Question 1

QDP Corporation's AMTI is $569,000 for 2017.Its regular tax liability is $110,000.What is its AMT?

Accepted Answer

The answer of QDP Corporation's AMTI is $569,000 for 2017.Its...

Question 2

For 2017,SRH's taxable income is $35,000 and JHH's taxable income is $45,000.Together,Scott and Jackson Howard own 100 percent of both corporations.What is the combined tax liability of the two corporations? (Use Corporate Tax Rate Schedule.)

Accepted Answer

The answer of For 2017,SRH's taxable income is $35,000 and...

Question 3

IndusTree Inc.received $1,800,000 from the sale of a property in 2017.The property's adjusted basis for regular tax purposes was $200,000 at the time of the sale.The property's adjusted basis for AMT purposes was $290,000.What is the amount of the AMT adjustment due to the sale of the asset? Does it increase or decrease AMTI?

Accepted Answer

The answer of IndusTree Inc.received $1,800,000 from the sale of...

Question 4

AR Systems Inc.(AR)had $120,000 of tax liability last year.It anticipates a current-year tax liability of $500,000.Assuming AR is considered a large corporation for purposes of estimating tax liability,what are the minimum estimated tax payments it should make to avoid underpayment penalties? Ignore the annualized income method.

Accepted Answer

The answer of AR Systems Inc.(AR)had $120,000 of tax liability...

Question 5

On January 1,2015,Credit Inc.recorded goodwill valued at $270,000 when it acquired the assets of another company.At the end of 2016,the auditors of Credit Inc.determined that the goodwill had been impaired by $50,000 and Credit Inc.wrote down the book value of the goodwill by $50,000.During 2017,the goodwill was not further impaired.In 2018,additional goodwill was impaired and was written down another $18,000 for financial reporting purposes.What is the temporary book-tax difference associated with the purchased goodwill in 2016,2017,and 2018? Are the differences favorable or unfavorable? Are the differences permanent or temporary?

Accepted Answer

The answer of On January 1,2015,Credit Inc.recorded goodwill valued at...

Question 6

On January 1,2016,GrowCo issued 50,000 nonqualified stock options (NQOs)valued at $1 per option.Each option entitles the owner to purchase one share of stock for $4.These options vest (accrue)at 20 percent per year for five years beginning in 2016.By the end of 2016,20,000 of the options had vested.At the end of 2017,these options were exercised when the stock price is $6.25.What is the total value of the book-tax difference associated with the stock options for 2017? Is it favorable or unfavorable? How much of the adjustment is permanent and how much is temporary? (Note that ASC 718 applies to these transactions.)

Accepted Answer

The answer of On January 1,2016,GrowCo issued 50,000 nonqualified stock...

Question 7

Pure Action Cycles Inc.,a bicycle manufacturer,has a net capital loss in 2017 of $64,000.It had net capital gains of $21,500 in 2016,$45,000 in 2015,$10,000 in 2014 (but suffered a net operating loss in 2014),and $8,000 of net capital gain in 2012.What is the net capital gain in 2016 after the carryback is applied?

Accepted Answer

The answer of Pure Action Cycles Inc.,a bicycle manufacturer,has a...

Question 8

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

The answer of On January 1,2005 [before the adoption of...

Question 9

In the current year,Auto Rent Corporation reported the following taxable income at the end of its first,second,and third quarters: (Use Exhibit 5-11)
  What amount of estimated tax payments would Auto Rent pay each quarter in order to avoid estimated tax penalties under the annualized income method of computing estimated tax payments? (Use Corporate Tax Rate Schedule.)

Accepted Answer

The answer of In the current year,Auto Rent Corporation reported...

Question 10

During 2017,Hughes Corporation sold a portfolio of stock it had held for five years at a loss of $200,000.It also sold some investment land and recognized a capital gain of $180,000.In 2015,Hughes reported a net capital gain of $12,000 and in 2016 it recognized a net capital gain of $6,000.What is the amount of its net capital loss carryover to 2018?

Accepted Answer

The answer of During 2017,Hughes Corporation sold a portfolio of...

Question 11

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

Accepted Answer

The answer of ValuCo gives you the following information:
 ...

Question 12

VitalJuice Corporation reports the following schedule of prior year taxes it owed:
  What is VitalJuice's tax liability for Year 4?

