True or False ________ 1. ________ 2. ________ 3. ________ 4. ________ 5. ________ 6. ________ 7. ________ 8. ________ 9. ________ 10. ________ 11. ________ 12. ________ 13. ________ 14. ________ 15. ________ 16. ________ 17. ________ 18. ACC 4250 Corporate Assignment Part 1 It is possible for a trust managed by a trustee to be treated as a corporation for income tax purposes. If the taxpayer creates a legal corporation under state law, the government cannot disregard the entity and tax the taxpayer on the income. Generally, corporate taxable income is more closely related to accounting income than individual taxable income is related to accounting income. Corporations should try to reclassify initial expenditures as expenses other than organization costs because organization costs do not give rise to any tax benefit. A corporation is not allowed a dividends-received deduction in computing its net operating loss for any given year. A corporation's annual charitable contribution deduction is limited to 10 percent of its taxable income without reduction for charitable contributions, the dividends-received deduction, net operating loss carrybacks, and capital loss carrybacks. Capital losses are more advantageous to corporations than individuals because there is a three-year carryback for corporations but no carry-back for individuals. Corporations compute gains and losses on the sale of depreciable property in the same way as individuals. An accrual basis corporation must use the cash method in claiming deductions for amounts paid to its sole shareholder, who is an individual on the cash method. Generally, corporations pay a lower marginal tax rate than individuals pay. Corporations are required to pay an alternative minimum tax at the same rate as individuals. A corporation with alternative minimum taxable income of $20,000 will be subject to an alternative minimum tax of $4,000. Form 1120 for a calendar year corporation is due April 15. An individual who transfers property in return for all of the common stock of a corporation will not recognize gain under