Question 1

On January 1,2005 [before the adoption of ASC 718],Net Optimizers Inc.granted 1,000 nonqualified stock options (NQOs)valued at $.05 per option.Each option entitles the owner to purchase one share of stock for $1.These options vest at 10 percent per year for ten years.On December 31,2017,300 options are exercised when the stock price is $5.In 2017,what is the book-tax difference associated with the stock options? Is it favorable or unfavorable? Is it permanent or temporary?

Accepted Answer

$1,200,fav...

Question 2

Which of the following statements regarding the alternative minimum tax is false?

Accepted Answer

A)   Corporations compute the AMT by multiplying their AMT base by 35% and subtracting their regular tax liability.
B)   Small corporations are exempt from the AMT.
C)   All first-year corporations are exempt from the AMT.
D)   None of the choices are false (choose if you believe all of these above statements are true) .E) B) and C)
F) None of the above

Question 3

ValuCo gives you the following information:
  What is its ACE adjustment for the year? Is it favorable or unfavorable?

Accepted Answer

$55,500,unfavorable
Two of the three ite...

Question 4

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 does not apply?

Accepted Answer

A)   Financial accounting-no expense; tax-no deduction.
B)   Financial accounting-no expense; tax-deduct bargain element at exercise.
C)   Financial accounting-expense value over vesting period; tax-no deduction.
D)   Financial accounting-expense value over vesting period; tax-deduct bargain element at exercise.E) None of the above
F) A) and B)

Question 5

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year.Which of the following statements is true?

Accepted Answer

A)   Rapidpro may use the prior year tax liability to determine its first and second quarter estimated tax payments only since it is a large corporation.
B)   To avoid penalty, the second quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first quarter estimated taxable income (assume it does not rely on its current year actual tax liability to determine its estimated tax payment) .
C)   To avoid penalty, the third quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third quarter estimated taxable income (assume it does not rely on its current year actual tax liability to determine its estimated tax payment) .
D)   None of the choices are true.E) A) and B)
F) All of the above

Question 6

The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes.

Accepted Answer

A) True 
 B)False

Question 7

For incentive stock options granted when ASC 718 applies,the value of the options that accrue in a given year always creates a permanent,unfavorable book-tax difference.

Accepted Answer

A) True 
 B)False

Question 8

Corporations may carry a net operating loss sustained in the current year back two years and forward 20 years.

Accepted Answer

A) True 
 B)False

Question 9

Jazz Corporation owns 50% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Accepted Answer

A)   $0.
B)   $7,000.
C)   $8,000.
D)   $10,000.E) B) and C)
F) A) and D)

Question 10

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

Accepted Answer

A) True 
 B)False

Question 11

A C corporation reports its taxable income or loss on Form 1065.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements regarding capital gains and losses is false?

Accepted Answer

A)   In terms of tax treatment, corporations generally prefer capital gains to ordinary income.
B)   Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year.
C)   C corporations can carry back net capital losses three years and they can carry them forward for five years.
D)   Corporations must apply capital loss carrybacks and carryovers in a particular order.E) A) and D)
F) C) and D)

Question 13

Jazz Corporation owns 10% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss) before the dividend was ($6,000) .What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Accepted Answer

A)   $0.
B)   $2,800.
C)   $4,200.
D)   $7,000.
E)   None of the choices are correct.F) C) and E)
G) B) and C)

Question 14

Which of the following statements is false regarding corporate estimated tax payments?

Accepted Answer

A)   The due dates for estimated tax payments are the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year.
B)   Corporations must pay estimated taxes only if they have a federal income tax liability greater than $10,000 (including the alternative minimum tax) .
C)   Even though a corporation extends its tax return, it still must pay its tax liability for the year by three and one-half months after year-end.
D)   Corporations using the annualized income method for determining estimated tax payments project their tax liability for the year based on income from the first, second, and third quarters.E) A) and B)
F) All of the above

Question 15

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

Accepted Answer

A)   Approval of the payment from the board of directors.
B)   Approval from the IRS prior to making the contribution.
C)   Payment made within three and one-half months of the tax year-end.
D)   All of the choices are necessary.E) A) and B)
F) A) and C)

Question 17

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Accepted Answer

A) True 
 B)False

Question 18

Corporations may carry excess charitable contributions forward five years,but they may not carry them back.

