Principles Of Taxation For Business And Investment Planning 2018 Edition 21st Edition By Sally Jones – Test Bank

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