CORPORATE TAX FINAL EXAM (C-
CORP) QUESTIONS AND ANSWERS
A corporation's deduction for charitable contributions is limited to 50 percent of adjusted
taxable income. - Answer-False
In all circumstances, organizational expenditures must always be capitalized but may be
amortized over 60 months or longer - Answer-False
A limited liability company will always be taxed as a corporation - Answer-False
The dividends received deduction is 50 percent of dividends received out of the
earnings and profits of taxable, domestic corporations - Answer-False
Code Sec. 351 is an elective provision - Answer-False
When a corporation receives property from a shareholder in exchange for stock its basis
equals that of the shareholder, increased by any gain recognized by the shareholder. -
Answer-True
For purposes of Code Sec. 351 control is defined as greater than 50% - Answer-False
Services are considered property for purposes of Code Sec. 351. - Answer-False
A loss in control shortly after transfer could cause a transaction to fail to qualify under
Code Sec. 351 - Answer-True
All liabilities transferred in a Code Sec. 351 exchange are treated as boot for purposes
of gain recognition - Answer-False
If the aggregate adjusted basis of property transferred to a corporation in a Code Sec.
351 transaction exceeds the fair market value of the property, then the corporation's
basis in such property is limited to the property's fair market value - Answer-True
The corporation's holding period for property received in a Code Sec. 351 transaction
includes the holding period of the shareholder. - Answer-True
When a local government contributes property to a corporation as an inducement, the
fair market value of the property is included in gross income of the corporation. -
Answer-True
An advantage of a corporation issuing debt is that interest payments are generally
deductible by the corporation - Answer-True
CORP) QUESTIONS AND ANSWERS
A corporation's deduction for charitable contributions is limited to 50 percent of adjusted
taxable income. - Answer-False
In all circumstances, organizational expenditures must always be capitalized but may be
amortized over 60 months or longer - Answer-False
A limited liability company will always be taxed as a corporation - Answer-False
The dividends received deduction is 50 percent of dividends received out of the
earnings and profits of taxable, domestic corporations - Answer-False
Code Sec. 351 is an elective provision - Answer-False
When a corporation receives property from a shareholder in exchange for stock its basis
equals that of the shareholder, increased by any gain recognized by the shareholder. -
Answer-True
For purposes of Code Sec. 351 control is defined as greater than 50% - Answer-False
Services are considered property for purposes of Code Sec. 351. - Answer-False
A loss in control shortly after transfer could cause a transaction to fail to qualify under
Code Sec. 351 - Answer-True
All liabilities transferred in a Code Sec. 351 exchange are treated as boot for purposes
of gain recognition - Answer-False
If the aggregate adjusted basis of property transferred to a corporation in a Code Sec.
351 transaction exceeds the fair market value of the property, then the corporation's
basis in such property is limited to the property's fair market value - Answer-True
The corporation's holding period for property received in a Code Sec. 351 transaction
includes the holding period of the shareholder. - Answer-True
When a local government contributes property to a corporation as an inducement, the
fair market value of the property is included in gross income of the corporation. -
Answer-True
An advantage of a corporation issuing debt is that interest payments are generally
deductible by the corporation - Answer-True
