Corporation

Question 1

charitable contributions

Answer 1

deduction up to 10% of AGI

Question 2

business casualty/loss

Answer 2

100% deductible

no $100 reduction OR 10% of AGI

Question 3

organizational expenditures

Answer 3

deduct $5000 or org costs and $5000 of start-up costs
reduced by amount of excess of $50k expenses

excess of $5k is amortized over 180 months

Question 4

organizational expenditures excluded costs

Answer 4

costs to issue/sell stock, commissions, underwriter’s fees, and transfer costs

Question 5

goodwill

Answer 5

amortized on straight-line basis for 15 years

Question 6

life insurance premiums

Answer 6

corp beneficiary - nondeductible

employee beneficiary - deductible

Question 7

state/local/payroll taxes

Answer 7

deduction

Question 8

federal income taxes

Answer 8

NOT deductibble

Question 9

capital losses

Answer 9

up to $3000 deduction to offset capital gains

Question 10

capital loss carryover

Answer 10

3 back 5 forward

Question 11

net operating loss carryover

Answer 11

2 back 20 forward

Question 12

uniform capitalization rules

Answer 12

raw materials, direct labor, overhead

Question 13

general business credit

Answer 13

may not exceed net income tax
greater of:
1) 25% regular tax liability above $25k
2) tentative min tax for year

Question 14

dividends received reduction (DRD)

Answer 14

prevents triple taxation

Question 15

DRD for < 20% ownership

Answer 15

70%

Question 16

DRD for 20-80% ownership

Answer 16

80%

Question 17

DRD for > 80% ownership

Answer 17

90%

Question 18

DRD does not apply to…

Answer 18

PPP
personal service corp
personal holding companies
personally taxed S corp

Question 19

DRD taxable income limitation

Answer 19

lesser of:
DRD calculation
% of TI without regard to DRD, NOL, capital loss, domestic production

Question 20

DRD for affiliated corporation

Answer 20

100%

Question 21

DRD for SBIC

Answer 21

100%

Question 22

affiliated corporation

Answer 22

company parent owns 80% or more of voting power of all outstanding stock OR 80% or more of all outstanding stock

Question 23

brother/sister corp

Answer 23

NOT consolidated

Question 24

AMT adjustment

Answer 24

add/subtract to income
LID
long term contracts (%age completion required)
installment sales (installment method not allowed)
depreciation adjustments (diff between regular depreciation method vs AMT method)

Question 25

AMT preferences

Answer 25

not taxed but add backs for AMT
PPP
percentage depletion
private activity bond interest
pre '87 ACRS depreciation

Question 26

AMT adjusted current earnings (ACE)

Answer 26

add/subtract
MOLDD
muni interest income
organizational expense amortization
life insurance proceeds on key employees
depreciation difference between AMT and ACE
dividends received deduction (under 20%)

75% of difference between ACE and AMTI before adjustment and alternative tax NOL deduction

Question 27

AMT credits

Answer 27

reduces minimum tax

Question 28

AMT tax credit carryforward

Answer 28

reduces future regular tax

Question 29

ADS depreciation system

Answer 29

straight line method over 40 years

adjust from regular tax depreciation (27.5, 31.5, 39 years)

Question 30

MACRS depreciation

Answer 30

double declining method

Question 31

tax-exempt interest on private activity bonds

Answer 31

exempt from taxable income but not an AMT preference so add mack to calculation of unadjusted AMTI

Question 32

unadjusted AMTI

Answer 32

AMTI after adjustments, preferences

Question 33

AMT exemption

Answer 33

$40,000
- 25% (AMTI excess of $150k)
= allowed exemption