C12-Chp-02-2-Homework-Sol-Corp-Tax-2012 - Page 1 of 7 First...

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08d699acc0f573b6a0f49b9498612368058c05b7.doc. Page 1 of 7 First Name______________________________Last Name: ______________________________________ Home work-Chapter 2. On the right side of the page enter letter of the best answer for each question. Enter the letter of your answers on: C12-Chp-02-2-HW-Sol-Corp-Tax-Excel-2012-Answer Sheet. Turn in one copy of your answer page. (43 @ 2.5 Pts. = 107.5) This is a “bread and butter” chapter. It covers day to day tax compliance (and planning). You need to know everything in this chapter. Many questions are based on law not explained in this text, because the law was covered in Tax-I and the accounting methods were covered in Intermediate Accounting. Your graduate courses build on the foundation you obtained in earlier courses. 1 [Pg. 2-5] Jan is married and files a joint return. The joint return does not have unusually large personal deductions. The joint return does not contain substantial amounts of income other than the income from the business described below. Jan operates an unincorporated office supply business that has the following income statement each year: Sales $1,000,000 Operating expenses 900,000 Net income $ 100,000 Jan is considering incorporating the business. If the business is incorporated, she will draw a salary of $50,000, and the corporation will not pay dividends. Retained earnings will be reinvested in additional warehouse space and delivery equipment. The corporation is not expected to have surplus funds in the forseeable future. Which of the following organizational forms is likely to result in the lowest total income tax burden? a . Proprietorship b. Corporation without S election c. Corporation with S election B 2 [Pg. 2-3] Sue owns 100% of Sue Corp. (C corporation) and 50% of SueCorpS (S corporation). She is also a 50% partner in the Sue Partnership. She works in all three businesses, but only receives compensation (salary) from the two corporations. Her beginning tax basis is $65,000 for each of the three entities. Transactions for the year are as follows. Sue Corp. SueCorpS. Sue Partnership. Revenue $100,000 $100,000 $100,000 Compensation to Sue 40,000 40,000 Other Expenses 10,000 30,000 30,000 Net Income and taxable income 50,000 30,000 70,000 Total dividends paid to shareholder $6,000 Total dividends paid to shareholders $4,000 Total distribution to partners $10,000 How much gross income is to be reported by Sue from these three entities for the year? a. $169,000 b. $136,000 c. $100,000 d. $80,000 B 3 [Pg. 2-8] Which of the following cannot choose its tax entity status with the Check the box regulations? a. C corporation b. Partnership c. Proprietorship A 4 [Pg. 2-10] Choosing a tax year. Which taxpayers face restrictions on use of a fiscal year? a.
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  • Spring '08
  • Godfrey,H
  • Taxation in the United States, Generally Accepted Accounting Principles, Income tax in the United States

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C12-Chp-02-2-Homework-Sol-Corp-Tax-2012 - Page 1 of 7 First...

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