Question 1

VitalJuice Corporation reports the following schedule of prior year taxes it owed:  
What is VitalJuice's tax liability for Year 4?

Accepted Answer

$750,000
Explanation: VitalJuice generat...

Question 2

Income that is included in book income, but excluded from taxable income, results in a favorable, permanent book-tax difference.

Accepted Answer

A) True 
 B)False

Question 3

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 the corporations as a controlled group.

Accepted Answer

A) True 
 B)False

Question 4

For corporations, which of the following regarding net capital losses is true?

Accepted Answer

A)  A corporation that experiences a net capital loss has a favorable book-tax difference in the year of the loss.
B)  A corporation that experiences a net capital loss in year 4 first carries the loss back to year 3, then year 2, and then year 1 before carrying it forward.
C)  Net capital loss carrybacks are deductible in determining a corporation's net operating loss.
D)  Net capital loss carrybacks and carryovers create temporary book-tax differences if they are used before they expirE.Net capital losses create an unfavorable book-tax difference in the year they occur and a favorable book-tax difference in the year they are applied.These book-tax differences are temporary.E) None of the above
F) All of the above

Question 5

WFO Corporation has gross receipts according to the following schedule: 
If WFO began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method?

Accepted Answer

A)  Year 3
B)  Year 4
C)  Year 5
D)  Year 6
E)  None of these.F) A) and C)
G) D) and E)

Question 6

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is false regarding corporate estimated tax payments?

Accepted Answer

A)  The due dates for estimated tax payments are the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year.
B)  Corporations must pay estimated taxes only if they have a federal income tax liability greater than $10,000 (including the alternative minimum tax) .
C)  Even though a corporation extends its tax return, it still must pay its tax liability for the year by three and one-half months after year-end.
D)  Corporations using the annualized income method for determining estimated tax payments project their tax liability for the year based on income from the first, second, and third quarters.E) All of the above
F) A) and D)

Question 8

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

Accepted Answer

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 these are necessary.E) None of the above
F) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements regarding controlled groups is false?

Accepted Answer

A)   	A disproportionate distribution occurs when a partner receives more than his proportionate share of the partnership's hot assets.
B)   	A disproportionate distribution occurs when a partner receives less than his proportionate share of the partnership's hot assets.
C)   	The tax provisions related to disproportionate distributions attempt to preserve the partners' share of ordinary income potential.
D)   	Disproportionate distributions will only occur in liquidating distributions.E) A) and C)
F) A) and B)

Question 11

Netgate Corporation's gross regular tax liability for 2016 was $95,375. What was its taxable income?

Accepted Answer

The answer of Netgate Corporation's gross regular tax liability for...

Question 12

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  Corporations are not required to report book-tax differences on their income tax returns.
B)  Corporations will eventually recognize the same amount of income for book and tax purposes for income-related temporary book-tax differences.
C)  Income excludable for tax purposes usually creates a temporary book-tax difference.
D)  None of these is truE.Temporary book-tax differences will eventually reverse; if a difference is favorable one year, it will be unfavorable in another.E) A) and C)
F) A) and D)

Question 14

GenerUs Inc.'s board of directors approved a charitable cash contribution to FoodBank, a qualified non-profit organization, in November of 2016. GenerUs made payment to FoodBank on February 2, 2017. GenerUs Inc. (a calendar-year corporation) may claim a deduction for the contribution on its 2016 tax return.

Accepted Answer

A) True 
 B)False

Question 15

In 2016, Datasoft Inc. received $350,000 in dividends from CSLabs Inc. Datasoft's taxable income before the dividends received deduction and $20,000 charitable contribution deduction is $300,000. What is Datasoft's DRD assuming it owns 15% of the CSLabs Inc. stock?

Accepted Answer

$196,000, ...

Question 16

IndusTree Inc. received $1,800,000 from the sale of a property in 2016. The property's adjusted basis for regular tax purposes was $200,000 at the time of the sale. The property's adjusted basis for AMT purposes was $290,000. What is the amount of the AMT adjustment due to the sale of the asset? Does it increase or decrease AMTI?

Accepted Answer

$90,000 decrease to AMTI
Explanation: Th...

Question 17

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).

