Practice-Test REG: C-Corporate Tax
Prep Questions with Solved Solutions
Updated.
A personal holding company is one that derives at least 60% of its revenue from passive sources
that include: - Answer taxable interest, dividends, rentals, and royalty income
Rules on the requirements of using the M-1 vs M-2 - Answer Total Assets = >10m or more = M-
2
Total Assets = <10m = M-1
Charitable Contribution Deduction Limitation - Answer Limitation = 10% of TI computed
without regard to: CCD, NOL, NCL, C/B, DRD, DPAD.
Excess > Carry-forward 5 years
*Must subtract NOL carry-forward
Dividends received deduction rules - Answer Ownership:
- <20% = 70% ded.
- 20% - <80% = 80% ded.
- >80% = 100%
*DRD cannot exceed TI limitation. TI limits = TI x ded% used.
SH will not recognize a G/L if what conditions are met? (Formation) - Answer 1) 80%> Control
2) No boot received
Boot = Cash received or cancellation of debt. (Amt of liab. that exceeds the net book value)
On formation of a C-corp, the basis of the property received from the transferor / SH is the: -
Answer greater of:
1) SH AB + Gain recognized
2) Debt assumed by Corp.
, Dividends received deduction calculation - Answer 1) Multiply dividend received by ded%
2) Multiply the TI by ded%
3) Limit = lessor of 1 or 2. (Unless 1 results in NOL, then use 1 as amount)
*Must have held for >45 days.
*TI is calculated without regard to: NOL ded., DRD, CL carryback.
Charitable contributions can be deducted for BOD authorized contributions made after year-
end, as long as the contribution is made... - Answer no later than 2 1/2 months after the end
of the tax year.
Concerning G/L, what is the benefit of corporations filing a tax return with a subsidiary? -
Answer Inter-company profits are eliminated and property sold between entities retains its
basis.
*The new property owner (Entity B) will take on the AB of Entity A.
For tax purposes, even an accrual basis taxpayer is required to recognize bad debts expense in
the period in which... - Answer a receivable is written off.
The foreign tax credit is applied after determining the... - Answer gross tax liability, not before.
Can a SH be in the control club with having provided services only? - Answer No, property
must have been contributed.
IRS rule for the SH contributing services to be able to be included in the control group? - Answer
The SH can contribute property to meet the 80% rule. The value of the property must be at least
10% of the value of the services for the SH stock ownership to be included.
If boot is received on the formation of a corporation, the recognized gain equals... - Answer
Lower of:
1) Realized gain
2) FMV of boot received
For qualifying property, the corporation's basis in the property received is...
Prep Questions with Solved Solutions
Updated.
A personal holding company is one that derives at least 60% of its revenue from passive sources
that include: - Answer taxable interest, dividends, rentals, and royalty income
Rules on the requirements of using the M-1 vs M-2 - Answer Total Assets = >10m or more = M-
2
Total Assets = <10m = M-1
Charitable Contribution Deduction Limitation - Answer Limitation = 10% of TI computed
without regard to: CCD, NOL, NCL, C/B, DRD, DPAD.
Excess > Carry-forward 5 years
*Must subtract NOL carry-forward
Dividends received deduction rules - Answer Ownership:
- <20% = 70% ded.
- 20% - <80% = 80% ded.
- >80% = 100%
*DRD cannot exceed TI limitation. TI limits = TI x ded% used.
SH will not recognize a G/L if what conditions are met? (Formation) - Answer 1) 80%> Control
2) No boot received
Boot = Cash received or cancellation of debt. (Amt of liab. that exceeds the net book value)
On formation of a C-corp, the basis of the property received from the transferor / SH is the: -
Answer greater of:
1) SH AB + Gain recognized
2) Debt assumed by Corp.
, Dividends received deduction calculation - Answer 1) Multiply dividend received by ded%
2) Multiply the TI by ded%
3) Limit = lessor of 1 or 2. (Unless 1 results in NOL, then use 1 as amount)
*Must have held for >45 days.
*TI is calculated without regard to: NOL ded., DRD, CL carryback.
Charitable contributions can be deducted for BOD authorized contributions made after year-
end, as long as the contribution is made... - Answer no later than 2 1/2 months after the end
of the tax year.
Concerning G/L, what is the benefit of corporations filing a tax return with a subsidiary? -
Answer Inter-company profits are eliminated and property sold between entities retains its
basis.
*The new property owner (Entity B) will take on the AB of Entity A.
For tax purposes, even an accrual basis taxpayer is required to recognize bad debts expense in
the period in which... - Answer a receivable is written off.
The foreign tax credit is applied after determining the... - Answer gross tax liability, not before.
Can a SH be in the control club with having provided services only? - Answer No, property
must have been contributed.
IRS rule for the SH contributing services to be able to be included in the control group? - Answer
The SH can contribute property to meet the 80% rule. The value of the property must be at least
10% of the value of the services for the SH stock ownership to be included.
If boot is received on the formation of a corporation, the recognized gain equals... - Answer
Lower of:
1) Realized gain
2) FMV of boot received
For qualifying property, the corporation's basis in the property received is...
