All of the following, except one, are requisites in the carry-over of net operating loss? There must be no substantial change in the ownership of the business. Carry-over is not allowed if the corporation is subject to MCIT during the taxable year. Even if the corporation paid MCIT, the running of the prescriptive period is not interrupted. The carry-over is good for one year.

All of the following, except one, are requisites in the carry-over of net operating loss? There must be no substantial change in the ownership of the business. Carry-over is not allowed if the corporation is subject to MCIT during the taxable year. Even if the corporation paid MCIT, the running of the prescriptive period is not interrupted. The carry-over is good for one year.

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 5MCQ: Which of the following statements with respect to the depreciation of property under MACRS is...

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Which of the following statements is incorrect with respect to the treatment of a net operating loss arising in 2022? a.Unlike individuals, corporations do not adjust their NOLs for net capital losses or nonbusiness deductions. b.The deduction for any carryover year of the NOL is limited to 80% of taxable income (determined without regard to the NOL deduction). c.A corporation may claim a dividends received deduction in computing an NOL. d.An NOL is generally carried back 2 years and forward 20 years.
Which of the following statements with respect to the depreciation of property under MACRS is incorrect? Under the half-year convention, one-half year of depreciation is allowed in the year the property is placed in service. If a taxpayer elects to use the straight-line method of depreciation for property in the 5 -year class, all other 5 -year class property acquired during the year must also be depreciated using the straight-line method. In some cases, when a taxpayer places a significant amount of property in service during the last quarter of the year, real property must be depreciated using a mid-quarter convention. Real property acquired after 1986 must be depreciated using the straight-line method. The cost of property to which the MACRS rate is applied is not reduced for estimated salvage value.
LossCo reported a net operating loss of $5 million for financial reporting and tax purposes. The enacted tax rate is 25%. Assume that LossCo does not qualify as a type of company that is allowed to carry back an NOL to prior taxable years. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.
Gold Corporation, a calendar year C corporation, was formed several years ago and has been profitable until the current year. In the current year, Gold incurs a net operating loss. Identify the issues that Gold Corporation should consider regarding its NOL.
Which of the following statements related to loss carryback is NOT correct? O The company may carry the net operating loss back two years and receive refunds for income taxes paid in those years. O The company may carry the net operating loss back three years and receive refunds for income taxes paid in those years. O The company may carry forward any loss remaining after the two-year carryback to offset future taxable income. O The company must apply the loss to the earlier year first and then to the second year.
US taxpayers legally residing in a foreign country from January 2nd until December 12th of the same year earning $108,700 of income in 2021 qualifies to exclude that amount of income from US taxation. True O False
Choose the correct. How does the amortization of tax-deductible goodwill affect the computation of a parent company’s income taxes?a. It is a deductible expense only if the parent owns at least 80 percent of subsidiary’s voting stock.b. It is deductible only as impairments are recognized.c. It is a deductible item over a 15-year period.d. It is deductible only if a consolidated tax return is filed.
During 2019, Quill Corporation, a calendar year C corporation, sold the following business assets on the dates listed below. Compute the amount and character of the gain or loss Quill Corporation must report from the disposition of each asset. Then determine the sum of each type of gain or loss and the net effect these gains and losses have on Quill Corporation’s 2019 taxable income. Assume that Quill has no Section 1231 losses in prior years. Please show your work and explain your calculations. Asset Acquired Sold Cost CostRecovery AdjustedBasis Sales Price Computer 1/13/18 5/16/2019 $208,000 $74,880 $133,120 $180,000 Office equipment 8/10/15 3/10/2019 $160,000 $117,160 $42,840 $40,000 Office building 7/23/12 2/12/2019 $320,000 $60,000 $260,000 $400,000 Land 7/23/12 2/12/2019 $80,000 $0 $80,000 $100,000
Losses from wash sales of stocks or securities shall not be deductible, except The taxpayer is a dealer of securities or stocks and made in the course of business of suchdealer. The shares of stock are sold and then reacquired or repurchased are identical stocks orsecurities. The shares of stock are sold and then reacquired within a period beginning 30 days before thedate of such sale or disposition. The shares of stock are sold and then reacquired within a period of ending 30 days after suchsale or disposition.
The company has the opportunity to engage in a transaction that will generate a total cash of $180,000 that will be considered a taxable income in the year received. Pioneer will receive $100,000 in year 0 and $80,000 in year 1. The company has the option to restructure the above transaction and receive $107,500 in year 0 and $80,000 in year 1. However, Pioneer should recognize the total amount received as a taxable income in year 0. The company’sinvestment manager rejected the restructure of the above proposal. Assume the company uses 8% discount rate and has a marginal tax rate of 35%. Do you agree with the investment manager decision? Assuming you disagree, provide the appropriate calculations and explain your recommendation
In its first year of existence (year 1), Willow Corp. (a C corporation) reports a loss for tax purposes of $50,000. In year 2 it reports a $40,000 loss. For year 3, it reports taxable income from operations of $100,000 before any loss carryovers. How much tax will Willow Corp. pay in year 3, what is its NOL carryover to year 4, and when will the NOL expire under the following assumptions? (New Corporate income tax rate has been mentioned as "21% on all taxable income" as per the recent change. Leave no answer blank. Enter zero if applicable.) a. Year 1 is 2017. Willow Corp. tax liability in Year 3 Willow Corp. NOL carryover to Year 4
Lion, Inc. reported taxable income of $530,000 for its most recent current year end. Not included in the company's computation of taxable income were: tax-exempt interest of $17,000 and disallowed expenses of $21,000. Lion deducted depreciation of $137,000 on its tax return. Under the alternative (E&P) depreciation method, the deduction would have been $87,000. Lion paid out dividends to its 4 equal shareholders of $20,000 each on December 1, 2021. Lion has been incorporated for a number of years and has accumulated earnings and profits of $1,870,000 as computed at the beginning of the current year. a. Compute the company's current E&P for the year ended December 31, 2021. b. Compute the company's accumulated E&P for January 1, 2022.