Grocer Services Corporation (a calendar year taxpayer), a wholesale distributor of food, made the following donations to qualified charitable organizations during the year: Adjusted Basis
141. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest67
Grocer Services Corporation (a calendar year taxpayer), a wholesale distributor
of food, made the following donations to qualified charitable organizations
during the year:
Adjusted Basis
Fair Market Value
Food (held as inventory) donated to the Ohio
Children’s Shelter
$3,500
$8,000
Passenger van to Ohio Children’s Shelter, to be
used to
transport children to school
7,500
7,100
Stock in Acme Corporation acquired 7 months ago
and
held as an investment, donated to
Southwest University
4,000
6,200
How much qualifies for the charitable contribution deduction?
a.
$15,000.
b. $16,850.
c. $17,250.
d. $19,450.
e. None of the above.
142. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest68
In the current year, Plum Corporation, a computer manufacturer, donated 100 laptop
computers to a local school district (a qualified educational organization).
The computers were constructed by Plum earlier this year, and the school
district allocated the computers among its various schools where they will be
used for educational purposes. Plum’s basis in the computers is $50,000, and
their fair market value is $120,000. What is Plum’s deduction for the
contribution of the computers (ignoring the taxable income limitation)?
a.
$0.
b. $50,000.
c. $85,000.
d. $100,000.
e. $120,000.
143. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest69
During the current year, Kingbird Corporation (a calendar year C corporation)
had the following income and expenses:
Income from operations
$135,000
Expenses from operations
99,000
Dividends received (40% ownership)
9,000
Domestic production activities deduction
2,700
On October 1, Kingbird Corporation made a contribution to a qualified
charitable organization of $6,300 in cash (not included in any of the above
items). Determine Kingbird’s charitable contribution deduction for the current
year.
a.
$0.
b. $4,230.
c. $4,500.
d. $6,300.
e. None of the above.
144. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest70
Hippo, Inc., a calendar year C corporation, manufactures golf gloves. For 2011,
Hippo had taxable income (before DPAD) of $800,000, qualified domestic
production activities income of $950,000, and W-2 wages related to qualified
production activities income of $130,000. Hippo’s domestic production activities
deduction for 2011 is:
a.
$0.
b. $65,000.
c. $72,000.
d. $85,500.
e. None of the above.
145. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest71
In the current year, Amber, Inc., a calendar C corporation, has income from
operations of $200,000 and operating deductions of $225,000. Amber also had
$30,000 of dividends from a 25% stock ownership in a domestic corporation.
Which of the following statements is incorrect
with respect to Amber’s net operating loss deduction?
a.
The NOL is carried back 3 years and forward 10 years by Amber.
b. Amber’s NOL is $19,000.
c. A dividends received deduction is
allowed in computing Amber’s NOL.
d. Amber can elect to forgo the
carryback period and only carry forward the NOL.
e. None of the above.
146. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest72
Which of the following statements is incorrect
with respect to the treatment of net operating losses by corporations?
a.
A corporation may elect to forgo the carryback period and just carryforward an
NOL.
b. A corporation may claim a dividends
received deduction in computing an NOL.
c. An NOL is generally carried back 2
years and forward 20 years.
d. Unlike individuals, corporations do
not adjust their NOLs for net capital losses or nonbusiness deductions.
e. None of the above.
147. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest73
Red Corporation, which owns stock in Blue Corporation, had net operating income
of $200,000 for the year. Blue pays Red a dividend of $40,000. Red takes a
dividends received deduction of $28,000. Which of the following statements is
correct?
a.
Red owns 80% of Blue Corporation.
b. Red owns 20% or more, but less than
80% of Blue Corporation.
c. Red owns less than 20% of Blue
Corporation.
d. Red owns 80% or more of Blue
Corporation.
e. None of the above.
148. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest74
Eagle Corporation owns stock in Hawk Corporation and has taxable income of
$100,000 for the year before considering the dividends received deduction. Hawk
Corporation pays Eagle a dividend of $130,000, which was considered in
calculating the $100,000. What amount of dividends received deduction may Eagle
claim if it owns 25% of Hawk’s stock?
a.
$0.
b. $80,000.
c. $100,000.
d. $104,000.
e. None of the above.
149. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest75
Copper Corporation owns stock in Bronze Corporation and has net operating
income of $900,000 for the year. Bronze Corporation pays Copper a dividend of
$150,000. What amount of dividends received deduction may Copper claim if it
owns 65% of Bronze stock (assuming Copper’s dividends received deduction is not
limited by its taxable income)?
a.
$97,500.
b. $105,000.
c. $120,000.
d. $150,000.
e. None of the above.
150. CHAPTER
2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest76
Orange Corporation owns stock in White Corporation and has net operating income
of $400,000 for the year. White Corporation pays Orange a dividend of $60,000.
What amount of dividends received deduction may Orange claim if it owns 15% of
White stock (assuming Orange’s dividends received deduction is not limited by
its taxable income)?
a.
$9,000.
b. $42,000.
c. $48,000.
d. $60,000.
e. None of the above.
Step by step
Solved in 3 steps
