Chapter 11 The Corporate Taxpayer
1) In terms of dispersal of ownership, corporations are classified as either closely held or publicly held.
Answer: TRUE
Difficulty: 1 Easy
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
2) The corporate characteristic of limited liability is more important to the shareholders than the characteristic of centralized management.
Answer: TRUE
Difficulty: 1 Easy
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
3) The stock of closely held corporations is typically restricted as to transferability by some type of buy-sell agreement.
Answer: TRUE
Difficulty: 2 Medium
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
4) The federal tax law considers the member corporations of an affiliated group to be a single entity for federal tax purposes. An example of this treatment is the requirement to share the 15% tax bracket.
Answer: TRUE
Difficulty: 2 Medium
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
5) At least three corporations are required to form an affiliated group.
Answer: FALSE
Difficulty: 1 Easy
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
6) An affiliated group consists of a parent company that directly owns 80% of at least one subsidiary corporation plus all other subsidiaries that are 80% owned within the group.
Answer: TRUE
Difficulty: 2 Medium
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
7) The corporate characteristic of free transferability exists if the corporate stock is subject to a buy-sell agreement.
Answer: FALSE
Difficulty: 1 Easy
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
8) A nonprofit corporation may incur a federal income tax if it has unrelated business income.
Answer: TRUE
Difficulty: 2 Medium
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
9) Eagle, Inc. made a contribution to the Boy Scouts of $25,000 during its current tax year. The corporation’s taxable income before any charitable contribution deduction was $200,000. The corporation has a current charitable contribution deduction of $25,000.
Answer: FALSE
Difficulty: 2 Medium
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
10) Bisou Inc. made a $48,200 contribution to charity this year. Only $39,000 of the contribution was deductible. Bisou can carry the $9,200 nondeductible contribution back three years and forward five years.
Answer: FALSE
Difficulty: 2 Medium
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
11) The four primary legal characteristics of a corporation are unlimited liability, limited life, free transferability of interests, and centralized management.
Answer: FALSE
Difficulty: 2 Medium
Topic: Legal Characteristics of Corporations
Learning Objective: 11-01 Identify the four primary legal characteristics of corporations.
Accessibility: Keyboard Navigation
Gradable: automatic
12) A nondeductible charitable contribution is a permanent book/tax difference.
Answer: FALSE
Difficulty: 1 Easy
Topic: Computing Corporate Taxable Income
Learning Objective: 11-02 Compute the corporate charitable contribution and dividends-received deductions.
Accessibility: Keyboard Navigation
Gradable: automatic
13) Corporations are allowed a deduction for charitable contributions, limited to 10 percent of taxable income before the deduction.
Answer: TRUE
Difficulty: 1 Easy
Topic: Computing Corporate Taxable Income
Learning Objective: 11-02 Compute the corporate charitable contribution and dividends-received deductions.
Accessibility: Keyboard Navigation
Gradable: automatic
14) Dividends-received deductions generally are not allowed for dividends from foreign corporations.
Answer: TRUE
Difficulty: 1 Easy
Topic: Computing Corporate Taxable Income
Learning Objective: 11-02 Compute the corporate charitable contribution and dividends-received deductions.
Accessibility: Keyboard Navigation
Gradable: automatic
15) The dividends-received deduction is equal to 80% of any dividends-received by a corporate taxpayer.
Answer: FALSE
Difficulty: 1 Easy
Topic: Computing Corporate Taxable Income
Learning Objective: 11-02 Compute the corporate charitable contribution and dividends-received deductions.
Accessibility: Keyboard Navigation
Gradable: automatic
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