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Exam 5: Corporate Operations

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Question 41

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Federal income tax expense reported on a corporation's books generates a temporary book-tax difference for Schedule M-3 purposes.

A) True
B) False

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Question 42

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Taxable income of the all C corporations is subject to a flat 21% tax rate.

A) True
B) False

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Question 43

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

For tax purposes, a corporation may deduct the entire amount of a net capital loss in the year incurred.

NOL and capital loss carryovers are deductible in calculating the charitable contribution limit modified taxable income, while capital loss carrybacks are not.

Calendar-year corporations that request an extension for filing their 2018 tax returns will have a tax return due date of October 15.

Which of the following describes the correct treatment of the exercise of nonqualified stock options (NQOs) ?

Corporations have a larger standard deduction than individual taxpayers because they generally have higher revenues.

Which of the following does NOT create a temporary book-tax difference?

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

Rapidpro Inc. had more than $1,000,000 of taxable income two years prior to the current year. It would like to use its prior year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year. Which of the following statements is True?

Which of the following is deductible in calculating DRD modified taxable income?

Studios reported a net capital loss of $30,000 in year 5. It reported net capital gains of $14,000 in year 4 and $27,000 in year 6. What is the amount and nature of the book-tax difference in year 6 related to the net capital carryover?

Remsco has taxable income of $60,000 and a charitable contribution limit modified taxable income of $72,000. Its charitable contributions for the year were $7,500. What is Remsco's current-year charitable contribution deduction and contribution carryover?

For tax purposes, companies using nonqualified stock options deduct expenses in the year the options are exercised.

Jazz Corporation owns 10% of the Williams Corp. stock. Williams distributed a $10,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income (loss) before the dividend was ($6,000) . What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

A C corporation reports its taxable income or loss on Form 1065.

AR Systems Inc. (AR) had $120,000 of tax liability last year. It anticipates a current-year tax liability of $500,000. Assuming AR is considered a large corporation for purposes of estimating tax liability, what are the minimum estimated tax payments it should make to avoid underpayment penalties? Ignore the annualized income method.

Corporation A receives a dividend from Corporation B. It includes the dividend in gross income for tax purposes but includes a pro-rata portion of B's earnings in its financial accounting income. If A has accounted for the dividend correctly (using the general rule) , how much of B's stock does A own?

The dividends received deduction is designed to mitigate the extent to which corporate earnings are subject to more than two levels of taxation.