ACCT 431 - Ch. 16

D. Current year tax depreciation greater than the current year book depreciation

Abby is reconciling the book net income of Sojoum, inc. to its taxable income. Which of the following items would be a temporary difference between book net income and taxable income? A. Penalties B. Tax exempt interest income C. 50% of business meals expense D. Current year tax depreciation greater than the current year book depreciation

B. The Corp will deduct the bonus on its 2019 tax return and Sam will be taxed on the bonus in 2019

Big Brother, Inc., a C Corporation, accrues a reasonable bonus to its sole stockholder Sam on Dec. 31, 2018. If Sam is on the cash basis and the Corp. pays the bonus to Sam in 2019, then which of the following is correct for income tax purposes? A. The Corp. will deduct the bonus on its 2019 tax return and Sam will be taxed on the bonus in 2018. B. The Corp will deduct the bonus on its 2019 tax return and Sam will be taxed on the bonus in 2019 C. The Corp will deduct the bonus on its 2018 tax return and Sam will be taxed on the bonus in 2018 D. The Corp will deduct the bonus on its 2018 tax return and Sam will be taxed on the bonus in 2019

A. $5,000

Cupcake, Inc., a C Corporation, has the following items on its book income statement for 2018: long-term capital gain of $10,000 and a short-term capital loss of $25,000. The Corp had a long-term capital gain on an installment sale in 2017. The original sales price in 2017 was $100,000 and the cost basis of the asset sold was $60,000. If the Corp collects $50,000 in 2018 from the 2017 installment sale, then what is the total net capital gain taxable in 2018? A. $5,000 B. $25,000 C. $0 D. $35,000

D. Excess capital loss in the current year

Julia is reconciling the book net income of Bison Inc., a C Corp, to its taxable income. Which of the following items should be added to the book net income on Schedule M-1? A. Life insurance proceeds B. Tax exempt interest income C. Excess of tax depreciation over book depreciation D. Excess capital loss in the current year

B. 60,000

Edgewood, Inc. used the accrual basis of accounting. Edgewood, Inc. reported the following information regarding bad debts for 2018: (1) the beginning balance of the ADA was $65,000 at Jan. 1, 2018; (2) the ending balance of ADA was $75,000 at Dec. 31, 2018; and (3) the 2018 book amount for BDE was $70,000. What is the tax deductible amount for bad debts for 2018? A. 80,000 B. 60,000 C. 70,000 D. 75,000

D. $13,000

Esther, is the sole stockholder of Silly Goose, Inc., a C Corp. Her corporation had the following income and expenses for the year: service revenue of $600,000, operating expenses of $500,000, and taxable interest income of $10,000. Included in the operating expenses is a charitable contribution of $20,000. What is the current year deductible charitable contribution for the Silly Goose Corp? A.$20,000 B. $10,000 C. $11,000 D. $13,000

A. Prior year charitable contribution allowed as a deduction this year

Fran is reconciling the book net income of Lex Design, Inc., a C Corp., to its taxable income. Which of the following items should be subtracted from book net income of Schedule M-1? A. Prior year charitable contribution allowed as a deduction this year B. Excess of book depreciation over tax depreciation C. One half of business meals D. Penalties

A. $20,000 dividend income and $100,000 tax basis in stock

Galloway, Inc., a C Corp, distributes cash of $20,000 to its sole stockholder, Andy. Andy's tax basis in his stock is $100,000 before the distribution. Andy's taxable income from the distribution and tax basis in his stock after the distribution will be: A. $20,000 dividend income and $100,000 tax basis in stock B. No taxable income and $80,000 tax basis in stock C. No taxable income and $100,000 tax basis in stock D. $20,000 dividend income and $80,000 tax basis in stock

C. April 15

Johnny Boy, Inc. a C Corp., uses the calendar year. What is the unextended due date for the corporation's 2018 tax return? A. February 15 B. March 15 C. April 15 D. May 15

D. Federal income tax expense

Kristen is reconciling the book net income of Edgewood, Inc. to its taxable income. Which of the following items would be a permanent difference between book net income and taxable income? A. Current year excess of book BDE over tax BDE B Current year excess of tax depreciation over book depreciation C. Current year deduction of a charitable contribution carryover from the prior year D. Federal income tax expense

C. Will's taxable income from the C Corp is $100,000

Laughing Horse, Inc. has $300,000 of taxable income before payment of a reasonable salary to its employee/owner, Will. If Laughing Horse, Inc. is a C Corp. and pays a reasonable salary of $100,000 to its sole stockholder Will, then which of the following is correct? A. Will's taxable income from the C Corp is $300,000 B. Will's taxable income from the C Corp is $200,000 C. Will's taxable income from the C Corp is $100,000 D. Will's taxable income from the C Corp is $400,000

B. $25,000

Two Dogs, Inc., a C Corp., owns 15% of the stock of Lillian, Inc., another C Corp. If Lillian, Inc. pays a cash dividend of $50,000 to Two Dogs, Inc., then what is the amount of the Dividends Received Deduction that Two Dogs, Inc. gets? A. $0 B. $25,000 C. $50,000 D. $32,500