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1 | | All corporate deductions are deductions from AGI. |
| | A) | True |
| | B) | False; corporations do not report AGI. |
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2 | | A current year temporary book-tax difference is unfavorable if it causes taxable income to decrease relative to book income. |
| | A) | True |
| | B) | False |
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3 | | Federal income tax expense reported on a corporation's books generates an unfavorable temporary book-tax difference. |
| | A) | True |
| | B) | False |
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4 | | Similar to individuals, corporations are not subject to any limitations relating to the carryforward of unused net capital losses. |
| | A) | True |
| | B) | False |
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5 | | All-Star Corporation has a net operating loss in 2013. It can carry the loss back to the previous two years, starting with 2011. |
| | A) | True |
| | B) | False |
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6 | | For corporations, the top marginal tax rate for the alternative minimum tax is lower than the top marginal tax rate for regular income tax purposes. |
| | A) | True |
| | B) | False |
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7 | | All taxable corporations are required to file a Schedule M-3 with their tax returns. |
| | A) | True |
| | B) | False |
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8 | | Boise Corporation has gross receipts according to the following schedule: (68.0K)
If Boise began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method? |
| | A) | Year 3 |
| | B) | Year 4 |
| | C) | Year 5 |
| | D) | Year 6 |
| | E) | None of these |
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9 | | Which of the following does not create a permanent book-tax difference? |
| | A) | Federal income tax expense |
| | B) | Municipal bond interest income |
| | C) | Charitable contributions in excess of the 10% of taxable income limitation |
| | D) | Fines and penalties |
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10 | | Puma, Inc. sold equipment at a loss. Puma depreciated the property using the straight-line method for financial accounting purposes and it used MACRS for tax cost-recovery. If accumulated depreciation for financial accounting purposes is less than accumulated depreciation for tax reporting purposes on the date of the sale, what is the nature of the book-tax difference associated with the loss on the sale? |
| | A) | Permanent; favorable |
| | B) | Permanent; unfavorable |
| | C) | Temporary; favorable |
| | D) | Temporary; unfavorable |
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11 | | Corporation P receives a dividend from Corporation Q. Corporation P includes the dividend in its gross income for tax and financial accounting purposes. If P accounted for the dividend as gross income for book and tax purposes, what can we conclude about P's ownership in Q? |
| | A) | P likely owns less than 20 percent of the stock of Q |
| | B) | P likely owns at least 20 but not more than 50 percent of the stock of Q |
| | C) | P owns more than 50 percent of the stock of Q |
| | D) | Cannot be determined |
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12 | | Ski Inc. owns 30 percent of Snow Inc., both of which are corporations. Snow pays Ski a dividend of $20,000 in 2013. What is the amount of Ski's dividend's received deduction, assuming the taxable income limitation does not apply? |
| | A) | $6,000 |
| | B) | $14,000 |
| | C) | $16,000 |
| | D) | $20,000 |
| | E) | None of these |
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13 | | June Inc. issued 12,000 nonqualified stock options valued at $24,000 (in total--$2 each). Each option entitles the holder to purchase one share of stock. The options vest over three years - a third in 2013 (the year of issue), a third in 2014, and a third in 2015. Two thousand options are exercised in 2014 with a bargain element on each option of $5. What is the 2014 book-tax difference associated with the stock options (assume ASC 718 applies to the options)? |
| | A) | $2,000 unfavorable |
| | B) | $6,000 favorable |
| | C) | $6,000 unfavorable |
| | D) | $8,000 unfavorable |
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14 | | Chairs-R-Us, Inc. reported a net capital loss of $25,000 in year 4. It reported net capital gains of $10,000 in year 3 (before any capital loss carryback) and $20,000 of net capital gains in year 5 (before any capital loss carryovers). What is the amount and nature of the book-tax difference in year 5 related to the net capital loss carryover? |
| | A) | $15,000 favorable |
| | B) | $20,000 favorable |
| | C) | $25,000 favorable |
| | D) | None of these |
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15 | | LNS Corporation generated a minimum tax credit of $80,000 in 2013. If its 2013 tentative minimum tax is $300,000 and its regular tax liability is $270,000, what is its minimum tax credit carryover to 2014? |
| | A) | $80,000 |
| | B) | $50,000 |
| | C) | $30,000 |
| | D) | $0 |
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16 | | Wildcat Corp. uses the annualized income method to determine its quarterly federal income tax payments. It had $50,000, $25,000, and $45,000 of taxable income for the first, second, and third quarters, respectively ($120,000 in total through the first three quarters). What is Wildcat's annual estimated taxable income as of the end of the third quarter? |
| | A) | $240,000 |
| | B) | $200,000 |
| | C) | $160,000 |
| | D) | $150,000 |
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