CHAPTER 3-CORPORATIONS: SPECIAL SITUATIONS
1. The domestic production activities deduction is limited to corporations.
2. Fewer corporations are subject to the AMT than to the domestic production activities deduction.
3. In terms of
CHAPTER 6-CORPORATIONS: REDEMPTIONS AND
1. The Code treats corporate distributions that are a return of a shareholders investment as sales or exchanges
and corporate distributions that are a return from a shareholders investment as dividends.
CHAPTER 7-CORPORATIONS: REORGANIZATIONS
1. United States tax policy tries to encourage business development.
2. To ensure the desired tax treatment, parties contemplating a corporate reorganization should apply for a letter
ruling from the IRS.
CHAPTER 18-THE FEDERAL GIFT AND ESTATE TAXES
1. Sometimes also known as transaction taxes, Federal gift and estate taxes are excise taxes.
2. A lifetime transfer that is supported by full and adequate consideration is not a gift.
CHAPTER 4-CORPORATIONS: ORGANIZATION AND
1. Similar to the like-kind exchange provision, 351 can be partly justified under the wherewithal to pay
2. Similar to like-kind exchanges, the receipt of boot under 351 can ca
CHAPTER 5-CORPORATIONS: EARNINGS & PROFITS
AND DIVIDEND DISTRIBUTIONS
1. Distributions by a corporation to its shareholders are presumed to be a return of capital unless the parties can
2. Dividends are always taxed as ordinary
CHAPTER 13-COMPARATIVE FORMS OF DOING
1. A business entity is always taxed the same way as its legal form.
2. The corporate tax rate for a business entity is always less than the tax rate that would apply if the business
entity were no
CHAPTER 2-CORPORATIONS: INTRODUCTION AND
1. Olgas proprietorship earned a net profit of $95,000 during the year and she withdrew $70,000 of this
profit. Olga must report $70,000 net income from the proprietorship on her individual income t
CHAPTER 8-CONSOLIDATED TAX RETURNS
1. Tax incentives constitute the primary motivation for most corporations to operate on a consolidated basis.
2. A consolidated return may be the product of a merger of the affiliates, or of some other tax-fav
CHAPTER 14-TAXES ON THE FINANCIAL
1. If a corporation has no subsidiaries, its book and taxable income are identical.
2. Only domestic entities are included in a combined financial statement prepared under GAAP.
CHAPTER 16-MULTISTATE CORPORATE TAXATION
1. Roughly one-fifth of all taxes paid by businesses in the U.S. are to state, local, and municipal jurisdictions.
2. Usually a business chooses a location where it will build a new plant based chiefly o
CHAPTER 20-INCOME TAXATION OF TRUSTS AND
1. Trusts are created exclusively to reduce tax liabilities.
2. A trust might be used by a newly elected politician.
3. Like a partnership, the fiduciary is a tax-reporting, but not a
SOLUTIONS TO PROBLEM MATERIALS
The $500,000 is economic income and gross income for tax purposes. Sam realized $500,000 for agreeing
not to compete and must include the entire amount in gross income. Pay for not performing
SOLUTIONS TO PROBLEM MATERIALS
The entire $8,400 is deductible since the benefit from the payment will be completely received
by the end of 2017.
Since the benefit from the payment will not be completely received by
CHAPTER 9-TAXATION OF INTERNATIONAL
1. The United States has income tax treaties with only members of the European Union.
2. Income tax treaties may provide for higher withholding tax rates on interest income than the rate provided