Vol 2 Add'l Test Bank Ch05

Vol 2 Add'l Test Bank Ch05 - Corporations Earnings and...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Earnings and Profits and Dividend Distributions 5-1 CHAPTER 5 CORPORATIONS: EARNINGS AND PROFITS AND DIVIDEND DISTRIBUTIONS EXAMINATION QUESTIONS 1. Assume taxable income is the starting point for computing E & P. During 2008, Moscow Corporation made a charitable contribution of $100,000. Of this amount $10,000 could not be deducted in arriving at Moscow's taxable income for 2008 because of the 10% limitation. The $10,000 was carried over to 2009 and fully deducted in that year. a. The excess charitable contribution deduction reduces Moscow Corporation's E & P for 2009. b. The excess charitable contribution deduction of $10,000 would reduce Moscow c. The excess charitable contribution increases Moscow Corporation's E & P for 2008. d. The excess charitable contribution deduction has no effect on Moscow e. None of the above. 2. A corporation sells property (basis of $90,000) to its sole shareholder for $80,000, the fair market value of the property. With respect to the sale, a. The corporation has a tax loss of $10,000. b. The shareholder has a constructive dividend of $10,000. c. The shareholder has a basis of $80,000 in the property. d. The corporation does not recognize a tax loss but reduces its E & P account $90,000. e. None of the above. 3. Paris Corporation has a deficit in accumulated E & P of $60,000. For 2009, it has current E & P of $40,000. On March 31, 2009, Paris distributes $65,000 to its sole shareholder, Jennifer. Jennifer has a basis of $10,000 in her stock in Paris Corporation. a. Jennifer has dividend income of $65,000. b. Jennifer has dividend income of $40,000, reduces her stock basis to zero, and has a capital gain of $15,000. c. Jennifer has dividend income of $40,000 and reduces her stock basis to $5,000. d. Jennifer has no dividend income, reduces her stock basis to zero, and has a capital gain of $10,000. e.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/27/2010 for the course ACC 1303 taught by Professor Smith during the Summer '10 term at HCCS.

Page1 / 5

Vol 2 Add'l Test Bank Ch05 - Corporations Earnings and...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online