Corporate Operations

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Questions Bank

Business Income,Deductions,and Accounting Methods
Property Acquisition and Cost Recovery
Property Dispositions
Entities Overview
Corporate Operations
Accounting for Income Taxes
Corporate Taxation: Nonliquidating Distributions
Corporate Formation,Neorganization,and Liquidation
Forming and Operating Partnerships
Dispositions of Partnership Interests and Partnership Distributions
S Corporations
State and Local Taxes
The Ustaxation of Multinational Transactions
Transfer Taxes and Wealth Planning

All Questions

Question 1

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True/False

In general,a corporation can elect to use either the accrual or cash method of accounting no matter how large the corporation.

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Question 2

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True/False

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

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Question 3

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True/False

Large corporations (gross receipts of $5 million or more)are allowed to use the cash method of accounting for at least the first two years of their existence.

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Question 4

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True/False

Although a corporation may report a temporary book-tax difference for an item of income or deduction for a given year,over the long term the total amount of income or deduction it reports with respect to that item will be the same for both book and tax purposes.

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Question 5

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True/False

An unfavorable temporary book-tax difference is so named because it causes taxable income to decrease relative to book income.

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Question 6

True/False

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

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Question 7

True/False

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

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Question 8

True/False

For a corporation,goodwill created in an asset acquisition generally leads to temporary book-tax differences.

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Question 9

True/False

For incentive stock options granted when ASC 718 applies,the value of the options that accrue in a given year always creates a permanent,unfavorable book-tax difference.

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Question 10

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In a given year,Adams Corporation has goodwill impairment in excess of the allowable amortization for tax purposes.Adams has a favorable temporary book-tax difference for that year.

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Question 11

True/False

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

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Question 12

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A nonqualified stock option will create a permanent book-tax difference in a given year if it accrues during the year but is exercised in a later year.

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Question 13

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

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Question 14

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A corporation may carry a net capital loss forward five years to offset capital gains in future years but it may not carry a net capital loss back to offset capital gains in previous years.

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Question 15

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A corporation may carry a net capital loss back two years and forward 20 years.

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Question 16

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A corporation may carry a net capital loss back three years and forward five years.

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Question 17

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Corporations may carry a net operating loss sustained in the current year back two years and forward 20 years.

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Question 18

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Bingo Corporation incurred a net operating loss in 2017.If Bingo carries the loss back,it must first carry the loss back to offset its 2016 taxable income and then carry any remaining loss back to offset its 2015 taxable income.

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Question 19

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Net operating losses generally create permanent book-tax differences.

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Question 20

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Net capital loss carryovers but not carrybacks are deductible against capital gains in determining a corporation's net operating loss for the year.

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