Question 10

1 Point

Which of the following is a primary legal characteristic of the corporate form of business?

The management of the business is centered in a Board of Directors elected by the shareholders.

A shareholder must seek permission to sell his stock.

The life of the corporation will terminate when a majority of the shareholders die or cease to exist.

A shareholder is personally liable for the debts of the corporation.

Question 9

1 Point

Aaron, Inc. is a nonprofit corporation that collects and distributes food for needy families. Aaron, Inc. also operates a small grocery store for profit. Which of the following statements is true?

The income from the collection and distribution of food and the income from grocery store are taxable.

No income from either of the activities is taxable.

Only the income from the collection and distribution of food is taxable.

Only the income from the grocery store is taxable.

Question 8

1 Point

In its first taxable year, Platform, Inc. generated a $100,000 net operating loss and made a $10,000 cash donation to a local charity. In its second year, Platform generated $350,000 operating income and made a $20,000 donation to the same charity. Compute Platform's taxable income for its second year.

$220,000

$235,000

$320,000

$230,000

Question 7

1 Point

Which of the following statements regarding the current year tax treatment of corporate dividends is true?

All shareholders receiving dividend payments from U.S. corporations are entitled to a dividends-received deduction.

Dividends-received from foreign corporations are not eligible for the dividends-received deduction.

Corporations are entitled to deduct dividend payments to shareholders in calculating corporate taxable income.

Dividend payments between members of an affiliated group of corporations filing a consolidated return are tax exempt.

Question 6

1 Point

Mandrake, Inc. has book income of $569,300. Its income includes a $50,700 bad debt expense, determined by the allowance method. Actual write offs this year were $48,000. Based only on this information, compute Mandrake's taxable income.

$569,300

$572,000

$566,600

$528,600

Question 5

1 Point

Airfreight Corporation has book income of $370,000. Book income includes a $25,000 gain realized on a like-kind nontaxable exchange of realty. Based only on these items, compute Airfreight's taxable income.

$370,000

$395,000

$345,000

$420,000

Question 4

1 Point

Harmon, Inc. was incorporated and began business on January 1, 2018. Its tax liability for 2018 was $36,000. Its tax liability for 2019 was $50,000. Which of the following is a correct statement concerning the payment of estimated taxes for 2019?

Harmon must pay $12,500 on the 15th day of April, June, September, and December.

Harmon must pay $9,000 on the 15th day of April, June, September and December. The $14,000 balance is payable by April 15, 2020.

Harmon may pay the $50,000 tax no later than April 15, 2020.

None of the above statements is correct.

Question 3

1 Point

Which of the following is a means to avoid the double taxation burden imposed on the profits of corporations?

Treat all corporations as passthrough entities for federal tax purposes.

Enact tax legislation that would make dividends nontaxable to all of the corporation's shareholders.

Allow corporate shareholders a credit on their tax returns for the taxes paid by the corporation on the profits currently distributed to shareholders as dividends.

All of the above would avoid double taxation.

Question 2

1 Point

In determining the incidence of the corporate income tax:

Corporations may pass the tax burden onto consumers in the form of higher prices

Corporate shareholders may bear the burden of the corporate tax in the form of lower return on investment

Corporate employees may bear the burden of the corporate tax in the form of lower compensation

All of the above parties may bear the indirect burden of the corporate income tax

When price competition is fierce, the incidence of the corporate income tax

Cannot be passed on to customers or suppliers, and must be borne solely by shareholders

May be passed on to employees through lower compensation

Is borne primarily by customers through higher prices or lower product quality

Can be mitigated only with tax reform