Accepted Answer

The answer of VitalJuice Corporation reports the following schedule of...

Question 13

TerraWise Inc.reported the following information for 2017:
  What is TerraWise Inc.'s AMTI?

Accepted Answer

The answer of TerraWise Inc.reported the following information for 2017:
...

Question 14

In 2014,Smith Traders Inc.reported taxable income of $100,000.In 2015,it reported taxable income of $15,000.In 2016,it reported taxable income of $95,000.In 2017,Smith Traders experienced a net operating loss of $25,000.What amount of refund can Smith Traders receive if it does not elect to forgo the carry back (see the Corporate Tax Rate Schedule.)?

Accepted Answer

The answer of In 2014,Smith Traders Inc.reported taxable income of...

Question 15

Imperial Construction Inc.(IC)issued 100,000 incentive stock options (ISOs)to its employees on January 1,2017 with an estimated value of $5.50 per option.The options vest (accrue)at 25 percent per year for four years (beginning in 2017).Each option allows the holder to purchase one share of stock at $8.On January 1,2018,employees exercised 12,500 options as IC's stock price reached $14.72.What is the amount of the book-tax difference in 2018 associated with the incentive stock options? Is it favorable or unfavorable? Is it temporary or permanent?

Accepted Answer

The answer of Imperial Construction Inc.(IC)issued 100,000 incentive stock options...

Question 16

In 2017,Datasoft Inc.received $350,000 in dividends from CSLabs Inc.Datasoft's taxable income before the dividends received deduction and $20,000 charitable contribution deduction is $300,000.What is Datasoft's DRD assuming it owns 15% of the CSLabs Inc.stock?

Accepted Answer

The answer of In 2017,Datasoft Inc.received $350,000 in dividends from...

Question 17

AB Inc.received a dividend from CD Corporation and is able to claim a dividends received deduction without limitation.AB owns 10 percent of CD.What is AB's marginal tax rate (to the nearest tenth of a percent)on the dividends received (after taking the DRD into account)assuming its ordinary marginal tax rate is 34%?

Accepted Answer

The answer of AB Inc.received a dividend from CD Corporation...

Question 18

In 2017,Webtel Corporation donated $50,000 to a qualifying charity.For the year,it reported taxable income of $310,000,which included the following: the $50,000 charitable contribution (before limitation),a $100,000 dividends received deduction,and a $20,000 net operating loss carryover.What is Webtel Corp.'s charitable contribution deduction?

Accepted Answer

The answer of In 2017,Webtel Corporation donated $50,000 to a...

Question 19

Netgate Corporation's gross regular tax liability for 2017 was $95,375.What was its taxable income? (Use Corporate Tax Rate Schedule.)

Accepted Answer

The answer of Netgate Corporation's gross regular tax liability for...

Question 20

In 2017,LuxAir Inc.(LA)has book income of $160,000.Included in this figure is income generated from ownership in Jet Repair Corporation (JRC),of which LA owns 30%.JRC has $270,000 in earnings for the year and pays $32,000 in dividends to LA.Assuming accounting for the investment in JRC (income from JRC and the DRD)are its only book-tax differences,what is LA's tax liability for 2017? (Use Corporate Tax Rate Schedule.)

Accepted Answer

The answer of In 2017,LuxAir Inc.(LA)has book income of $160,000.Included...

Quiz 5: Corporate Operations

QDP Corporation's AMTI is $569,000 for 2017.Its regular tax liability is $110,000.What is its AMT?

For 2017,SRH's taxable income is $35,000 and JHH's taxable income is $45,000.Together,Scott and Jackson Howard own 100 percent of both corporations.What is the combined tax liability of the two corporations? (Use Corporate Tax Rate Schedule.)

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

VitalJuice Corporation reports the following schedule of prior year taxes it owed: What is VitalJuice's tax liability for Year 4?

TerraWise Inc.reported the following information for 2017: What is TerraWise Inc.'s AMTI?

In 2017,Datasoft Inc.received $350,000 in dividends from CSLabs Inc.Datasoft's taxable income before the dividends received deduction and $20,000 charitable contribution deduction is $300,000.What is Datasoft's DRD assuming it owns 15% of the CSLabs Inc.stock?

Netgate Corporation's gross regular tax liability for 2017 was $95,375.What was its taxable income? (Use Corporate Tax Rate Schedule.)