taxation of corporations 453933

Aug 29, 2021 | Uncategorized

  1. 1. Which of the following statements is correct regarding the taxation of C corporations?
    Schedule M 2 is used to reconcile net income as computed for financial accounting purposes with taxable income reported on the corporation’s tax return.
    The corporate return is filed on Form 1120S.
    Corporations can receive an automatic extension of nine months for filing the corporate return by filing Form 7004 by the due date for the return.
    A corporation with total assets of $7.5 million or more is required to file Schedule M 3.
    None of the above.
  1. Schedule M 1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation’s income tax return as follows: net income per books + additions ‘ subtractions = taxable income. Which of the following items is a subtraction on Schedule M 1?
    Book depreciation in excess of tax depreciation.
    Excess of capital losses over capital gains.
    Proceeds on key employee life insurance.
    Income subject to tax but not recorded on the books.
    None of the above.
  1. In 2013, Bluebird Corporation had net income from operations of $100,000. Further, Bluebird recognized a long term capital gain of $30,000, and a short term capital loss of $45,000. Which of the following statements is correct?
    Bluebird Corporation will have taxable income in 2013 of $100,000 and will have a net capital loss of $15,000 that can be carried back 3 years and forward 5 years.
    Bluebird Corporation may use the capital loss to offset the capital gain and must carry the net capital loss of $15,000 forward five years as a short term capital loss.
    Bluebird Corporation may deduct $33,000 of the capital loss in 2013 and may carry forward the remainder of the capital loss indefinitely to offset capital gains.
    Bluebird Corporation will have taxable income in 2013 of $85,000.
    None of the above.
  1. During 2013, Sparrow Corporation, a calendar year C corporation, had operating income of $425,000, operating expenses of $280,000, a short term capital loss of $10,000, and a long term capital gain of $25,000. How much is Sparrow’s tax liability for 2013?
    $42,650.
    $42,800.
    $45,650.
    $62,400.
    None of the above.