First Exam-Federal Income Taxes Acco-321-Corporations

Universidad del Turabo

First Exam-Federal Income Taxes Acco-321-Corporations

Professor Edwin F. Rodriguez Cruz

1-The rule limiting the allowability of passive activity losses and credits applies to

a. Partnership

b. S Corporations

c. Personal Service Corporations

d. Widely-held C Corporations

2-A corporation’s capital losses are

a. Deductible only to the of the corporation’s capital gains

b. Deductible from the corporation’s capital gains

c. Carried back three years and forward 15 years.

d. Forfeited if the corporation had no capital gains in the year in which the capital losses were incurred.

3-Corporate dividends received deduction

a. Must exceed the applicable percentage of the recipient shareholder’s taxable income.

b. Is affected by a requirement that the investor corporation must own the investee’s stock for a specified minimum holding period.

c. Is affected by the percentage of the investee’s stock owned by the investor corporations.

d. May be claimed by S corporations.

4-The minimum total voting power that a parent corporation must have in a subsidiary’s stock in order to be eligible for the filling of a consolidated return is

a. 20%

b. 50%

c. 51%

d. 80%

5-A corporation capital loss carryback or carryover is

a. Not allowable under current law.

b. Limited to $3,000.

c. Always treated as a long-term capital loss.

d. Always treated as a short-term capital loss.

6-If an S corporation has no accumulated earnings or profits, the amount distributed to a shareholder

a. Must be returned to a shareholder.

b. Increase the shareholder’s basis for the stock.

c. Decrease the shareholder’s basis for the stock.

d. Has no effect on the shareholder’s basis for the stock.

7-If a corporation’s charitable contributions exceed the limitation for deductibility in a particular year, the excess

a. Is not deductible in any future or prior years.

b. May be carried back or forward for one year at the corporation election.

c. May be carried forward to a maximum of five succeeding years.

d. May be carried back to the third preceding year.

8-The accumulated tax earnings can be imposed

a. On both partnership and corporations.

b. On companies that make distributions in excess of accumulated earnings.

c. On personal holding companies.

d. Regardless of the numbers of stockholders in a corporations.

9-In the case of a corporation that is not a financial institution, which of the following statements is correct with regard to the deduction for bad debts

a. Either the reserve method or the direct charge-off method may be used, if the election is made in the corporation’s first year.

b. On approval from the IRS, a corporation may change its method from direct charge-off to reserve.

c. If the reserve method was consistently used in prior years, the corporation may take a deduction for a reasonable addition to the reserve for bad debts.

d. A corporation is required to use the direct charge-off method rather than the reserve method.

10-Which of the following conditions will prevent a corporation from qualifying as an S Corporations?

a. The corporation has both common and preferred stock.

b. The corporation has one class of stock with different voting rights.

c. One shareholder is an estate.

d. One shareholders a grantor trust.

11-If a corporation’s tentative minimum tax exceed the regular tax, the excess amount

a. Carried back for the first taxable year.

b. Carried back to the third taxable year.

c. Payable in addition to the regular tax.

d. Subtract to the regular tax.

12-Corporation A and B combine a qualifying reorganization, and form Corporation C, the only surviving corporation. This reorganization is tax-free to the

Shareholders Corporations

a. Yes yes

b. Yes

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