Accepted Answer

A) True 
 B)False

Question 18

Urban Corporation receives tax-exempt income from Denver municipal bonds. All the proceeds from the bonds were used to fund public projects. In computing adjusted current earnings in its AMT computation, Urban must add back the interest income from its municipal bonds.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Imperial Construction Inc. (IC) issued 100,000 incentive stock options (ISOs) to its employees on January 1, 2016 with an estimated value of $5.50 per option. The options vest (accrue) at 25 percent per year for four years (beginning in 2016). Each option allows the holder to purchase one share of stock at $8. On January 1, 2017, employees exercised 12,500 options as IC's stock price reached $14.72. What is the amount of the book-tax difference in 2017 associated with the incentive stock options? Is it favorable or unfavorable? Is it temporary or permanent?

Accepted Answer

$137,500 unfavorable...

Exam 16: Corporate Operations

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).

Correct Answer
verified

Correct Answer
verified
$90,000 decrease to AMTI
Explanation: Th...
View Answer

Which of the following statements is false regarding corporate estimated tax payments?

Correct Answer
verified

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Correct Answer
verified

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

Correct Answer
verified

Income that is included in book income, but excluded from taxable income, results in a favorable, permanent book-tax difference.

Correct Answer
verified

VitalJuice Corporation reports the following schedule of prior year taxes it owed: What is VitalJuice's tax liability for Year 4?

Correct Answer
verified
$750,000
Explanation: VitalJuice generat...
View Answer

Which of the following statements regarding controlled groups is false?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Netgate Corporation's gross regular tax liability for 2016 was $95,375. What was its taxable income?

Correct Answer
verified

Correct Answer
verified
$137,500 unfavorable...
View Answer

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

Correct Answer
verified

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

Correct Answer
verified

WFO Corporation has gross receipts according to the following schedule: If WFO began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method?

Correct Answer
verified

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

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 the corporations as a controlled group.

Correct Answer
verified

Urban Corporation receives tax-exempt income from Denver municipal bonds. All the proceeds from the bonds were used to fund public projects. In computing adjusted current earnings in its AMT computation, Urban must add back the interest income from its municipal bonds.

Correct Answer
verified

For corporations, which of the following regarding net capital losses is true?

Correct Answer
verified

In 2016, Datasoft Inc. received $350,000 in dividends from CSLabs Inc. Datasoft's taxable income before the dividends received deduction and $20,000 charitable contribution deduction is $300,000. What is Datasoft's DRD assuming it owns 15% of the CSLabs Inc. stock?

Correct Answer
verified
$196,000, ...
View Answer

Exam 16: Corporate Operations

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).

Correct AnswerverifiedShow Answer

Correct Answerverified$90,000 decrease to AMTIExplanation: Th...View AnswerShow Answer

Which of the following statements is false regarding corporate estimated tax payments?

Correct AnswerverifiedShow Answer

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Income that is included in book income, but excluded from taxable income, results in a favorable, permanent book-tax difference.

Correct AnswerverifiedShow Answer

VitalJuice Corporation reports the following schedule of prior year taxes it owed: What is VitalJuice's tax liability for Year 4?

Correct Answerverified$750,000Explanation: VitalJuice generat...View AnswerShow Answer

Which of the following statements regarding controlled groups is false?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Netgate Corporation's gross regular tax liability for 2016 was $95,375. What was its taxable income?

Correct AnswerverifiedShow Answer

Correct Answerverified$137,500 unfavorable...View AnswerShow Answer

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

WFO Corporation has gross receipts according to the following schedule: If WFO began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method?

Correct AnswerverifiedShow Answer

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

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 the corporations as a controlled group.

Correct AnswerverifiedShow Answer

Urban Corporation receives tax-exempt income from Denver municipal bonds. All the proceeds from the bonds were used to fund public projects. In computing adjusted current earnings in its AMT computation, Urban must add back the interest income from its municipal bonds.

Correct AnswerverifiedShow Answer

For corporations, which of the following regarding net capital losses is true?

Correct AnswerverifiedShow Answer

In 2016, Datasoft Inc. received $350,000 in dividends from CSLabs Inc. Datasoft's taxable income before the dividends received deduction and $20,000 charitable contribution deduction is $300,000. What is Datasoft's DRD assuming it owns 15% of the CSLabs Inc. stock?

Correct Answerverified$196,000, ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
$90,000 decrease to AMTI
Explanation: Th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$750,000
Explanation: VitalJuice generat...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$137,500 unfavorable...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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$196,000, ...
View Answer