Ch14TB - 733 Chapter 14 Taxation of CorporationsBasic...

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© 2009 CCH. All Rights Reserved. Chapter 14 733 Chapter 14 Taxation of Corporations—Basic Concepts TRUE-FALSE QUESTIONS—CHAPTER 14 A business cannot be taxed as a corporation unless it is incorporated under local law. 1. There is no tax on the f rst $400 of corporate taxable income. 2. A partnership is not a tax-paying entity. 3. The dividends received deduction is 70 percent of dividends received out of the earnings and pro f ts of taxable, 4. domestic corporations. When a corporation receives property from a shareholder its basis equals that of the shareholder, increased by any 5. gain recognized by the shareholder. In a Code Sec. 351 transfer, liabilities cannot trigger gain, unless they exceed the aggregate basis of property 6. transferred. Cash basis corporations can only deduct charitable contributions in the year made. 7. A shareholder recognizes no gain on a capital contribution to a corporation merely because he is a minority 8. shareholder. Options to buy stock constitute stock for Code Sec. 351 purposes, but only if the stock so quali f es. 9. Depreciation claimed on a given asset will never be recaptured upon a Code Sec. 351 transfer. 10. The receipt of boot in a Code Sec. 351 transfer precludes any nonrecognition treatment. 11. A sale of Code Sec. 1244 stock results in ordinary income if sold at a gain. 12. Most corporations must use the accrual method of accounting. 13. A corporation must make all the same adjustments as an individual when computing its net operating loss. 14. A corporation’s deduction for charitable contributions is limited to 50 percent of adjusted taxable income. 15. Code Secs. 267 and 1239 apply to transactions between shareholders and their “controlled” corporations. 16. Organizational expenditures must be capitalized but may be amortized over 60 months or longer. 17. The full dividends received deduction is not permitted if the corporation has a net operating loss for the year. 18. The corporate income tax rate is a F at 34 percent for all corporations with taxable income of $335,000 or more. 19. A brother-sister controlled group can f le a consolidated return if all members of the group consent. 20.
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734 CCH Federal Taxation—Comprehensive Topics Chapter 14 © 2009 CCH. All Rights Reserved. MULTIPLE CHOICE QUESTIONS—CHAPTER 14 Which of the following items are eligible for immediate expensing and 180-month amortization? 21. (1.) Fee to CPA to handle Subchapter S election (2.) Refreshments served at organizational meetings (3.) Underwriting commission (4.) Legal fees in connection with incorporation (5.) Recording fees upon transfer of assets to corporation (2), (4), and (5) a. (1), (2), and (5) b. (1), (2), (3), (4), and (5) c. (1), (2), and (4) d. Sandra Sherman incorporates her apartment building. It has a basis of $50,000, a value of $150,000, is subject to a 22. mortgage of $70,000 and has a depreciation recapture potential of $12,000. If Sandra receives stock worth $80,000, she will recognize: No gain. a.
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This note was uploaded on 10/17/2010 for the course ACTG 310 taught by Professor Neal during the Spring '10 term at N.E. Illinois.

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Ch14TB - 733 Chapter 14 Taxation of CorporationsBasic...

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