ACT-5Y Instructions. (1) Assume that the corporations in the questions are all C corporations unless specifically stated (2) Read all answers and make sure that your selection is the BEST answer for multiple erwise choice. (3) Show your work on the problems and on the multiple choice for possible partial credin. (4) Multiple choice worth 3 points each (33 points possible) 1. Arcana Corporation had $200,000 operating income and $80,000 operating expenses during the year. In addition, Arcana had a $10,000 long-term capital gain and a $6,000 short-term capital loss. Compute Arcana's taxable income for the year. a. $117,000. b. $120,000. c. $124,000 d. $116,000. Adel transfers cash of $300,000 and land worth $200,000 to Hometown Glory Corporation for 100% of the stock in Hometown Glory. In the first year of operation, Hometown Glory has net taxable income of $70,000. If at year-end Hometown Glory distributes $50,000 to Adel: 2. a. Adel has taxable income of $50,000. b. Hometown Glory Corporation has a tax deduction of $50,000. c. Adel has no taxable income from the distribution. d. Hometown Glory Corporation reduces its basis in the land to $150,000. e. None of the above. On January 1, Toke Corporation (a calendar year taxpayer) has accumulated E &P of $190,000 During the year, Toke incurs a net loss of $240,000 from operations that accrues ratably. On June 30, Toke distributes $100,000 to MaryJane, its sole shareholder, who has a basis in her stock of $40,000. How much of the S100,000 distribution is a dividend to MaryJane? 3. SO a. b. $70,000. c. S60,000 d. $50,000. e. None of the above March 8, 2018