Chapter 13
C Corporations


C Corporations —
Tax Year and Accounting Method
Corporations
have the unrestricted right to select its annual tax
year, regardless of the tax years employed by its shareholders.
Most corporations must use the accrual method.
The cash method MAY be used by C corporations that have
average annual gross receipts of $5 million or less in the three
preceding years, or by PSCs.
Must file Form 1120 on or before the 15th day of 3rd month
following close of tax year even if it has no taxable income

C Corporations—Comparison with Individual Taxpayers
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Organizational Expenditures
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Dividend Received Deduction
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Charitable Contribution
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Interest Expense
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Amortization of Original Issue
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Bond Redemptions-Premiums
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Stock Redemptions (not deductible)
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Travel, Meals and Entertainment
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Insurance Premiums
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Research and Experimental
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Fines (not deductible)
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Bad Debts
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Worthless Securities
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Casualty Losses (same as individuals’ business use
Different Treatment
Similar Tax Treatment
Expenses
Chapter 16, Exhibit 6b
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Compensation
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Educational Expenses
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Net Operating Losses
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Capital Gains and Losses
casualty losses)
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Taxes
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Depreciation (except Sec. 1250 recapture)
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Amortization
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Depletion
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Political Contributions & Lobbying
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Business Investigation Expense
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Business Start Up Expense

C Corporations— Tax Formula
Credits (If Any)
–
Gross Regular Tax Liability
=
Tax Rate
x
Taxable Income (Loss)
=
Deductions
–
Gross Income
=
Cost of Goods Sold
–
Exclusions
–
Ord. and Cap. Income “From Whatever Source Derived”
Net Tax Due or Refundable
=
Personal Holding Co. Tax (If Any)
+
Accumulated Earnings Tax (If Any)
+
FICA Taxes
+
Alt. Minimum Tax (If Any)
+
Net Regular Tax Liability
=
N.B.: AGI, standard deductions, personal exemptions, at-risk rules, and
passive activity loss rules do not apply to regular C corporations.

Corporate Tax Rates
34% (3rd bracket)
100,000
75,000
25% (2nd bracket)
75,000
50,000
15% (1st bracket)
$
50,000
$
0
Marginal Tax Rate:
But Not Over:
At Least:
Tax Rates on Corporate Taxable Income
Computing Regular Income Tax.
Corporations are subject to the 4-bracket graduated tax rate
structure below.
39%
(


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- Fall '14
- fabioambrosio
- Accounting, Progressive Tax, Corporation