The Corporate Taxpayer

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Questions Bank

Taxes and Taxing Jurisdictions
Policy Standards for a Good Tax
Taxes as Transaction Costs
Maxims of Income Tax Planning
Tax Research
Taxable Income from Business Operations
Property Acquisitions and Cost Recovery Deductions
Property Dispositions
Nontaxable Exchanges
Sole Proprietorships
The Corporate Taxpayer
The Choice of Business Entity
Jurisdictional Issues in Business Taxation
The Individual Tax Formula
Compensation and Retirement Planning
Investment and Personal Financial Planning
Tax Consequences of Personal Activities
The Tax Compliance Process

All Questions

Question 1

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True/False

In terms of dispersal of ownership, corporations are classified as either closely held or publicly held.

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Question 2

Free

True/False

The corporate characteristic of limited liability is more important to the shareholders than the characteristic of centralized management.

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Question 3

Free

True/False

The stock of closely held corporations is typically restricted as to transferability by some type of buy-sell agreement.

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Question 4

Free

True/False

The federal tax law considers the member corporations of an affiliated group to be a single entity for federal tax purposes.

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Question 5

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True/False

At least three corporations are required to form an affiliated group.

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Question 6

True/False

An affiliated group consists of a parent company that directly owns 80% of at least one subsidiary corporation plus all other subsidiaries that are 80% owned within the group.

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Question 7

True/False

The corporate characteristic of free transferability exists if the corporate stock is subject to a buy-sell agreement.

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Question 8

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A nonprofit corporation may incur a federal income tax if it has unrelated business income.

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Question 9

True/False

After 2017, a 37% excise tax applies to compensation in excess of $1 million paid to executives of tax-exempt organizations.

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Question 10

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After 2017, a 100% dividends-received deduction is permitted for any dividends received from a foreign corporation.

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Question 11

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Eagle, Inc. made a contribution to the Boy Scouts of $25,000 during its current tax year. The corporation's taxable income before any charitable contribution deduction was $200,000. The corporation has a current charitable contribution deduction of $25,000.

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Question 12

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Bisou Inc. made a $48,200 contribution to charity this year. Only $39,000 of the contribution was deductible. Bisou can carry the $9,200 nondeductible contribution back three years and forward five years.

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Question 13

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The four primary legal characteristics of a corporation are unlimited liability, limited life, free transferability of interests, and centralized management.

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Question 14

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A nondeductible charitable contribution is a permanent book/tax difference.

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Question 15

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Corporations are allowed a deduction for charitable contributions, limited to 10 percent of taxable income before the deduction.

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Question 16

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For distributions prior to 2018, dividends-received deductions generally are not allowed for dividends from foreign corporations.

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Question 17

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The dividends-received deduction is equal to 65% of any dividends-received by a corporate taxpayer.

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Question 18

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Donatoni Corporation owns 40% of Market, Inc. voting common stock. During the current year, Donatoni received a $30,000 dividend from Market. Donatoni must report the dividend as gross income, and is allowed a $15,000 dividends-received deduction.

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Question 19

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Rogers, Inc. owns 12% of Lampe Corporation's voting common stock. During the current year, Rogers generated $50,000 operating income and received $8,000 dividends from Lampe. Only $2,800 of the dividend is taxable.

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Question 20

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A corporation is required to report differences between book and taxable income on either Schedule M-1 or Schedule M-3 of the corporate income tax return.

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