ACC221 2

Which of the following statements regarding the corporate dividends-received deduction is false? A. The dividends-received deduction is unlimited. B. No deduction is allowed for dividends from tax-exempt corporations. C. Generally, a corporation can deduct 65% of the dividends received from a corporation of which it owns 20% or more. D. Generally, a corporation can deduct 50% of the dividends received from a corporation of which it owns less than 20%.

A. The dividends-received deduction is unlimited.

In Year 1, Green, Inc., had gross receipts from sales of $500,000, dividends of $100,000 from a domestic corporation in which Green owned 50% of the stock, and operating expenses of $800,000. What is the Year 1 net operating loss for Green? A. $200,000 B. $265,000 C. $300,000 D. $330,000

B. $265,000

In tax year 2019, Sun Corporation had a $10,000 long-term capital loss and a $5,000 short-term capital gain. In tax year 2015, Sun reported $1,000 in long-term capital gains and $4,000 in short-term capital gains. Sun Corporation reported no other capital gains or losses in any other tax year. How much net capital loss will be available for Sun to carry into tax year 2020? A. $1,000 B. $4,000 C. $5,000 D. $0

C. $5,000

Which of the following statements about the dividends-received deduction (DRD) is true? A. To be eligible for the DRD, a corporation must hold the stock for at least 41 days during the 61-day period that begins 40 days before the dividends are paid. B. If dividends are received from both 15%-owned and non-15%-owned corporations, the limit is first computed with respect to 15%-and-more-owned corporate dividends. C. The taxable income limit does not apply if a current NOL exists or an NOL results from the DRD. D. A corporation cannot take the DRD if it holds a long position in substantially similar or related property.

C. The taxable income limit does not apply if a current NOL exists or an NOL results from the DRD.

With regard to the treatment of capital losses by a corporation other than an S corporation, which of the following statements is false? A. If a corporation has a net capital loss, it cannot deduct the loss in the current year. B. When a corporation carries a long-term net capital loss to another year, it is treated as a short-term loss. C. When figuring a current-year net capital loss, you must include any capital loss carried from another year. D. A corporation may not carry a capital loss from, or to, a year during which it is an S corporation.

C. When figuring a current-year net capital loss, you must include any capital loss carried from another year.

Which of the following statements concerning the charitable contribution deduction by a corporation is true? A. A corporation can deduct contributions to charitable organizations only if they are made in cash. B. A corporation is not permitted to carry over any charitable contributions that were not deducted in the current year. C. A corporation using the accrual basis of accounting must have made the charitable donation by the close of its tax year. D. A corporation cannot deduct contributions in the current year that exceed 10% of its taxable income.

D. A corporation cannot deduct contributions in the current year that exceed 10% of its taxable income.

Corporations can take a deduction for dividends received from which of the following? A. A corporation exempt from tax for the tax year of the distribution. B. None of the answers are correct. C. A real estate investment trust. D. A corporation whose stock has been held for 91 days.

D. A corporation whose stock has been held for 91 days.

During the current year, Corporation G received $48,000 in dividends from a 19%-owned taxable domestic corporation. G received no other dividends. G's charitable contributions for the year totaled $15,000. G's taxable income for the year was $70,000 after the dividends-received deduction but before the deduction for charitable contributions. What is the amount of Corporation G's charitable contribution deduction for the year? A. $9,400 B. $7,000 C. $10,000 D. $15,000

A. $9,400

During the current year, the NOGO Corporation had the following items of income and expenses: • Income from operations $50,000 • Dividend income from Cooper Corporation (a 10% owned corporation) $90,000 • Expenses of operations $40,000 What is the NOGO Corporation's dividends-received deduction, if any? A. $45,000 B. $58,500 C. $10,000 D. $90,000

A. $45,000

HY-Text, Inc., a calendar-year cash-basis corporation, had the following transactions during the year: Net income per books (after tax estimates) $100,000 Federal income tax paid 22,250 Excess of capital losses over capital gains 5,000 Interest from municipal bonds 11,000 Expenses related to municipal bond interest 500 What is HY-Text's taxable income? A. $116,750 B. $77,750 C. $127,750 D. $139,000

