Corporate Taxable Income Flashcards
Publicly traded partnerships may use the “check-the-box” regulations to be taxed as either a corporation or a partnership?
No, publicly traded partnerships are ineligible for the “check-the-box” regulations and must generally be taxed as corporations.
Personal service corporations are taxed at a flat rate of 35%?
Yes, the corporate rates do not apply to personal service corporations. They are taxed at a flat rate of 35%. A personal service corporation’s principal activity is performing personal services, substantially by employee-owners. An employee-owner owns more than 10% of the stock.
A personal holding company is organized under a state’s Professional Association Act and has one owner?
No, any nonexempt closely held corporation is classified as a personal holding company if a significant portion of its income is passive in nature. Personal holding companies are subject to a penalty tax on excess personal holding company income.
A personal service corporation is generally required to use a calendar year?
Yes, a corporation, generally, may elect either a calendar or fiscal tax year. A personal service corporation is required to use a calendar tax year. An exception exists for a valid business purpose or a personal service corporation that makes “minimum distributions.”
The cash method of accounting may be used by personal service corporations, S corporations, and C corporations that have average annual gross receipts of not more than $5 million in the 3 preceding tax years?
Yes, the cash method may be used only by personal service corporations, S corporations, and C corporations that have average annual gross receipts of not more than $5 million in the 3 preceding tax years. Tax shelters may not use the cash method.
An eligible entity with a single member can only elect to be taxed as a sole proprietorship?
No, an eligible entity with a single member can elect to be taxed as a corporation or disregarded as an entity separate from its owner (sole proprietorship).
An association of professionals is treated as a corporation for tax purposes only if it is organized under a state’s Professional Association Act?
No, an association of professionals is treated as a corporation for tax purposes if it is organized under a state’s Professional Association Act and operated as a corporation. One individual may be a professional association.
For corporations, excess capital losses may be offset against income from other sources but only to a limited extent?
No, corporate capital gains do not have the multiple long term baskets like individual capital gains do.
