1) Which of the following statements regarding proposed regulations is not correct?
2) Regulations are
3) Which of the following courts is not a trial court for tax cases?
4) Which of the following statements is incorrect?
5) Which of the following is an advantage of a sole proprietorship over other business forms?
6) Which of the following statements is correct?
7) Three members form an LLC in the current year. Which of the following statements is incorrect?
8) Identify which of the following statements is true.
9) Identify which of the following statements is true.
10) Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Wayne contributes services for 15% of the stock. The tax effect is
11) Matt and Sheila form Krupp Corporation. Matt contributes property with a FMV of $55,000 and a basis of $35,000. Sheila contributes property with a FMV of $75,000 and a basis of $40,000. Matt sells his stock to Paul shortly after the exchange. The transaction will
12) For Sec. 351 purposes the term property does not include
13) Identify which of the following statements is true.
14) A new corporation may generally select one of the following accounting methods with the exception of
15) Identify which of the following statements is false.
16) Edison Corporation is organized on July 31. The corporation starts business on August 10. The corporation adopts a November 30 fiscal year end. The following expenses are incurred during the year: Date Type Amount
What is the maximum amount of organizational expenditures that can be deducted by the corporation for its first tax year ending November 30?
17) Maxwell Corporation reports the following results:
Gross income from operations $ 90,000
Dividends received from 18%-owned domestic corporation 70,000
18) Island Corporation has the following income and expense items for the year.
Gross receipts from sales $60,000
Dividends received from 15%-owned domestic corporation 40,000
Expenses connected with sales 30,000
The taxable income of Island Corporation is
19) Which of the following is not an adjustment in calculating AMTI?
20) Tax-exempt interest income on state and local municipal bonds which are not a private activity is
21) Which of the following statements about the alternative minimum tax depreciation rules is correct?
22) Maxwell Corporation reports the following results:
Year Current E&P Distributions
2005 $6,000 $4,000
2006 5,000 1,000
2007 1,000 -0-
23) Grant Corporation sells land (a no inventory item) with a basis of $57,000 for $100,000. Nichole will be paid on an installment basis in five equal annual payments starting in the current year. The E&P for the year of sale will be increased as a result of the sale (excluding federal income taxes) by
24) Identify which of the following statements is false.
25) Identify which of the following statements is true.
26) Identify which of the following statements is true.
27) For purposes of determining current E&P, which of the following items cannot be deducted in the year incurred?
28) A corporation distributes land and the related liability to Meg, its sole shareholder. The land has a FMV of $60,000 and is subject to a liability of $70,000. The corporation has current and accumulated E&P of $80,000. The corporation’s adjusted basis for the property is $70,000. What effect does the transaction have on the corporation?
29) Hogg Corporation distributes $30,000 to its sole shareholder, Ima. At the time of the distribution, Hoggs’ E&P is $14,000 and Ima’s basis in her stock is $10,000. Ima’s gain from this transaction is
30) One consequence of a property distribution by a corporation to a shareholder is
31) Which of the following is not a reason for a stock redemption?
32) Elijah owns 20% of Park Corporation’s single class of stock. Elijah’s basis in the stock is $8,000. Park’s E&P is $28,000. If Park redeems all of Elijah’s stock for $48,000, Elijah must report dividend income of
33) Which of the following is not a condition that permits a stock redemption to be treated as a sale?
34) Identify which of the following statements is true.
35) Identify which of the following statements is true.
36) The definition of a partnership does not include
37) Which of the following items is not separately stated for an S corporation?
38) Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2008. Tex and Shirley each own 50% of the stock. Cactus does not make any distributions during 2008, but had $200,000 of ordinary income. In 2009, ordinary income was $100,000 and distributions were $100,000. What is Tex’s ordinary income for 2008?
39) Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2008. Tex and Shirley each own 50% of the stock. Cactus does not make any distributions during 2008, but had $200,000 of ordinary income. In 2009, ordinary income was $100,000 and distributions were $100,000. What is Tex’s ordinary income for 2009?
40) On January 1, Helmut pays $2,000 for a 10% capital, profits and loss interest in a partnership, which has recourse liabilities of $20,000. The partners share economic risk of loss from recourse liabilities in the same way they share partnership losses. In the same year, the partnership incurs losses of $6,000 and the recourse liabilities increase by $5,000. Helmut and the partnership use a calendar tax year-end. Helmut’s basis at year-end is
41) On January 2 of the current year, Calloway and Taylor contribute cash equally to form the CT Partnership. Calloway and Taylor share profits and losses in a ratio of 75% and 25%, respectively. The partnership’s ordinary income for the year was $40,000. Calloway received a distribution of $5,000 during the year. What is Calloway’s share of taxable income for the year?
42) On the first day of the partnership’s tax year, Karen purchases a 50% interest in a general partnership for $30,000 cash and she materially participates in the operation of the partnership for the entire year. The partnership has $40,000 in recourse liabilities when Karen enters the partnership. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. There is no minimum gain related to the nonrecourse liability. During the year the partnership incurs a $120,000 loss and a $20,000 increase in liabilities. How much of the loss can Karen report on her tax return for the current year?
43) The total bases of all distributed property in the partner’s hands following a nonliquidating distribution is limited to
44) The Internal Revenue Code includes which of the following assets in the definition of Sec. 751 properties?
45) Identify which of the following statements is true.
46) Which of the following conditions will not cause an S election to be terminated?
47) Identify which of the following statements is true.
48) Identify which of the following statements is false.
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