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Multiple Choice Quiz
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1
In order to file a Form 1120A, a corporation must meet certain requirements, one of which is to have gross receipts or sales of under $500,000.
A)True
B)False
2
A corporation can deduct a charitable contribution of up to 50% of its adjusted gross income.
A)True
B)False
3
Corporate distributions to shareholders are called dividends.
A)True
B)False
4
Schedule M-1 reconciles from net income per books to net income per the tax law.
A)True
B)False
5
A corporation may elect to become a Subchapter S corporation only at the time it is initially formed.
A)True
B)False
6
A corporation has a fiscal year end of April 30. It does not request an extension of time to file its income tax return. It must file its return no later than the 15th day of
A)September
B)August
C)July
D)June
7
A corporation has a fiscal year end of September 30. If the corporation receives an automatic extension to file its return, the return will be due on the 15th day of:
A)March
B)April
C)May
D)June
8
Pricilla formed a corporation and owns all of the stock. She contributed property with a FMV of $60,000 and a basis of $55,000 and she received $10,000 cash from the corporation. Pricilla's taxable gain is:
A)$ 0
B)$ 5,000
C)$10,000
D)$60,000
9
Arturo transfers land with a FMV of $900,000 to a newly-formed corporation in exchange for all of the stock. The land has a basis of $600,000 and debt of $400,000. The basis of the land, in the hands of the corporation is:
A)$300,000
B)$400,000
C)$600,000
D)$900,000
10
TTT Corporation has a fiscal year end that ends on March 30. It is required to make quarterly estimated payments. The first estimated payment will be due on the 15th of
A)May
B)June
C)July
D)August
11
A corporation has taxable income of $400,000. What is its tax liability?
A)$ 22,100
B)$113,900
C)$136,000
D)$140,000
12
Orange Corporation was formed in 2005. In that year it had a net capital loss of $2,000. In 2006, it had a net capital gain of $5,000. In 2007, the company reported a net capital loss $9,000. What is the amount of capital loss carryforward to 2008?
A)$0
B)$4,000
C)$6,000
D)$9,000
13
Adam owns 100% of Banana Company and has a basis of $60,000 in his stock. The company has earnings and profits of $54,000 and distributes a cash dividend to Adam of $72,000. Adam has a
A)Nontaxable distribution of $18,000
B)Capital gain of $12,000
C)Dividend of $72,000
D)Nontaxable distribution of $6,000
14
Which of the following statements is correct?
A)Distributions paid in excess of earnings and profits are taxable to the extent of stockholder basis.
B)Distributions of appreciated property creates a gain to the stockholder recipient.
C)A distribution from earnings and profits in excess of stockholder basis, is a taxable capital gain.
D)Earnings and profits are the same as retained earnings.
15
Willow Corporation has book income of $300,000 which includes tax expense of $70,000. It reported a capital loss of $10,000, and tax-exempt municipal bond interest of $30,000. Determine Willow's taxable income.
A)$250,000
B)$280,000
C)$340,000
D)$350,000
16
When reconciling from book income to taxable income on Schedule M-1, which of the following statements is correct?
A)The difference between accelerated depreciation on the books and straight line depreciation on the tax return in the later years of asset life is a negative adjustment.
B)A charitable contribution carryforward realized in the current year is a positive adjustment.
C)A charitable contributions above the 10% tax limitation is a positive adjustment.
D)Federal income tax expense on the books is a positive adjustment.
17
The corporate AMT exemption amount is
A)$40,000
B)$150,000
C)$310,000
D)an amount that depends on corporate AMT income.
18
A corporation subject to AMT has AMT income of $270,000. What is the amount of Alternative Minimum Tax?
A)$57,500
B)$54,000
C)$52,000
D)$46,000
19
Ramona is a 50% shareholder in a Subchapter S corporation. At the beginning of the year, her basis in the stock was $100,000. The corporation reported total net income of $60,000 and total dividend income of $20,000. The corporation also borrowed an additional $20,000 from a local bank. What is the basis of Ramona's stock at the end of the year?
A)$140,000
B)$150,000
C)$180,000
D)$200,000
20
Barrie owns 100% of a Subchapter S corporation and her basis in the stock is $200,000. In the current year, the corporation reports a net loss of $250,000 and interest income of $20,000. How much of the net loss can Barrie claim in the current year?
A)$200,000
B)$220,000
C)$250,000
D)cannot be determined with the information provided.





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