Question 1

Which of the following statements is correct regarding the taxation of C corporations?

Accepted Answer

A)   Schedule M-2 is used to reconcile net income computed for financial accounting purposes with taxable income reported on the corporation's tax return.
B)   The corporate return is filed on Form 1120S.
C)   Corporations can receive an automatic extension of nine months for filing the corporate return by filing Form 7004 by the due date for the return.
D)   A corporation with total assets of $7.5 million or more is required to file Schedule M-3.
E)   None of the above.F) D) and E)
G) B) and D)

Question 2

Canary Corporation, an accrual method C corporation, uses the calendar year for tax purposes. Leticia, a cash method taxpayer, is both a shareholder of Canary and the corporation's CFO. On December 31, 2018, Canary has accrued a $75,000 bonus to Leticia. Describe the tax consequences of the bonus to Canary and to Leticia under the following independent situations.
a. Leticia owns 35% of Canary Corporation's stock and the corporation pays the bonus to Leticia on February 4, 2019.
b. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to Leticia on May 6, 2019.
c. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to Leticia on April 12, 2019.

Accepted Answer

Under § 267(a)(2), an accrual method tax...

Question 3

In working with Schedule M-2 (analysis of unappropriated retained earnings per books)  of Form 1120, which of the following is an addition to beginning retained earnings?

Accepted Answer

A)   Cash dividends.
B)   Net loss per books.
C)   Property dividends.
D)   Net income per books.
E)   None of the above.F) C) and E)
G) A) and B)

Question 4

Gerald, a cash basis taxpayer, owns 70% of the stock of Black Corporation, a calendar year, accrual basis C corporation. On December 31, 2018, Black accrued a bonus of $80,000 to Gerald, and paid the bonus to Gerald on January 2, 2019. When does Gerald report the bonus, and when does Black Corporation deduct the bonus? Would your answers change if Gerald was a 40% shareholder of Black?

Accepted Answer

Gerald is a more than 50% shareholder of...

Question 5

A personal service corporation must use a calendar year, and is not permitted to use a fiscal year.

Accepted Answer

A) True 
 B)False

Question 6

Briefly describe the charitable contribution deduction rules applicable to C corporations.

Accepted Answer

Tax year of deduction: In general, a cha...

Question 7

Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions - subtractions = taxable income. Which of the following items is an addition on Schedule M-1?

Accepted Answer

A)   Tax depreciation in excess of book depreciation.
B)   Proceeds of life insurance paid on death of key employee.
C)   Excess of capital losses over capital gains.
D)   Tax-exempt interest.
E)   None of the above.F) B) and E)
G) None of the above

Question 8

In the current year, Oriole Corporation donated a painting worth $30,000 to the Texas Art Museum, a qualified public charity. The museum included the painting in its permanent collection. Oriole Corporation purchased the painting five years ago for $10,000. Oriole's charitable contribution deduction is $30,000 (ignoring the taxable income limitation).

Accepted Answer

A) True 
 B)False

Exam 17: Corporations: Introduction and Operating Rules

Correct Answer
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Gerald is a more than 50% shareholder of...
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Correct Answer
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Under § 267(a)(2), an accrual method tax...
View Answer

Correct Answer
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Briefly describe the charitable contribution deduction rules applicable to C corporations.

Correct Answer
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Tax year of deduction: In general, a cha...
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In working with Schedule M-2 (analysis of unappropriated retained earnings per books) of Form 1120, which of the following is an addition to beginning retained earnings?

Correct Answer
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A personal service corporation must use a calendar year, and is not permitted to use a fiscal year.

Correct Answer
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Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions - subtractions = taxable income. Which of the following items is an addition on Schedule M-1?

Correct Answer
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Which of the following statements is correct regarding the taxation of C corporations?

Correct Answer
verified

Exam 17: Corporations: Introduction and Operating Rules

Correct AnswerverifiedGerald is a more than 50% shareholder of...View AnswerShow Answer

Correct AnswerverifiedUnder § 267(a)(2), an accrual method tax...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Briefly describe the charitable contribution deduction rules applicable to C corporations.

Correct AnswerverifiedTax year of deduction: In general, a cha...View AnswerShow Answer

In working with Schedule M-2 (analysis of unappropriated retained earnings per books) of Form 1120, which of the following is an addition to beginning retained earnings?

Correct AnswerverifiedShow Answer

A personal service corporation must use a calendar year, and is not permitted to use a fiscal year.

Correct AnswerverifiedShow Answer

Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions - subtractions = taxable income. Which of the following items is an addition on Schedule M-1?

Correct AnswerverifiedShow Answer

Which of the following statements is correct regarding the taxation of C corporations?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Gerald is a more than 50% shareholder of...
View Answer

Correct Answer
verified
Under § 267(a)(2), an accrual method tax...
View Answer

Correct Answer
verified

Correct Answer
verified
Tax year of deduction: In general, a cha...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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