Chapter 5 - Entity Tax

Question 1

An exempt organization is not taxed on unrelated business income if it is under $____

Answer 1

1000

Question 2

___ and ___ are included in tax estimates

Answer 2

BEAT and corporate tax credit

Question 3

What is DNI (distributable net income)?

Answer 3

income that is available for distribution to beneficiaries each year. It is also the maximum amount of deduction allowed for distribution to income beneficiaries.

Question 4

How is DNI/taxable income calculated?

Answer 4

all income (include muni) - deductions (ignore cap gains)

Question 5

Does a partners basis use tax-exempt (muni bonds) income?

Answer 5

Yes

Question 6

For trusts, what gets allocated to the principal and what gets allocated to the trust income?

Answer 6

principal - extraordinary items (premiums, mortgage)

income - ordinary items (interest, taxes)

Question 7

selling of land is referred to as a ___ gain/loss

Answer 7

ordinary

Question 8

To claim DRD, one has to hold the stock for ___ days

Answer 8

45

Question 9

If you own more than __% of a company the gain/loss will always be ____

Answer 9

50

ordinary

Question 10

When calculating accounting income should you include anything allocable to corpus? What should you include?

Answer 10

No

Any type of profit

Question 11

There is no ____ recognized if it happened over a sale of property to/from a related party

Answer 11

loss

Question 12

Are S corps distributions considered income or taxable?

Answer 12

S corp distributions are not income nor taxable

Question 13

If a partner dies who gets their interest? And till when?

Answer 13

The estate gets the interest until the discharge date

Question 14

Taxable dividend or dividends income is:

Answer 14

greater of current EP or current EP + Accum EP.

Note that current EP can also be the distribution of cash (FMV) and/or property (FMV-basis)

Question 15

Is there such thing as a capital gains deduction?

Answer 15

No, but there is capital loss deduction

Question 16

Can tax shelter use the cash basis?

Answer 16

No, tax shelter uses accrual

Question 17

Exempt organization are required to disclose contributors annually. (T/F)

Answer 17

T

Question 18

Who can take NOL deductions?

Answer 18

trusts and estates can, as pass thru entities (partnerships and corps) cannot

Question 19

When a partner sells their interest to another party, the amount realized is the sum of:

Answer 19

Cash and property received + Relief from debt.

Question 20

Net Business Income is = non separately stated income (T/F)

Answer 20

T

Question 21

Corp/S corp tax returns are due _____. Ind tax returns are due _____.

Answer 21

March 15. April 15.

Question 22

REALIZED

Answer 22

FMV of prop rec + boot rec/relieved - boot given/assumed - Adj basis of prop given up

Question 23

RECOGNIZED

Answer 23

lesser of REALIZED or boot rec/relieved - boot given/assumed

Question 24

BASIS

Answer 24

Adj basis of prop given up + RECOGNIZED - boot rec/relieved + boot given/assumed

Question 25

When asking about taxable income you may have to solve like its a __

Answer 25

M-1

Question 26

Gain from a property non-liquidating distribution calculation ______

Answer 26

FMV - adj basis

Question 27

Is there a gain on reorginization?

Answer 27

No

Question 28

Does gross income include cap gain/loss?

Answer 28

No

Question 29

When figuring out the amount a C corp can deduct on charitable contribution (multiplying income by 10%) what can you ignore in the calculation of income?

Answer 29

DRD

Question 30

A personal holding company will be a ____ that is __% owned by an individual that receives money from a ____ _____

Answer 30

corporation 25 third party

Question 31

For amortizations youre allowed to deduct _K from the amortizable amount, then amortize that amount then add back the _K

Answer 31

5K

Question 32

NCL is treated as __

Answer 32

ST

Question 33

Are services rendered to a corporation (garaunteed payments) subject to self employment taxes?

Answer 33

Yes

Question 34

When a partnership is dissolved the partners still hold _____ and ____ ____

Answer 34

liability and apparent authority

Question 35

C-Corp. shareholders pay tax on _____ income, S-Corp. shareholders pay tax when income is ______ by the Corporation

Answer 35

distributed | earned

Question 36

Are are bank int, admin exp, charitble contributions, and cap gain included on ordinary income?

Answer 36

yes yes no no

Question 37

For businesses other than financial institutions, bad debts must be deducted under the __ __ ___ method, rather than the reserve method.

Answer 37

direct charge-off

Question 38

If you gave property to become a partner then that property is sold you need to calculate ___ ___ ___ (___ - ___) and add that to normal gain ((___ - ___)x___)

Answer 38

Built in gain (FMV of property given - basis of property given) (SP of property given - FMV of property given) x %

Question 39

When a corp. gives property to SH the gain is:

Answer 39

FMV (or liability if greater) - basis

Question 40

Is salary (including CEO) a seperatley stated item?

Answer 40

No

Question 41

Corp. non-liquidating distribution gain is not like gain from ____ where the gain is actually _____. Corp. non-liquidating distribution gain are only the _____ (___ - ___).

Answer 41

partnerships negative positives FMV - basis

Question 42

S corp can and cant have:

Answer 42

100 SH, one class of stock, residents (even aliens), estates & trusts, but cant have an LLC as a SH

Question 43

is gain recognized on the sale of treasury stock?

Answer 43

No

Question 44

What is ignored in taxable income/M1 calculations?

Answer 44

refunds

Question 45

A gift is _____. a trust is ______.

Answer 45

irrevocable | revocable

Question 46

Does gross income for partnerships include non-tax income?

Answer 46

No

Question 47

For a corporation a loss is only deductible in a _____

Answer 47

complete liquidation

Question 48

DRD

Answer 48

0-19 = 50 20-80 = 65 81 - 100 = 100