C12-Chp-08-1B-Class-Plan-Consolidated-Tax-Returns-Etc-Sol

C12-Chp-08-1B-Class-Plan-Consolidated-Tax-Returns-Etc-Sol -...

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Tab-1. Problems 898c49355fa055fd52ac6e8e450db2ba6d60dcb2.xlsx Page 1 of 8 Controlled groups of corporations Txt Code 1 What are the corporate tax rates in Section 11? 11 b 1 2 How are Corp. rates modified for corporations that are part of a controlled group? 1561 a 1 What exemption amounts, etc. are limited for members of a controlled group? 1561 a 2+ 3 See Schedule J on page B-30 in the appendix to your textbook. (Form 1120) 4 Name three types of controlled groups 1563 a 5 How does a member of a brother-sister controlled group compute it tax? 1563 a 2 6 Dad owns repair business (C Corp) in Charlotte. His daugher owns a similar corporation in Monroe, and one in Gastonia. His son owns a similar corporation in Concord and one in Salisbury. (Total of 5 corps.) No special election is made. Revenue of Dad's C corporation $200,000 Expense of Dad's C corporation ($170,000) Taxable income $30,000 Tax computation $10,000 15% $1,500 $5,000 25% $1,250 $5,000 34% $1,700 $10,000 39% $3,900 $8,350 7 Sue owns 100% of these corps. Build, Inc. Repair, Inc. Revenue $800,000 $200,000 Expenses 750,000 170,000 Tax. Income $50,000 $30,000 Type of controlled group? 1563. What is combined tax liability? $12,000 b. $15,000 c. $16,125 Dream Total Allocate Rate Tax Layer 1 $50,000 $25,000 15% $3,750 Layer 2 $25,000 $12,500 25% $3,125 Layer 3 $25,000 $12,500 34% $4,250 Total $50,000 $11,125 Magic Layer 1 $50,000 $25,000 15% $3,750 Layer 2 $25,000 $5,000 25% $1,250 Layer 3 $25,000 $0 34% $0 Total $30,000 $5,000 Would you allocate differently? 8 Identify brother-sister corps given these individual ownership percentages. 1563 a 2 Corporations Owners-Individuals A B C D James 20% 40% 15% 15% 15% Carol 25% 10% 20% 20% 10% Joan 20% 40% 40% 20% 20% Wallace 10% 10% 20% 25% 10% Total 75% 100% 95% 80% 55% 9 Corporations A, B, and C each have only one class of stock. Corporations Shareholders Corp. A Corp. B Corp. C Mr. Jones 60% 40% Ms. Hill 40% 60% Corp. B 80% 100% 100% 80% Which corporations are Brother-Sister? How many are in a controlled Group?
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Tab-2. Problems 898c49355fa055fd52ac6e8e450db2ba6d60dcb2.xlsx Page 2 of 8 Controlled groups of corporations Txt Code 1 What is a parent subsidiary controlled group? 1563 a 1 2 What corporations may file a joint return? Answer: P, S1 1501 1504 Parent Taxable Income $30,000 1504 a 1 Owns 90% Sub-1 Taxable Income $20,000 Owns 70% Sub-2 Taxable Income $40,000 How is income tax computed, assuming a consolidated return is not filed? 1563 a 1 What corporations are prohibited from filing a joint return? 8-13 4 Who can file a joint return? Answer: P, S1, S2 8-9 1501 Parent 1504 Owns Owns 90% 30% Sub-1 Owns 70% Sub-2 5 Assume Calendar year Parent (above) bought the 30% ownership of Sub-2 on October 1. 6
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C12-Chp-08-1B-Class-Plan-Consolidated-Tax-Returns-Etc-Sol -...

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