Periwinkle Corporation owns 15% of the stock of Plum Corporation, which pays it dividend of $40,000. Periwinkle Corporation also owns 20% of the stock of Platinum Corporation, which pays it a $25,000 dividend. Assuming the taxable income limitation does not apply, how much is Periwinkle Corporation's dividend received deduction for the year? (Hint: You can use Schedule: C of Form 1120)

a. $45,500.

b. $48,000.

c. $52,000.

d. $65,000.

e. None of the above.

4. Russet Corporation, a calendar year taxpayer, has alternative minimum taxable income (before the exemption amount) of $500,000 in 2016. Russet Corporations tentative minimum tax for 2016 is

a. $92,000.

b. $100,000.

c. $136,500.

d. $140,000.

e. None of the above.

5. For 2016, Salmon Corporation has QPAI of $4 million, TI of $4.5 million, and W-2 wages of $600,000 allocable to domestic production gross receipts. Its PAD is:

a. $0.

b. $300,000.

c. $360,000.

d. $405,000.

e. None of the above.

6. Cannon and Bruno form Lemon Corporation. Cannon transfers property (basis of $365,000 and fair market value of $300,000) while Bruno transfers land (basis of $80,000 and fair market value of $290,000) and $10,000 in cash. Each receives 50% of Lemon Corporations stock, which is worth a total of $600,000. As a result of these transfers:

a. Cannon has a recognized loss of $65,000, and Bruno has a recognized gain of $210,000.

b. Neither Cannon nor Bruno has any recognized gain or loss.

c. Cannon has no recognized loss, but Bruno has a recognized gain of $210,000.

d. Lemon Corporation will have a basis in the land of $290,000.

e. None of the above.

7. Elizabeth transferred a building (adjusted basis of $200,000 and fair market value of $310,000) to Pear Corporation. In return, Elizabeth received 80% of Pear Corporation's stock (worth $180,000) and an automobile (fair market value of $50,000). In addition, there is an outstanding mortgage of $210,000, held for 5 years, on the building that Pear Corporation assumed. With respect to this transaction:

a. Elizabeth has no recognized gain.

b. Elizabeth's recognized gain is $50,000.

c. Elizabeths recognized gain is $60,000.

d. Pear Corporation's basis in the building is $200,000.

e. None of the above.

8. On January 1, Copper Corporation (a calendar year taxpayer) has accumulated E & P of $60,000. During the year, Copper incurs a net loss of $100,000 from operations that accrues ratably. On June 30, Copper distributes $25,000 to Chelsea, its sole shareholder. How much of the $25,000 represents ordinary dividend income to Chelsea?

a. $0.

b. $5,000.

c. $10,000.

d. $25,000.

e. None of the above

9. Dahlia Corporation has 1,000 shares of common stock outstanding. Brooklyn owns 400 of the shares, Brooklyns brother owns 300 shares, Brooklyns daughter owns 100 shares, and Hosta Corporation owns 200 shares. Brooklyn owns 60% of the stock in Hosta Corporation. How many shares is Brooklyn deemed to own in Dahlia Corporation under the attribution rules of 318?

a. 400.

b. 500.

c. 620.

d. 800.

e. None of the above.

10. The stock in Rose Corporation is held equally by two sisters. One year before its liquidation, the shareholders transfer property (basis of $500,000, fair market value of $300,000) to Rose Corporation in return for stock. In a current year liquidation, Rose Corporation transfers the property (now worth $250,000) pro rata to the sisters. What amount of loss will Rose Corporation recognize on the distribution?

a. $0.

b. $250,000.

c. $200,000.

d. $50,000.

e. None of the above

11. Federal tax legislation generally originates in what body?

a.	Internal Revenue Service.
b.	Senate Finance Committee.
c.	House Ways and Means Committee.
d.	House Taxation Committee.
e.	None of the above.

12. Which citation refers to a U.S. Court of Federal Claims decision?

a.	Apollo Computer, Inc. v. U.S., 95-1 USTC 50,015 (Fed. Cl., 1994).
b.	Westreco, Inc., T.C. Memo. 1992-561 (1992).
c.	Bausch & Lomb, Inc. v. Comm., 933 F. 2d 1084 (CA-2, 1991).
d.	Portland Manufacturing Co. v. Comm., 35 AFTR 2d 1439 (CA-9, 1975).
e.	None of the above.

13. On December 31, 2013, Flamingo, Inc., a calendar year, accrual method C corporation, accrues a bonus of $50,000 to its president (a cash basis taxpayer), who owns 75% of the corporations outstanding stock. The $50,000 bonus is paid to the president on February 1, 2014. For Flamingos 2013 Form 1120, the $50,000 bonus will be a deduction item?

14. Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2013. He also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn. How much income must Bjorn report from these businesses?

a.	$0 income from the S corporation and $30,000 income from the C corporation.
b.	$30,000 income from the S corporation and $30,000 of dividend income from the C corporation.
c.	$90,000 income from the S corporation and $0 income from the C corporation.
d.	$90,000 income from the S corporation and $30,000 income from the C corporation.
e.	None of the above.

15. Erin Corporation, a personal service corporation, had $230,000 of net active income, $40,000 of portfolio income, and a $250,000 passive activity loss during the year. How much is Erins taxable income?

a.	$20,000.
b.	$40,000.
c.	$270,000.
d.	$520,000.
e.	None of the above.

16. Yvonne Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2013 tax year, Yvonne had a U. S. profit of $1.3 million (QPAI) and a loss from the imported merchandise of $200,000. What is Yvonnes DPAD?

a.	$33,000.
b.	$66,000.
c.	$99,000.
d.	$1,080,000.
e.	None of the above.

17. Mitchell and Powell form Green Corporation. Mitchell transfers property (basis of $105,000 and fair market value of $90,000) while Powell transfers land (basis of $8,000 and fair market value of $75,000) and $15,000 of cash. Each receives 50% of Green Corporations stock (total value of $180,000). As a result of these transfers:

a.	Mitchell has a recognized loss of $15,000, and Powell has a recognized gain of $67,000.
b.	Neither Mitchell nor Powell has any recognized gain or loss.
c.	Mitchell has no recognized loss, but Powell has a recognized gain of $15,000.
d.	Green Corporation will have a basis in the land of $23,000.
e.	None of the above.

18. Albert transfers land (basis of $140,000 and fair market value of $320,000) to Gold Corporation for 80% of its stock and a note payable in the amount of $80,000. Gold assumes Alberts mortgage on the land of $200,000.

a.	Albert has a recognized gain on the transfer of $140,000.
b.	Albert has a recognized gain on the transfer of $80,000.
c.	Albert has a recognized gain on the transfer of $60,000.
d.	Gold Corporation has a basis in the land of $220,000.
e.	None of the above.

19. As a result of a redemption, a shareholders interest (direct and indirect) in the corporation decreased from 80% to 55%. The redemption qualifies for sale or exchange treatment as a disproportionate redemption. True or False? Give reasons.

20. Seven years ago, Eleanor transferred property she had used in her sole proprietorship to Blue Corporation for 2,000 shares of Blue Corporation in a transaction that qualified under 351. The assets had a tax basis to her of $400,000 and a fair market value of $700,000 on the date of the transfer. In the current year, Blue Corporation (E & P of $1 million) redeems 600 shares from Eleanor for $260,000 in a transaction that does not qualify for sale or exchange treatment. With respect to the redemption, Eleanor will have

a.	$140,000 dividend.
b.	$260,000 dividend.
c.	$140,000 capital gain.
d.	$260,000 capital gain.
e.	None of the above.