CHAPTER 20--CORPORATIONS AN

In completing schedule m 1 reconciliation of income

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90. In completing Schedule M-1 (reconciliation of income per books with income per tax return) of Form 1120, to net income per books: A. Add tax-exempt interest. B. Subtract excess of capital loss over capital gain. C. Add proceeds of term life insurance received by the corporation due to the death of a key employee. D. Add Federal income tax. E. None of the above. 91. To improve its liquidity, the shareholders of Spoonbill Corporation make a capital contribution of $200,000 in cash. To facilitate the building of a manufacturing plant, the City of Wichita donates land (worth $800,000) to Spoonbill Corporation. As a result of these transactions, Spoonbill has: 92. Which of the following will help avoid the thin capitalization problem? 93. Peter and Audrey form Junco Corporation with the following investments: From Peter From Audrey Cash $800,000 Building (basis of $400,000, fair market value of $300,000) $300,000 Land (basis of $200,000; fair market value of $500,000) 500,000 Junco issues stock equally to Peter and Audrey. One of the tax consequences of these transfers is: 10
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94. Camilla and Dean form Grouse Corporation with the following investment: From Camilla From Dean Cash $300,000 Property (basis of $320,000; fair market value of $330,000) $330,000 Camilla and Dean each receive 300 shares of stock in Grouse Corporation and, in addition, Dean receives $30,000 in cash. As a result of the transfer, Dean’s basis in the stock and Grouse’s basis in the property will be: A. $330,000 and $300,000. B. $300,000 and $330,000. C. $310,000 and $300,000. D. $290,000 and $310,000. E. None of the above. 95. Jordan and Addison form Dove Corporation with the following investments: From Jordan From Addison Cash $200,000 Equipment (basis of $400,000; fair market value of $300,000) 300,000 Land (basis of $300,000; fair market value of $600,000) $600,000 Jordan and Addison each receive one-half of the Dove stock. In addition, Addison receives cash of $100,000. One of the results of these transfers is:
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  • Spring '12
  • honig
  • Corporation, Income tax in the United States, C CORPORATION

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