Expert Answers

1.Richards Corporation has taxable income of
$280,000 calculated before the charitable contribution deduction and before its dividends-received deduction of $34,000. Richards makes cash contributions of $35,000 to charitable organizations. What is Richards Corporation’s charitable contribution deduction
for the current year? a. $35,000 b. $31,400 c. $24,600 d. $28,000

2.Green Corporation is incorporated on March 1 and beings business on June 1. Green’s first tax year ends on October 31, i.e., a short year. Green incurs the following expenses during the year:
Date Type Amount February Draft charter $ 2,000 March Stock commission 30,000 March Accounting fees to set up books 2,000 April Temporary director fees 2,000 December Charter modification fee 1,000 What is the deduction for organizational expenses if Green
chooses to deduct its costs as soon as possible? a. $667 b. $5,028 c. $500 d. $36,000

3. Island Corporation has the following income and expense items for the year. Gross receipts from sales $60,000 Dividends received from 15%-owned domestic corporation 40,000
Expenses connected with sales 30,000 The taxable income of Island Corporation is a.$47,000 b.$70,000 c.$42,000 d.$100,000

4. Which of the following is not an adjustment in calculating AMTI? a. Production activities deduction b. The regular tax NOL deduction
c. The difference between the gains for AMTI and regular tax purposes d. Gain on installment sales of noninventory property

5.Which of the following items are adjustments made to arrive at alternative minimum taxable income? a. Tax-exempt interest income
earned on private activity bonds b. Excess of depreciation claimed on personally acquired in the current year for taxable income purposes over that claimed for alternative minimum tax purposes c. Statutory exemption d. Excess percentage depletion

6.Identify which of the following statements is true. a. A transferor’s gain or loss that goes unrecognized when Sec. 351 applies is permanently exempt for taxation b. If a taxpayer transfers property and services as part of a transaction meeting the
Sec. 351 requirements, all of the stock received is counted in determining whether the property transferors have acquired control. c. If a taxpayer transfers property and services as part of a transaction meeting the Sec. 351 requirements, the nonrecognition
of gain or loss will apply to the services d. All are false

7. Matt and Sheila form Krupp Corporation. Matt contributes property with a FMV of $55,000 and a basis of $35,000. Sheila contributes property with a FMV of $75,000 and a basis of $40,000. Matt sells
his stock to Paul shortly after the exchange. The transaction will a. Qualify under Sec. 351 only if an advantage ruling has been obtained b. Qualify with respect to Sheila under Sec. 351 whether Matt qualifies or not c. Not qualify under Sec. 351 d. Qualify
under Sec. 351 if Matt can show the sale to Paul was not part of a prearranged plan

8. A new corporation may generally select one of the following accounting methods with the exception of a. Hybrid method b. Retail method c. Cash method d. Accrual method

9.Once a corporation has a taxable year it can change the taxable year without IRS permission if a. The resulting short period does not have a net operating loss b. The corporation has not changed its accounting period within the last 10 years c. The annualized
income for the short period is at least 80% of the corporation’s income for the preceding taxable year d. All of these

10. Identify which of the following statements is false a. A corporation’s first tax year may not cover a full 12-month period b. A new corporation
can elect a fiscal year that runs from February 16 to February 15 of the following year c. A corporation’s fiscal year generally must end on the last day of the month d. A fiscal year may not end on December 31