CHAPTER17QUIZ - Corporations: Introduction and Operating...

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Corporations: Introduction and Operating Rules 17-1 CHAPTER 17 CORPORATIONS: INTRODUCTION AND OPERATING RULES EXAMINATION QUESTIONS ____1. Venus Corporation donated scientific property worth $300,000 to State University to be used in research. The basis of the property was $200,000, and Venus had held it for fourteen months as inventory. Venus Corporation may deduct $250,000 as a charitable contribution. ____2. A corporate net operating loss can be carried back 3 years and forward 15 years to offset taxable income for those years. ____3. Jupiter Corporation received a $100,000 dividend from Pluto Corporation. Jupiter, which owns 75% of Pluto Corporation, may take a dividends received deduction of $80,000. ____4. A corporation pays $10,000 of life insurance premiums during the current year for coverage of its president, who is the sole shareholder. The corporation is the beneficiary of the policy. The corporation’s deduction is not limited. ____5. Income that is included in taxable income but not included in net income per books is a subtraction item on Schedule M-1. 6. Intergalactic Corporation, a personal service corporation, had $50,000 of active income, $90,000 of portfolio income, and a $160,000 passive loss during the year. How much of the passive loss is deductible? a. $0. b. $50,000. c. $90,000. d. $160,000. e. None of the above. 7. Which of the following is not an exception to the accrual method of accounting requirement? a. Corporations with average annual gross receipts of $5 million-or-less. b. Corporations engaged in the trade or business of farming. c. A partnership with a corporate partner. d. Corporations engaged in the trade or business of timber. e. All of the above.
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17-2 2007 Comprehensive Edition 8. During the current year, Satellite Corporation (a calendar year taxpayer) had the following income and expenses: Income from operations $175,000 Expenses from operations 150,000 Qualifying dividends from domestic corporation in which Satellite owns a 40% interest 25,000 NOL carryover from prior year 5,000 On October 1, Satellite Corporation made a contribution to a qualified charitable organization of $30,000 in cash (not included in any of the above items). Determine Satellite Corporation’s charitable contribution deduction for the current year. a.
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CHAPTER17QUIZ - Corporations: Introduction and Operating...

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