1. Ironwood Corporation has ordinary taxable income of $40,000 for calendar-year 2014, and a long-term capital loss of $20,000. What is the corporation’s tax liability for 2014?
a. $4,500
b. $6,000
c. $7,500
d. $10,000
e. None of the above
2. Which of the following statements is false regarding corporate capital losses?
a. Corporations are not allowed to deduct capital losses against ordinary income.
b. Corporations may carry capital losses back 3 years and forward 5 years to offset capital gains in those years.
c. Corporations may deduct $3,000 of net capital loss each year until the loss is used up.
d. A long-term capital loss carried to another year is treated as a short-term capital loss.
3. Walnut Corporation owns 60 percent of Teak Corporation, a domestic corporation. During 2014, Walnut Corporation received $20,000 in dividends from Teak Corporation. Assuming that Walnut’s taxable income for 2014 before the dividends received deduction is $500,000, what is the amount of Walnut’s dividends received deduction for 2014?
a. $0
b. $14,000
c. 16,000
d. $20,000
e. None of the above
4. Which of the following is not a corporate organizational expenditure that may be amortized?
a. The cost of organizational meetings
b. Fees paid to the state for incorporation
c. Accounting fees incident to organization
d. Legal fees incident to organization
e. All of the above are organizational expenditures
5. The purpose of Schedule M-1 on the corporate tax return is to:
a. Reconcile accounting (book) income to taxable income.
b. Summarize the dividends received deduction calculation.
c. List the officers of the corporation and their compensation.
d. Calculate the net operating loss deduction.
6. Which of the following statements is false regarding corporate tax return due dates?
a. Corporate tax returns for calendar-year corporations are due March 15.
b. Corporate tax returns may receive an automatic 6-month extension with the filing of a Form 7004.
c. Corporate taxes due must be paid by March 15 if the corporation reports on a calendar-year basis.
d. When an IRS due date falls on a weekend, the due date is considered to be the Friday preceding the weekend.
7. Which of the following is not required for a corporation to be eligible to make an S corporation election in 2014?
a. The corporation must have 100 or fewer shareholders.
b. The corporation must be a domestic corporation.
c. The corporation must have both common and preferred stock.
d. The shareholders of the corporation must not be nonresident aliens.
e. All shareholders must be individuals, estates, certain trusts, or financial institutions.