C11-Chp-00-5-CPA Exam Questions-May-1993

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32dee3c614ba17740c0a80878ffb147c8fe64e6b.doc Page 1 of 3 How much coverage would Acct 6120 get on a single CPA Exam? May, 1993. Chapter 2. Corporate Organization- Sec. 351 1 (CPAM93#53) Stone, a cash basis taxpayer, incorporated her CPA practice. No liabilities were transferred. The following assets were transferred to the corporation: Cash (checking account) $ 500 Computer equipment Adjusted basis 30,000 Fair market value 34,000 Cost 40,000 Immediately after the transfer, Stone owned 100% of the corporation's stock. The corporation's total basis for the transferred assets is: a. $30,000 b . $30,500 c . $34,500 d. $40,500 Chapter 2. Corporate Capital Structure Chapter 3. Corporate Income Tax 2 (CPAM93#41) In the current year, Acorn Inc. had the following items of income and expense: Sales $500,000 Cost of sales 250,000 Dividends received 25,000 The dividends were received from a corporation of which Acorn owns 30%. In Acorn's corporate income tax return, what amount should be reported as income before special deductions? a. $525,000 b. $505,000 c. $275,000 d. $250,000 3 (CPAM93#42) Ace Rentals Inc., an accrual-basis taxpayer, reported rent receivable of $35,000 and $25,000 in its 2004 and 2003 balance sheets, respectively. During 2004, Ace received $50,000 in rent payments and $5,000 in nonrefundable rent deposits. In Ace's 2004 corporate income tax return, what amount should Ace include as rent revenue? a. $50,000 b. $55,000 c. $60,000 d. $65,000 4 (CPAM93#44) Brown Corp., a calendar-year taxpayer, was organized and actively began operations on July 1, 2005, and incurred the following costs: Legal fees to obtain corporate charter $40,000 Commission paid to underwriter 25,000 Other stock issue costs 10,000 Brown wishes to amortize its organizational costs over the shortest period allowed for tax purposes. In 2005, what amount should Brown deduct for the amortization of organizational expenses? Note: the 2004 tax act provides for write-off of up to $5,000 (if not phased out) with amortization over 180 months for remaining costs.
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