e. The common parent must directly own 51% or more of the total voting power of all corporations included in the consolidated return. 4 Two brother-sister corporations each had taxable income of $100,000 in $2010. What is the total federal income tax liability for these corporations for 2010? a. $30,000 b. $44,500 c. $50,000 d. $61,250
1452ae5abe97fd7d563e31d9638ace003b1d8b40.doc. Page 2 of 4 5 Parent Corp. and Subsidiary Corp. file consolidated returns on a calendar-year basis. In January 2009, Subsidiary sold land, which it had used in its operations, to Parent for $75,000. Immediately before this sale, Subsidiary's basis for the land was $45,000. Parent held the land primarily for sale to customers in the ordinary course of business. In July 2010, Parent sold the land to Raleigh, an unrelated individual, for $90,000. In determining the consolidated Section 1231 net gain for 2010, how much should Subsidiary take into account as a result of the 2009 sale of the land from Subsidiary to Parent? a. $45,000 b. $30,000 c. $22,500 d. $15,000 6 Boone Corp. owns 60% of Hickory Corp.'s outstanding capital stock. Hickory's capital stock consists of 50,000 shares of common stock issued and outstanding. Hickory's net income was $200,000 for the current year. During the current year, Hickory declared and paid dividends of $80,000. Boone's income tax rate is 40%. In conformity with GAAP, Boone recorded the following entries for the year: Debit Credit Investment in Hickory Corp. common stock 120,000 Equity in earnings of subsidiary 120,000 Cash 48,000 Investment in Hickory Corp. common stock 48,000 What is the deferred tax asset or liability balance that results from the timing difference above. a. Deferred tax asset of $28,800 b. Deferred tax asset of $19,200 c. Deferred tax liability of $28,800 d. Deferred tax liability of $19,200 7 On December 31, last year, a group of investors paid $2 million for 100 percent of Charlotte Corporation stock. Among its other tax attributes, Charlotte Corporation had a $1,000,000 NOL carryforward. The long- term tax-exempt federal interest rate was 5 percent on the date of the ownership change. What is the amount of taxable income for this year if taxable income before any NOL deduction was $600,000? a. $800,0000 b. $680,000 c. $500,000 d. Other 8 [Sec. 721+, 351+]For both corporations and partnerships, there are tax rules that provide for tax-free transfer of assets to a business in exchange for an ownership interest. How do the corporate rules and the partnership rules compare regarding: (1) minimum ownership
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- Spring '08
- Accounting, Corporation