EA2 Study Unit 14.1-14.6 Corporate Income, Losses, and Deductions

Which factor does not contribute to the limitation on the business interest deduction?

A corporation experiences a net capital loss (NCL) in 2023. How many years can the NCL be carried back and forward, respectively?

What is the income classification when gain is recognized on the transfer of depreciable asset to a related party?

Parent sells a building to their Subsidiary at a loss of $50,000. Later, the Subsidiary sells the building to an unrelated third party at a gain of $70,000. How much gain does Subsidiary recognize?

An asset is sold to a related party at a loss of $10,000. The related party then sells the asset to an unrelated person at a loss of $15,000. How much loss is recognized on the subsequent sale to the unrelated person?

In a wholly owned corporation, if a 75% shareholder exchanges baseball cards for a corporate motorcycle, how is the gain calculated for tax purposes?

When reconciling income per books with income per tax return, which of the following adjustments should be subtracted from net income per books?

Which of the following increases the unappropriated retained earnings account?

A corporation received dividends from another domestic corporation. To be eligible for the dividends-received deduction (DRD), how long must the recipient corporation hold the stock?

Under what conditions is a dividend received from a foreign corporation eligible for the dividends-received deduction (DRD)?

Dividends received from which of the following entities are ineligible for the dividends-received deduction?

In 2023, when calculating the charitable contribution deduction for a corporation, what is the limitation based on?

If a corporation's charitable contribution exceeds the deductible limit in 2023, how is the excess treated for tax purposes?

During the current year, Chris Corporation, a domestic corporation, had gross receipts of $125,000, net capital gains of $10,000, expenses (not including cash contributions) of $75,000, contributions to qualified charities of $20,000, and a net operating loss carryover from last year of $20,000. What is the amount of Chris Corporation's allowable charitable contribution deduction for the current tax year?

In the current year, Little Company sold land, which had been held strictly for investment purposes, for $70,000. The original cost of the land when purchased 2 years ago was $80,000. During the year, Little also had a capital gain of $6,000 and received dividends from investments of $3,000. What is the amount of the loss that is deductible by Little in the current year from the sale of the land?

Mitchell sold his Saratoga Bombers Corporation stock to his brother Sheldon for $7,000. Mitchell's cost basis in the stock was $10,000. Sheldon later sold this stock to Morey, an unrelated party, for $10,500. What is Sheldon's recognized gain?

On January 2, Year 1, Tek Corp., an accrual-basis, calendar-year C corporation, purchased all the assets of a sole proprietorship, including $60,000 in goodwill. Tek's reported book income before federal income taxes was $400,000. A $1,500 deduction for annual amortization of goodwill was taken based on a 40-year amortization period. What should be the amount of Tek's taxable income, as reconciled on Tek's Schedule M-1 of Form 1120, U.S. Corporation Income Tax Return?

During the current year, ABC Corporation had gross receipts of $233,600, salaries of $175,000, contributions to qualified charitable organizations of $20,000, capital gains of $3,000, a capital loss carryback of $3,000, depreciation expense of $14,000, dividend income of $30,000, and a dividends-received deduction of $15,000. What is ABC's charitable contribution deduction for the year?

Alpha is a U.S. corporation that owns 21% of the stock of Omega, a foreign corporation that is not a foreign personal holding company. Forty percent of Omega's post-1986 undistributed income is from effectively connected business sources in the U.S. Alpha's dividend from Omega is $20,000 in the current year. Alpha has no debt related to its stock holdings. What is Alpha's dividends-received deduction?

With regard to the treatment of capital losses by a corporation other than an S corporation, which of the following statements is false?

In its first year of operations, Rowley Corporation, not a dealer in securities, realized taxable income of $128,000 from the operation of its business. In addition to its regular business operations, it realized short-term capital gain of $10,000 short-term capital loss ($4,000) long-term capital gain $12,000 Long-term capital loss ($32,000) What is Rowley's total taxable income?

During the current year, Dowdy, a C corporation, realized a long-term capital gain of $8,000 from the sale of a tract of land, a short-term capital gain of $6,000 from the sale of stock of Ornery Corporation, and a long-term capital loss of $18,000 from the sale of U.S. government securities. What amount of the long-term capital loss may Dowdy deduct on its current year income tax return?

During the current year, Zack Corporation experienced a $15,000 loss from operations. It received $100,000 in dividends from a domestic corporation of which Zack owns 15% of total stock outstanding. Zack's taxable income before the dividends-received deduction was $85,000. What is the amount of Zack's dividends-received deduction?

Daynite Corporation, a domestic corporation, acquired a 90% interest in KDN Corporation 10 years ago for $50,000. During the current year, the stock of KDN was declared worthless. KDN's income for all taxable years was from sources other than passive income. What are the character and the amount of the deduction Daynite should take in the current year?

For the current year, Roberts Corporation had a beginning balance of unappropriated retained earnings of $100,000 and net income per books of $125,000. During the year, it paid cash dividends of $60,000, had a loss on sale of securities of $3,600, and received a refund of the previous year's income taxes of $6,000. What is its ending balance of unappropriated retained earnings for the year?

Newport, Inc., a small business investment company, had income from operations of $55,000, dividend income from Strauss, Inc. (a domestic corporation) $15,000, and expenses of operations of $20,000 for the year. What is Newport, Inc.'s dividends-received deduction?

Which of the following statements about the dividends-received deduction (DRD) is true? The taxable income limit does not apply if a current NOL exists or an NOL results from the DRD.

During the year, HOOS Corporation had gross receipts of $436,600, salaries of $300,000, contributions to qualified charitable organizations of $60,000, capital gains of $7,000, depreciation expense of $28,000, dividend income of $60,000, and a dividends-received deduction of $42,000. What is the amount of HOOS Corporation's charitable contribution deduction for the year?

Which of the following contributions made by Natvale Corporation, a domestic corporation, is NOT deductible for federal income tax purposes?

Tapper Corp., an accrual-basis, calendar-year corporation, was organized on January 2, Year 1. During the year, revenue was exclusively from sales proceeds and interest income. The following information pertains to Tapper: Taxable income before charitable contributions for the year ended December 31, Year 1 was $500,000, Tapper's matching contribution to employee-designated qualified universities made during Year 1 was 10,000, Authorized contribution by board of directors to a qualified charity (authorized December 1, Year 1; made February 1, Year 2) 30,000. What is the maximum allowable deduction (among what has been already contributed) that Tapper may take as a charitable contribution on its tax return for the year ended December 31, Year 1?

During the year, PARD Corporation had gross receipts of $467,200, salaries of $350,000, contributions to qualified charitable organizations $40,000, capital gains $6,000, capital loss carryback $6,000, depreciation expense $28,000, dividend income $60,000, and a dividends-received deduction $30,000. What is PARD's charitable contribution deduction for the year?

Snow Corporation owns a 20% interest in Hail Corporation, a domestic corporation. For the year, Snow Corporation had gross receipts of $390,000, operating expenses of $400,000, and dividend income of $120,000 from Hail Corporation. What is Snow Corporation's dividends-received deduction for the year?

Corporations can take a deduction for dividends received from which of the following?