Reference no: EM132197171
Questions -
Q1. Which of the following statements is incorrect about limited liability companies and the check-the-box regulations?
a. If a limited liability company with more than one owner does not make an election, the entity is taxed as a partnership.
b. All 50 states and the District of Columbia have passed laws that allow creation of limited liability companies.
c. An entity with more than one owner and formed as a corporation cannot elect to be taxed as a partnership.
d. If a limited liability company with one individual owner does not make an election, the entity is taxed as a corporation.
e. A limited liability company with one owner can elect to be taxed as a corporation.
Q2. Carrot Corporation, a C corporation, has a net short-term capital gain of $65,000 and a net long-term capital loss of $250,000 during 2016. Carrot Corporation had taxable income from other sources of $720,000 during 2016. Carrot corporation had the following gains and losses during the years it had been in existence:
2012 Net long-term capital loss $30,000
2013 Net short-term capital loss 60,000
2014 Net short-term capital gain 45,000
2015 Net long-term capital gain 35,000
Compute the amount of Carrot's capital loss carryover to 2017.
a. $15,000
b. $32,000
c. $45,000
d. $105,000
e. $195,000
Q3. Copper Corporation, a C corporation engaged in manufacturing, had gross receipts of $5 million in 2014, $9 million in 2015, and $3 million in 2016. Gold Corporation, a personal service corporation (PSC), had gross receipts of $4 million in 2014, $7 million in 2015, and $5 million in 2016. Which of the corporations will be allowed to use the cash method of accounting in 2017?
a. Copper Corporation only.
b. Gold Corporation only.
c. Both Copper Corporation and Gold Corporation.
d. Neither Copper Corporation nor Gold Corporation.
e. None of the above.
Q4. Which of the following statements is incorrect regarding the dividends received deduction?
a. A corporation must hold stock for more than 45 days in order to qualify for a deduction with respect to dividends on such stock.
b. The taxable income limitation on the deduction does not apply with respect to dividends that otherwise qualify for 100% deduction and are received by a corporation from another member of its affiliated group.
c. If a stock purchase is financed 75% by debt, the deduction for dividends from that stock is reduced by 75%.
d. The taxable income limitation on the deduction does not apply if the normal deduction results in a net operating loss for the corporation.
e. The deduction is disallowed in full if the taxpayer has a net operating loss before the deduction is taken into account.
Q5. Emerald Corporation, a calendar year C corporation, was formed and began operations on April 1, 2018. The following expenses were incurred during the first tax year (April 1 through December 31, 2018) of operations.
Expenses of temporary directors and of organizational meetings $22,000
Fee paid to the state of incorporation 10,000
Accounting services incident to organization 15,500
Legal services for drafting the corporate charter and bylaws 9,500
Expenses incident to the printing and issuance of stock certificates 6,000
Assuming an IRC § 248 election was made to deduct organizational expenditures, what is the Emerald's deduction for organizational expenditures for 2018?
a. $2,850
b. $4,550
c. $5,000
d. $7,150
e. $7,400