1) A net operating loss realized by a regular C corporation may be less beneficial to its shareholders than a net operating loss realized by a partnership or LLC because:
A. Shareholders are taxed at lower rates than partners
B. A corporate loss can only be utilized by the corporation as a taxable entity in the form of a carry-back and carry-forward, and is not available to the shareholders.
C. corporations are taxed at lower rates than partnerships.
D. None of the above
2) In the past, the differential between the corporate and individual maximums rates combined with the effect of double taxation on corporate distributions, sometimes acted as an incentive for the corporation to accumulate income. What weapons does the Internal Revenue Code provide to combat this abuse?
A. IRC Section 531, Accumulated Earnings Tax
B. IRC Section 541, Personal Holding Company Tax
C. Both of the above.
D. None of the Above.
3) Historically, the corporate characteristics of continuity of life, centralized management, limited liability and free transferability were considered in determining whether an organization was taxed as a partnership or an association for tax purposes. Under current regulations, how can a partnership or limited liability company assure itself of being taxed as a partnership.
A. Check off the box election
B. Private letter ruling.
C. Contribute to the controlling political party.
D. The doctrines of Stare Decisis and Res Ipsa Loquitur.
E. A though D
4) Dan, a lawyer, owns a real estate company with a basis of $10,000 and a fair market value of $18,000. Elite has outstanding 100 shares, all held by Mr. Able. Elite issues 400 additional shares of its common stock (having fair market value of $18,000) to dan in exchange for his property worth $18,000.
A. Dan does not qualify for IRC 351 treatment because he has transferred his property to elite in a separate and distinct transaction from Mr. Able
B. Dan qualifies for section 351 treatment because he acquired “control” of Elite and Mr. Able must file an amendment returns covering his previous transfers to elite due to his loss of control.
C. The gain realized on the transfer is recognized in full by Dan because he occasionally renders legal services to Elite.
D. The transfer is not taxable to Dan or Elite due to the application of Section 351 and 1032.
5) Y Corporation Distributes, as a dividend, a building with a fair market value of $100,000 and an adjusted basis to Y at the time of distribution of $50,000, to X Corporation which is the sole shareholder of Y Corporation. What is the basis of the building in the hands of X?
D. None of the above
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