TRUE/FALSE QUESTIONS

1. The proprietorship uses gross ordinary income as the basis for calculating any self-employment

tax due.

2. In contrast to a regular corporation, an S corporations pass-through of income and deductions to its shareholders allows it to avoid double taxation of the same source of income.

3. A corporation is an artificial person created by Federal law.

4. Although recognized as partnerships under state law, certain partnerships are treated and taxed as corporations for Federal income tax purposes.

5. A corporation is allowed a dividends-received deduction only if the corporation is a member of an affiliated group and the dividends are received from another member of the same group.

6. At its election, a corporation can either deduct all organizational costs paid during the current year or amortize the expenditures over a period not less than 180 months.

7. Organizational expenses incurred by an accrual basis corporation in its first year of existence but paid in a later year will not qualify for amortization.

8. A corporation is not allowed a dividends-received deduction in computing its net operating loss for any given year.

9. Unlike individuals, corporations with excess capital losses in the current year are allowed to carry these losses back five years and forward three years to offset capital gains in the carryback or carryforward years.

10. An accrual basis corporation must use the cash method in claiming deductions for amounts paid to its cash basis sole shareholder.