A. $116,750

Marisa Corporation purchased 20% of Mantle Corporation's common stock in August of the current year and paid for the purchase with $100,000 cash and $100,000 borrowed from its bank. During the current year, Marisa received $50,000 in dividends from Mantle and paid $10,000 in interest expense on the bank loan. Marisa did not make any principal payments on the loan during the year. If Marisa had taxable income of $50,000 before special deductions, what is its dividends-received deduction for the year? A. $22,500 B. $16,250 C. $0 D. $32,500

A. $22,500

Meen Corporation's operating income for the current year was $200,000 after a reduction of $60,000 for charitable contributions. What is the maximum allowable deduction for contributions on Meen's federal income tax return? A. $26,000 B. $20,000 C. $6,000 D. $12,500

A. $26,000

For a domestic corporation to deduct a percentage of the dividends it receives from a foreign corporation, certain tests must be met. Which of the following conditions need NOT be present? A. The foreign corporation has derived income effectively connected with its U.S. business amounting to at least 50% of its gross income from all sources for a 36-month period. B. The domestic corporation owns at least 10% of the foreign corporation. C. The corporation is not a foreign personal holding company. D. The foreign corporation has income effectively connected with a trade or business in the U.S.

A. The foreign corporation has derived income effectively connected with its U.S. business amounting to at least 50% of its gross income from all sources for a 36-month period.

For Year 2, a corporation had taxable income of $70,000 without regard to the contribution deduction. Contributions made in Year 2 totaled $5,000, and a $4,000 carryover of excess contributions from Year 1 is available to apply to Year 2. What is the amount of contribution carryover available for Year 3, and what is its source? A. $2,000 from Year 2. B. $2,000 from Year 1. C. $3,000 from Year 1. D. $0

B. $2,000 from Year 1.

During the current year, ABC Corporation had the following income and expenses: Gross receipts $350,000 Salaries 175,000 Contributions to qualified charitable organizations 20,000 Capital gains 3,000 Capital loss carryback 3,000 Depreciation expense 14,000 Dividend income 30,000 Dividend deduction 15,000 What is ABC's charitable contribution deduction for the year? A. $17,600 B. $19,400 C. $20,000 D. $15,600

B. $19,400

For the current year, accrual-basis Corporation A's books and records reflected the following: Net income per books $104,000 Accrued federal income tax 35,000 Net capital loss 4,000 Tax-exempt interest 5,000 Book depreciation in excess of allowable tax depreciation 2,000 Based on the above facts, what is the amount of Corporation A's taxable income? A. $70,000 B. $69,000 C. $140,000 D. $150,000

C. $140,000

Taxpayer, Inc., a C corporation, had the following transactions during 2019: Long-term gain from sale of land $10,000 Short-term gain from sale of stock 20,000 Long-term losses from sale of securities (40,000) What is the amount of long-term capital loss that may be taken as a deduction by Taxpayer in2019? A. $0 B. $10,000 C. $30,000 D. $40,000

C. $30,000

Everyday Corporation realized net book income in the amount of $300,000 for tax year ended December 31, Year 1. Included in the net book income are the following: Federal income taxes $ 4,000 Excess capital losses over capital gains 10,000 Tax exempt interest income 5,000 What is Everyday Corporation's taxable income? A. $304,000 B. $280,000 C. $290,000 D. $309,000

D. $309,000

During the year, Wilmohr Corporation had the following items of income and expenses: Income from operations $40,000 Dividend income from East 98th St., Inc. (a 10%-owned domestic corporation) 80,000 Expenses of operations 30,000 What is Wilmohr Corporation's dividends-received deduction? A. $52,000 B. $80,000 C. $58,500 D. $40,000

D. $40,000

Carol Corporation and Brown Corporation are domestic corporations. The Carol Corporation owns 25%of the Brown Corporation. Carol's income from business for the current year is $500,000, and business expenses are $750,000. In addition to the income from business, Carol also received dividends from Brown in the amount of $100,000. Carol's dividends-received deduction is A. $50,000 B. $100,000 C. $25,000 D. $65,000

D. $65,000