Reference no: EM133040705
Questions -
Q1. Shaney Corporation repurchased its own outstanding bonds in the open market for $258,000 on May 31, 2019. The bonds were originally issued on May 5, 2015, at face value of $250,000. For its tax year ending December 31, 2019, Shaney should report
a. Neither income nor a deduction
b. A deduction of $8,000
c. Capital loss of $8,000
d. Capital gain of $8,000
Q2. Wright Corporation reported $100,000 of book income before income taxes for the year ended December 31, 2019. The income statement disclosed the following information:
Christmas gifts to 40 customers at $100 each
Dividends of $20,000 received from Morley, Ltd., a 20%-owned corporation that is not subject to United States income tax
Insurance premiums of $15,000 on a policy insuring the life of the president of the corporation, under which Wright Corporation is the beneficiary
What should Wright report as its taxable income for 2019?
a. $103,000
b. $105,000
c. $118,000
d. $115,000
Q3. Grady Corporation's book income before income taxes was $300,000 for the current year. Organization costs of $150,000 incurred at the organization date 2 years earlier were written off when incurred for financial reporting purposes and over the minimum period for income tax purposes. Assuming there were no other reconciling items, what is Grady's taxable income for the current year?
a. $270,000
b. $300,000
c. $310,000
d. $290,000
Q4. Snow Corporation owns a 20% interest in Hail Corporation, a domestic corporation. For 2019, Snow Corporation had gross receipts of $390,000, operating expenses of $400,000, and dividend income of $120,000 from Hail Corporation. The dividends were not from debt-financed portfolio stock. What is Snow Corporation's dividends-received deduction for 2019?
a. $78,000
b. $24,000
c. $71,500
d. $60,000
Q5. The following information for 2019 pertains to Bartley Corporation:
-Capital contributions by shareholders $50,000
-Realized loss on sale of treasury stock (10,500)
-Income from rental property in a sinking fund (in the hands of a trustee) 5,500
-Rent paid directly to a bond holder on a lease of corporate property 8,000
What is the amount of gross income to Bartley Corporation for 2019?
a. $53,000
b. $47,500
c. $13,500
d. $8,000
Q6. In 2018, Capital Corporation reported gross profits of $150,000, deductible expenses of $28,000, and a net capital loss of $10,000. Capital reported the following net capital gains during 2015-2017:
Year Net Capital Gains
2015 $5,000
2016 $1,000
2017 $3,000
What is the amount of Capital's capital loss carryover to 2019?
a. $5,000
b. $10,000
c. $1,000
d. $7,000