of $6,000. What is the amount of its net capital loss carryover to 2018?

Correct Answer

verified

$2,000, co...

View Answer

Show Answer

Question 72

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following describes the correct treatment of the exercise of nonqualified stock options (NQOs) that were granted when ASC 718 applies?

A) Financial-expense value over vesting period; tax-no deduction.
B) Financial-expense value over vesting period; tax-deduct bargain element at exercise.
C) Financial-no expense; tax-deduct bargain element at exercise.
D) Financial-no expense; tax-no deduction.

E) B) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 73

True/False

Review LaterAdd Note

Taxable income of the most profitable corporations is subject to a flat 35% tax rate.

Most corporations use the annualized income method to determine their required annual payment for purposes of making quarterly estimated payments.

Which of the following statements regarding book-tax differences associated with purchased goodwill is false?

A corporation may carry a net capital loss back two years and forward 20 years.

Which of the following statements regarding charitable contributions is false?

Controlled group provisions in the tax law prevent taxpayers from splitting a corporation into several smaller corporations to take advantage of low marginal corporate tax rates at low levels of income.

For a corporation, goodwill created in an asset acquisition generally leads to temporarybook-tax differences.

AmStore Inc. sold some of its heavy machinery at a gain. AmStore used the straight-line method for financial accounting depreciation and MACRS for tax cost-recovery. If accumulated depreciation for financial accounting purposes is less than accumulated depreciation for tax reporting purposes, what is the nature of the book-tax differenceassociated with the gain on the sale?

Corporations have a larger standard deduction than individual taxpayers because theygenerally have higher revenues.

For incentive stock options granted when ASC 718 applies, the value of the options that accrue in a given year always creates a permanent, unfavorable book-tax difference.

Corporations compute their dividends received deduction by multiplying the dividend amount by 10%, 50%, or 100% depending on their ownership in the distributingcorporation's stock.

Which of the following is not a type of controlled group as defined in the InternalRevenue Code?

In January 2016, Khors Company issues nonqualified stock options to its CEO, Jenny Svaro. Because the company does not expect Ms. Svaro to leave the company, the options vest at the time they are granted with a total value of $50,000. In December of2017, the company experiences a surge in its stock price, and Ms. Svaro exercises the options. The total bargain element at the time of exercise is $60,000. For 2017, what is the book-tax difference due to the options exercised?

A corporation with a minimum tax credit carryover may reduce regular tax down to the amount of its tentative minimum tax when its regular tax exceeds its tentative minimum tax.

Which of the following is not an acceptable method of determining the required annual payment of federal income tax for corporations?

TrendSetter Inc. paid $50,000 in premiums for life insurance coverage for its key employees for which TrendSetter Inc. is the beneficiary. What is the nature of the book-tax difference created by this expense?

Coop Inc. owns 40% of Chicken Inc., both Coop and Chicken are corporations. Chicken pays Coop a dividend of $10,000 in the current year. Chicken also reports financialaccounting earnings of $20,000 for that year. Assume that Coop follows the general rule of accounting for investment in Chicken. What is the amount and nature of the book-tax difference to Coop associated with the dividend distribution (ignoring the dividendsreceived deduction) ?

Jazz Corporation owns 50% of the Williams Corp. stock. Williams distributed a $10,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income before the dividend was$100,000. What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?