Accepted Answer

A) True 
 B)False

Question 19

Omnidata uses the annualized income method to determine its quarterly federal income tax payments.It had $100,000,$50,000,and $90,000 of taxable income for the first,second,and third quarters,respectively ($240,000 in total through the first three quarters) .What is Omnidata's annual estimated taxable income as of the end of the third quarter?

Accepted Answer

A)   $300,000.
B)   $320,000.
C)   $400,000.
D)   $480,000.E) B) and D)
F) B) and C)

Question 20

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 applies?

Accepted Answer

A)   Financial accounting-no expense; tax-no deduction.
B)   Financial accounting-no expense; tax-deduct bargain element at exercise.
C)   Financial-expense value over vesting period; tax-no deduction.
D)   Financial-expense value over vesting period; tax-deduct bargain element at exercise.E) None of the above
F) A) and D)

Exam 5: Corporate Operations

Which of the following statements regarding capital gains and losses is false?

Correct Answer
verified

Corporations may carry a net operating loss sustained in the current year back two years and forward 20 years.

Correct Answer
verified

For incentive stock options granted when ASC 718 applies,the value of the options that accrue in a given year always creates a permanent,unfavorable book-tax difference.

Correct Answer
verified

Correct Answer
verified

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 applies?

Correct Answer
verified

Corporations may carry excess charitable contributions forward five years,but they may not carry them back.

Correct Answer
verified

Which of the following statements is false regarding corporate estimated tax payments?

Correct Answer
verified

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Correct Answer
verified

The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes.

Correct Answer
verified

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year.Which of the following statements is true?

Correct Answer
verified

Correct Answer
verified
$1,200,fav...
View Answer

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 does not apply?

Correct Answer
verified

A C corporation reports its taxable income or loss on Form 1065.

Correct Answer
verified

Which of the following statements regarding the alternative minimum tax is false?

Correct Answer
verified

Jazz Corporation owns 10% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss) before the dividend was ($6,000) .What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Correct Answer
verified

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

Correct Answer
verified

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

Correct Answer
verified

Jazz Corporation owns 50% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Correct Answer
verified

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Correct Answer
verified

ValuCo gives you the following information: What is its ACE adjustment for the year? Is it favorable or unfavorable?

Correct Answer
verified
$55,500,unfavorable
Two of the three ite...
View Answer

Exam 5: Corporate Operations

Which of the following statements regarding capital gains and losses is false?

Correct AnswerverifiedShow Answer

Corporations may carry a net operating loss sustained in the current year back two years and forward 20 years.

Correct AnswerverifiedShow Answer

For incentive stock options granted when ASC 718 applies,the value of the options that accrue in a given year always creates a permanent,unfavorable book-tax difference.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 applies?

Correct AnswerverifiedShow Answer

Corporations may carry excess charitable contributions forward five years,but they may not carry them back.

Correct AnswerverifiedShow Answer

Which of the following statements is false regarding corporate estimated tax payments?

Correct AnswerverifiedShow Answer

Corporations are allowed to deduct at least some AMT exemption regardless of profitability.

Correct AnswerverifiedShow Answer

The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes.

Correct AnswerverifiedShow Answer

Rapidpro Inc.had more than $1,000,000 of taxable income two years prior to the current year.It would like to use its prior year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct Answerverified$1,200,fav...View AnswerShow Answer

Which of the following describes the correct treatment of incentive stock options (ISOs) granted when ASC 718 does not apply?

Correct AnswerverifiedShow Answer

A C corporation reports its taxable income or loss on Form 1065.

Correct AnswerverifiedShow Answer

Which of the following statements regarding the alternative minimum tax is false?

Correct AnswerverifiedShow Answer

Jazz Corporation owns 10% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income (loss) before the dividend was ($6,000) .What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Correct AnswerverifiedShow Answer

Which of the following is unnecessary to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?

Correct AnswerverifiedShow Answer

Both Schedules M-1 and M-3 require taxpayers to identify book-tax differences as either temporary or permanent.

Correct AnswerverifiedShow Answer

Jazz Corporation owns 50% of the Williams Corp.stock.Williams distributed a $10,000 dividend to Jazz Corporation.Jazz Corp.'s taxable income before the dividend was $100,000.What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Correct AnswerverifiedShow Answer

A corporation with an AMTI of $400,000 will have all of its AMT exemption phased-out.

Correct AnswerverifiedShow Answer

ValuCo gives you the following information: What is its ACE adjustment for the year? Is it favorable or unfavorable?

Correct Answerverified$55,500,unfavorableTwo of the three ite...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$1,200,fav...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$55,500,unfavorable
Two of the three ite...
View Answer