CHAPTER 3-CORPORATE DISTRIBUTIONS: CASH,
PROPERTY, AND STOCK DIVIDENDS
1. T received a distribution with respect to his stock of $50,000. The corporation had neither accumulated nor
current earnings and profits. T is entitled to recover his bas
CHAPTER 1-INCOME TAXATION OF CORPORATIONS
1. The proprietorship uses gross ordinary income as the basis for calculating any self-employment tax due.
2. In contrast to a regular corporation, an S corporations pass-through of income an
CHAPTER 2-CORPORATE FORMATION AND CAPITAL
1. During the year, R and S established T Corporation, which issued 100 shares of stock. R transferred land
worth $9,000 (basis $8,000) to the corporation for 90 shares of stock while S contri
CHAPTER 4-CORPORATE DISTRIBUTIONS: STOCK
REDEMPTIONS AND PARTIAL LIQUIDATIONS
1. M Corporation has 100 shares of outstanding stock, all of which are owned by B. Assuming M Corporation
redeems 70 of B's shares, the redemption does not qualify fo
CHAPTER 17-SOURCES AND APPLICATIONS OF
FEDERAL TAX LAW
1. Once a tax law is enacted by Congress, any official interpretations of the law are by subsequent court
2. The House Ways and Means Committee holds hearings on propo
CHAPTER 18-TAX PRACTICE AND PROCEDURE
1. An example of involuntary taxpayer compliance is found in a sales tax system.
2. The Secretary of the Treasury has delegated the rule-making authority to the Commissioner of the IRS,
CHAPTER 16-FAMILY TAX PLANNING
1. Grandfather GF, a single taxpayer, has current year taxable income of $300,000. His granddaughter GD, also
single, has current year taxable income of $210,000. An income shift of $15,000 from GF to GD during th
CHAPTER 15-INCOME TAXATION OF ESTATES AND
1. There is no statutory period after which a decedent's estate must be terminated.
2. Both estates and trusts may pay any income tax due for a year with a timely filed return.
CHAPTER 5-COMPLETE LIQUIDATIONS
1. It is necessary for a corporation to dissolve before a liquidation can be completed.
2. Shareholders generally treat the amounts received in a liquidation as amounts received in full payment of
CHAPTER 6-PENALTY TAXES ON CORPORATE
1. Corporations are required to compute and pay the accumulated earnings tax by the due date of the tax return.
2. The accumulated earnings tax is paid instead of the regular corpora