REG 3 - Entity Taxation Flashcards
(55 cards)
The accrual basis for tax purposes is required when:
1. Inventory Business (such as manufacturer) with +$30M average annual gross receipts over the last 3 years
2. Tax Shelters
3. Certain farming corporations
4. ___ ________________ with +$30M average gross receipts over the last 3 years
C Corporations
Are the life insurance proceeds after the death of an officer included in taxable income of a Corporation?
No
Is insurance expense related to the premiums on officer’s lives tax deductible for the Corporation?
No
Are premiums on group-term life insurance covering the lives of employee’s deductible by the employer?
Yes, unless the employer is a direct or indirect beneficiary
What bad debt method must accrual basis Corporations use?
The direct charge-off method
Are advertising costs deductible by Corporations?
Yes
Are organization costs (legal fees to draft corporate charter, accounting services, temporary directors, incorporation fees paid to the state) deductible by Corporations?
Yes, up to $50k with limitations
Are costs to sell stock (costs to issue stock and commissions paid to underwriters) deductible by Corporations?
No
The limitations of expensing/amortizing Corporation organization costs are that the first $_____ of org costs are immediately deductible as long as the costs do not exceed $50k. Any amounts after the immediate deduction are amortized over a minimum of 180 months (15 years)
$5k
The Charitable contribution deduction is limited to _____ of taxable income before these deductions/adjustments:
1. the dividends-received deduction
2. the charitable contribution deduction
3. net operating loss carryback,
4. Capital loss carryback
10%
Any remaining excess charitable contributions in excess of the current year limit can be carried forward ____ years.
5 years
Are penalties for underpayment of federal estimated taxes deductible?
No
Are business gifts deductible?
Yes, but only up to $25 per recipient per year
How long must the investor Corporation own the investee’s stock in order to receive the Dividends Received Deduction?
45 days
The Dividends Received Deduction is limited to _______% of taxable income before the deduction.
50%
What is the Dividends Received Deduction for each of these ownership percentages:
0-20% ownership (i.e. unrelated corp): ________% DRD
20-80% ownership: __________% DRD
80% or more ownership: _________% DRD
50%
65%
100%
Is Federal Income tax expense deductible?
No
Is State income tax expense deductible?
Yes
Where do Corporations reconcile temporary or permanent book/tax differences?
On Schedule M-1 or M-3
Are business entertainment expenses deductible expenses by Corporations?
No
Are business meal expenses deductible by Corporations?
Yes, but only up to 50%
-Fines;
-penalties;
-expenses related to the production of tax-exempt income (such as federal income tax expense, interest expense incurred on debt to carry municipal bonds);
-business entertainment expenses;
-50% of business meal expenses;
-the excess of $25 per recipient of business gifts
These are all examples of ____________ expenses.
nondeductible expenses
-interest on municipal bonds is an example of tax-_______ income
exempt
Life insurance proceeds received upon the death of an insured key executive and the related premium expenses is an example of different treatment of revenue and expenses for book and tax purposes
