ACCTOUNTING TAX

MULTIPLE CHOICE

1. Jone is a sole proprietorship. He would like to be taxed as a corporation for federal tax purposes. Jones may become a corporation by:

a. FIlling a corporate return for this yer.

b. Timely filling Form 7701 and attaching it to this year's return.

c. Timely filling Form 8832 and attaching it to this year's return.

d. He cannot be taxed as a corporation.

2. The following statements about the dividends-received deduction are true, except:

a. The stock on which dividends are received must be half for at least 46 days.

b. The deduction is not avilable if the long position is offset by a similar short position.

c. The deduction is limited to a percentage of taxable income prior to charitable contribution, net operating loss, and capital loss deductions.

d. Even if a consolidated return is not filed, a 100% dividends-received deduction is available for payments between members of the same affiliated group.

3. Indo Corporation was organized on January 4, 2018, and began active business on January 5, 2018. Indo incurred the following expenses in connection with creating its business.

Professional fees for stock issurance	$400
State incorporation fees	200
Printing costs for stock certificates	150
Broker's commissions on sale of stock	700
Legal fees for drafting the charter	600
Expenses for temporary directors	500

What is the maxmium amount of organizational expenses which may be deducted by Indo on its 2018 tax return?

a. $1,300 b.$1,700 c. $1,850 d. $2,550 e. None of the above

4. Cybele formed a corporation and transferred a building with a basis of $50,000, subject to a $70,000 mortgage, and cash of $15,000 to it for stock. Cybele's basis in her stock and the corporation's basis in the building are:

Stock Building

a. Zero $50,000

b. $15,000 50,000

c. Zero 40,000

d. Zero 55000

5. Crates Corporation's financial income before income taxes for the years was $250,000. Organization costs of $90,000 are being written off over a 10-year period for financial statement purposes. For tax purposes, these costs are being written off over the minimum allowable period. For the year, Creates' taxable income was:

a. $235,000 b. $247,600 c. $250,000 d. $253,000