Vol 2 Add'l Test Bank Ch02

Vol 2 Add'l Test Bank Ch02 - Corporations: Introductions...

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Corporations: Introductions and Operating Rules 2-1 CHAPTER 2 CORPORATIONS: INTRODUCTION AND OPERATING RULES EXAMINATION QUESTIONS 1. Yellow Corporation had $300,000 operating income and $75,000 operating expenses during the year. In addition, Yellow had a $200,000 short-term capital gain and a $300,000 short-term capital loss. Compute Yellow’s taxable income for the year. a. $425,000. b. $225,000. c. $222,000. d. $125,000. e. None of the above. 2. Orange Corporation, a closely held corporation (not a PSC), had $60,000 of active income, $90,000 of portfolio income, and a $150,000 passive loss during the year. How much of the passive loss is deductible? a. $0. b. $60,000. c. $90,000. d. $150,000. e. None of the above. 3. White Corporation, a personal service corporation, had $75,000 of active income, $15,000 of portfolio income, and a $90,000 passive loss during the year. How much of the passive loss is deductible? a. $0. b. $15,000. c. $75,000. d. $90,000. e. None of the above.
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2-2 2010 Corporation Edition 4. Which of the following statements is incorrect regarding the tax treatment of capital gains and losses for corporate taxpayers: a. Net long-term capital gains are taxed at ordinary income tax rates. b. Net capital losses can only be taken to the extent of capital gains. c. $3,000 of net capital losses can be taken in excess of capital gains each year. d. Net capital losses can be carried back three years and forward five years. e. All of the above. 5. Purple Corporation (a calendar year taxpayer) is engaged in the business of retailing CD players and makes the following donations during the year: Fair Market Adjusted Basis Value CD players (held as inventory) to the local Women’s Shelter $8,000 $12,000 Stock in Music acquired two years ago and held as an investment to a Catholic Church seminary 6,000 10,000 Delivery van to local SPCA (animal shelter) 8,000 4,000 How much qualifies for the charitable contribution deduction?
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This note was uploaded on 07/27/2010 for the course ACC 1303 taught by Professor Smith during the Summer '10 term at HCCS.

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Vol 2 Add'l Test Bank Ch02 - Corporations: Introductions...

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