Please answer the following as accurately as possible.
1. The Susan Corporation was required to use the Electronic Federal Tax Payment System (EFTPS) in 2007 for payment of its employment and corporation income taxes. In 2008, the total deposits of taxes by The Susan Corporation were $190,000. Which of the following is true?
A. The Susan Corporation is required to use EFTPS in 2008.
B. The
Susan Corporation may deposit corporate income tax payments and estimated tax
payments with Form 8109, Federal Deposit Coupon mailed to an authorized
depository or mailed to Financial Agent, Federal Tax Deposit Processing in St.
Louis, Missouri for tax year 2008.
C. The
Susan Corporation may send deposits directly to an Internal Revenue Service
Office for tax year 2008.
D. The
Susan Corporation is not required to participate in EFTPS, but may participate
voluntarily for tax year 2008.
2. The Lux Corporation incurred $10,000 in start-up costs when it opened for business in 2008. What is the minimum period over which these expenses can be recovered?
A. 12 months.
B. 36 months.
C. 60 months.
D. 180 months.
3. In tax year 2008, Roberts Corporation made a charitable contribution to a qualified organization of $40,000 in cash plus a vehicle with a fair market value of $15,000. For tax year 2008 Roberts Corporation had $400,000 in total income, $100,000 in total expenses not including the above charitable contributions, and would have a reportable dividend received deduction of $50,000. How much of the charitable contribution can Roberts Corporation deduct for the 2008 tax year?
A. $15,000.
B.
$25,000.
C.
$40,000.
D.
$55,000.
4. Maple Corporation had a net loss per its books for 2008 as follows:
Maple Corporation uses an accelerated method of depreciation for tax purposes, but not for book purposes. Maple Corporation's tax depreciation for 2008 will be $75,000. What is the taxable income for federal income tax purposes in 2008 for Maple Corporation?
A. $(5,000).
B.
$(35,000).
C.
$(25,000).
D.
$(20,000).
5. ABC, Inc., a regular domestic corporation and calendar year taxpayer, had taxable income of $10,000 for the year 2008. Because the company's accountant was on vacation during the month of March 2009, the corporate income tax return was not filed in a timely manner and no exception was filed. The new accountant mailed the return on June 15, 2009. Disregarding any possible late payment penalty, and assuming no estimated tax payments were made, calculate the maximum failure to file penalty that could be assessed against ABC, Inc.
A. $1,000.
B.
$350.
C.
$225.
D.
$270.
6. During 2008 the NOGO Corporation had the following items of income and expenses:
| Income from operations. | $50,000 |
| Dividend income from Cooper Corporation. | $90,000 |
| Expenses of operations. | $40,000 |
A. $74,000.
B.
$63,000.
C.
$82,000.
D.
$90,000.
7. The following statements regarding qualified qualified personal service corporations are true EXCEPT:
A. 2 and 3.
B. 3
only.
C. 1
and 3.
D. 4
only.
8. A corporation is a personal service corporation if
A. Its principal activity during the "testing period" is performing personal
services.
B. Its
employee-owners substantially perform the services in performing personal
services.
C. Its
employee-owners own more than 10% of the fair market value of its outstanding
stock on the last day of the testing period.
D. All of
the above.
9. The tentative minimum tax of a small corporation is zero. This means that a small corporation will not owe AMT.
True False
10. If a corporation is required to use the Electronic Federal Tax Payment System (EFTPS) and fails to do so, it may be subject to a 10% penalty.
True False
11. If you transfer property (or money and property) to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. This rule applies both to individuals and to groups who transfer property to a corporation. It also applies whether the corporation is being formed or is already operating. However, it does not apply if
A. The corporation is an investment company.
B. You
transfer the property in a bankruptcy or similar proceeding in exchange for
stock used to pay creditors.
C.
The stock received in exchange for the corporation's debt (other than a
security) or for interest on the corporation's debt (including a security) that
accrued while you held the debt.
D. All
of the above.
12. ABC Corporation's tax year ends on October 31, 2008. When is ABC Corporation's income tax return required to be filed?
A. January 31, 2009.
B. January 15, 2009.
C. March 15, 2009.
D. March 31, 2009.
13. Abbot Corporation's tax year ends on June 30, 2008. If Abbot Corporation (a domestic Corporation) timely files a Form 7004 Extension of Time to File, what is the extended due date of Abbot Corporation's income tax return for tax year ended June 30, 2008?
A. March
15, 2009.
B. March 30, 2009.
C. April 15, 2009.
D. May 15,
2009.
14. A corporation can accumulate its earnings for a possible expansion or other bona fide business reasons. However, if a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of
A.
20%.
B. 25%.
C. 15%.
D.
None
of the above.
15. You must treat certain transactions that increase a shareholder's proportionate interest in the earnings and profits or assets of a corporation as if they were distributions of a stock or stock rights.
True False
16. If a corporation cancels a shareholder's debt without repayment by the shareholder, the amount canceled is
A.
Not taxable by the shareholder.
B. Treated as a distribution to the shareholder.
C. Forgiven and not treated as a distribution.
D.
Treated as a gift.
17. The amount of a distribution is generally the amount of any money paid to the shareholder plus the fair market value (FMV) of any property transferred to the shareholder. However, this amount is reduced (but not below zero) by
A.
Any liability of the corporation the shareholder assumes in connection with the
distribution.
B. Any liability to which the property is subject immediately before the
distribution.
C. Any liability to which the property is subject immediately after the
distribution.
D. All
of the above.
18. Bob Moon Forms Moon Enterprises LLC (Limited Liability Company) during the year. What form must Moon Enterprises LLC file in order to elect to be taxed as a C corporation?
A. Form 1065 (U.S. Partnership Tax Return).
B.
Form 8832 (Entity Classification Election).
C. Form 1120 (U.S. Corporation Income Tax Return).
D. Form 7004 (Application for Extension of time to file for Corporations).
19. ABC Corporation is dissolved on July 9, 2008. What is the due date, without extensions, for filing of the final corporate income tax return?
A. March
15, 2009.
B. December 31, 2008.
C. October 15, 2008.
D.
October 9, 2008.
20. The corporation's basis of property contributed to capital by a shareholder is
A. Zero.
B. The same as the basis the shareholder had in the property.
C. Not taxable to the corporation.
D.
None of the above.
