Corporate Tax 2 of 3 (7)

Question 1

Charitable Contributions

Answer 1

Donations made by a corporation to a charitable organization, deductible to the extent of 10% of adjusted taxable income (ATI), with any excess carried forward up to 5 years. Pledges may be accrued if paid within 3 ½ months of year-end.

Question 2

Adjusted Taxable Income (ATI)

Answer 2

A corporation’s taxable income before any deduction for charitable contributions, a dividends-received deduction, or any capital loss carrybacks.

Question 3

Nondeductible Expenses

Answer 3

xpenses incurred by a corporation that are not considered ordinary and necessary for tax purposes and are, therefore, not deductible, including fines and penalties imposed by a government, costs of issuing stock, lobbying costs, compensation of executive officers in excess of $1,000,000 per year, and club dues.

Question 4

Accrual Differences

Answer 4

Items that are reported differently by an accrual basis corporate taxpayer than they will be handled for financial reporting purposes, including bad debts, warranties, contingencies, unrealized gains and losses on marketable securities, and inventory losses.