Tijilana Mitchell
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Mid-Term Fall 2018

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Tijilana Mitchell
Created by Tijilana Mitchell almost 6 years ago
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Mid-Term

Question 1 of 8

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1. Identify which of the following statements is false

Select one of the following:

  • A) A business need not be incorporated under state or federal law to be taxed as a corporation

  • B) Once an election is made to change its classification, an entity cannot change again for 60 months

  • C) Under the check-the-box regulations, an LLC that has only two members (owners) must be taxed as a partnership.

  • D) The check-the-box regulations permit an LLC to be taxed as a C corporation.

Explanation

Question 2 of 8

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2) For Sec. 351 purposes, the term "property" does not include

Select one of the following:

  • A) services rendered

  • B) cash

  • C) inventory.

  • D) accounts receivable.

Explanation

Question 3 of 8

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4) A shareholder's basis in stock received in a Sec. 351 transaction is

Select one of the following:

  • A) increased by the FMV of boot received from the corporation.

  • B) decreased by the gain recognized by the transferor

  • C) increased by the gain recognized by the corporation

  • D) decreased by liabilities assumed by the corporation.

Explanation

Question 4 of 8

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14. Island Corporation has the following income and expense items for the year

gross receipts from sales: $60000
dividends received from 15% - owned domestic corporation $40000
Expenses connected with sales $30000

The taxable income of Island Corporation is

Select one of the following:

  • 70000

  • 50000

  • 47000

  • 100,000

Explanation

Question 5 of 8

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10. Organization expenditures include all of the following except for

Select one of the following:

  • a. cost incurred when issuing stock

  • expenses of organizational meetings

  • fees paid to the state of incorporation

  • legal cost incident to the creation of the corporation

Explanation

Question 6 of 8

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16. Identify which of the following statements is false

Select one of the following:

  • A controlled group must apportion certain tax benefits among its members

  • Brown corporation owns 60% of Clark Corporation and 65% of Davis Corporation. Davis Corporation owns 10% of Clark Corporation, and Clark Corporation owns 10% of Davis Corporation. The remaining stock is owned by an individual shareholder. Brown, Davis, and Clark Corporations are a parent-subsidiary controlled group

  • The controlled group test is applied on December 31

  • There are three categories of control groups: parent-subsidiary, brother-sister, and combined

Explanation

Question 7 of 8

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17. Current E&P does not include

Select one of the following:

  • federal income tax refunds from prior years

  • life insurance proceeds where the corporation is the beneficiary

  • tax exempt interest income

  • all of the above

Explanation

Question 8 of 8

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28.)
The city of Portland gives data corporation 60000 cash and land worth 100000 to induce it to move. The cash was not spent during the 12 months following contribution. The contribution results in

Select one of the following:

  • a zero basis in the land and a $60000 basis reduction in other assets

  • income recognition in the amount of 16000 to the corporation at the time of contribution

  • a zero basis in the land and 60000 ordinary income to the corporation 24 months after the time of contribution if the cash is not used to purchase assets

  • income recognition in the amount of 60000 to the corporation 12 months after the time of contribution

Explanation

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