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Exam 16: Corporate Operations

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Question 21

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Which of the following is not required to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity for a calendar year-end corporation?

A) Approval of the payment from the board of directors.
B) Approval from the IRS prior to making the contribution.
C) Payment made within three and one-half months of the tax year-end.
D) All of the choices are necessary.

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

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Question 22

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Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation) by corporations is true?

A) Corporations may not carry over or carry back excess charitable contributions.
B) Corporations can carry excess charitable contributions over to a future year or back to a prior year.
C) Corporations can carry excess charitable contributions over to a future year but not back to a prior year.
D) Corporations can carry excess charitable contributions back to a prior year but not over to a future year.

E) None of the above
F) B) and C)

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Question 23

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

Which of the following describes the correct treatment of the exercise of nonqualified stock options (NQOs) ?

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.

Although a corporation may report a temporary book-tax difference for an item of income 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.

For estimated tax purposes, a "large" corporation is any corporation with average annual gross receipts of $5,000,000 in the three years prior to the current year.

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

GenerUs Incorporated board of directors approved a charitable cash contribution to FoodBank, a qualified nonprofit organization, in November of 2020. GenerUs made the payment to FoodBank on February 2, 2021. GenerUs Incorporated (a calendar-year corporation)may claim a deduction for the contribution on its 2020 tax return.

Studios reported a net capital loss of $38,500 in Year 5. It reported net capital gains of $31,000 in Year 4 and $44,000 in Year 6. What is the amount and nature of the book-tax difference in Year 6 related to the net capital carryover?

A corporation generally will report a favorable, temporary book-tax difference when it deducts a charitable contribution carryover.

For book purposes, RadioAircast Incorporated reported $15,000 of income from municipal bonds in 2020. It also expensed $12,000 of radio station filing fines paid to the FCC the same year. What is the total book-tax difference associated with these items? Is it favorable or unfavorable? What amount of the total adjustment is permanent and what amount is temporary?

Net operating losses generally create permanent book-tax differences.

Accrual-method corporations cannot deduct charitable contributions until they actually make payment to the charity.

Over what time period do corporations amortize purchased goodwill for tax purposes?

Which of the following statements regarding charitable contributions is false?

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

Which of the following statements regarding book-tax differences is true?

Corporations and individuals are allowed to claim the qualified business income deduction.

Corporations may carry a net operating loss sustained in 2020 back two years and forward 20 years.