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Exam 5: Corporate Operations

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Question 61

Multiple Choice

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Which of the following describes the correct treatment of incentive stock options (ISOs) ?

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

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

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Question 62

True/False

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Schedule M-1 reconciles from book income to bottom line taxable income (the taxable income that is applied to the tax rates to determine the corporation's gross tax liability).

A) True
B) False

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Question 63

True/False

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Corporations may carry excess charitable contributions forward five years, but they may not carry them back.

Omnidata uses the annualized income method to determine its quarterly federal income tax payments. It had $100,000, $50,000, and $90,000 of taxable income for the first, second, and third quarters, respectively ($240,000 in total through the first three quarters) . What is Omnidata's annual estimated taxable income as of the end of the third quarter?

For 2018, accrual-method corporations cannot deduct charitable contributions until they actually make payment to the charity.

Corporations are not allowed to deduct charitable contributions in excess of 10% of the corporation's taxable income (before the charitable contribution and certain other deductions).

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

A corporation may carry a net capital loss back three years and forward five years.

Which of the following statements regarding charitable contributions is False?