ACCT 424 quiz 1 - 1.

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1. Question: (TCO 6) ParentCo's separate taxable income was $350,000, and SubCo's was  $225,000. Consolidated taxable income before contributions was $400,000.   Charitable contributions made by the affiliated group included $15,000 by ParentCo  and $20,000 by SubCo.  Compute the group's charitable contribution deduction.   Your Answer:          $57,500.              $40,000.     INCORRECT          $35,000.     CORRECT ANSWER          $0.              Some other amount       Instructor  Explanation: 10% X $400,000, but not to exceed the total gifts.         Points  Received: 0 of 2   2. Question: (TCO 6) Which of the following is eligible to file Federal tax returns on a  consolidated basis?   Your Answer:          U.S. corporation engaged in multinational operations.     CORRECT  ANSWER          Japanese corporation engaged in multinational operations,  including two-thirds of its activities in the U.S.              A tax-exempt hospital.     INCORRECT          A partnership operating exclusively in North America              None of the above can file consolidated returns.       Instructor  Explanation:     Points  Received: 0 of 2   3. Question: (TCO 6) ParentCo acquired all of the stock of SubCo on January 1, 2007, for  $1,000,000.  The parties immediately elected to file consolidated tax returns.   SubCo generated taxable income of $60,000 for 2007 and paid a dividend of  $25,000 to ParentCo.  In 2008, SubCo generated an operating loss of $180,000,  and in 2009 produced taxable income of $65,000.  As of the last day of 2009, what  was ParentCo’s basis in the stock of SubCo?   Your Answer:          $1,000,000.              ($55,000).              ($80,000).              $920,000.     CORRECT          $1,945,000.       Instructor  Explanation: ParentCo’s initial stock basis was $1,000,000.  Positive adjustments to basis  include the $60,000 income for 2006 and the $65,000 of income for 2009.  Negative  adjustments to basis include the $25,000 dividend paid to ParentCo in 2007 and the  $180,000 loss in 2008.    
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ACCT 424 quiz 1 - 1.

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