Workbook2 Flashcards
Type b reorganizations are
The acquisition of one corp of another corporations stock–stock for stock basis and not a taxable transaction
d. $8,600
A. I chose B. We need to remember that the excess of organizational costs is amortized over 180 months. Then multiplied by the number of months in the year and added to the max of $5,000
What is the usual result to the shareholders of a distribution in complete liquidation of a corporation?
Capital gain/loss
What is a type A reorganization?
Is it tax free to both the shareholders and the coporation? -Type A= Mergers and Acquisitions
d. $15,000
D. I chose B. We are looking at it from the corporations side, which means they will have to recognize the gain in order to add it to their E&P. The distribution will be taxable as dividend income to the shareholder up to the amount of E&P
d. Not-for-profit organizations.
B
Delivery van 25,000
Computer and truck are 5 year. The desk and office furniture are 7 year.
d. S corporation.
B
d. Dart may utilize the cash basis method of accounting until it incurs an additional $10 million to develop additional software.
C. I chose B. Out of the four scenarios where accrual accounting is mandatory, he falls into the 4th because it is a C Corporation over $5 mil in annual gross receipts for the three proceeding years.
d. $435,000
A. Have to find the amount deductible for financial statement reporting purposes too and find the difference of that over the tax method.
d. $40,000 Section 1231 loss only.
B. No losses for Section 1245 and Section 1250. Net Section 1231 are taxed as ordinary losses and can be deducted against ordinary income.
d. Divide current-year income by prior-year income, then multiply the result by prior-year tax.
A
d. $20,000
C. Note: Land is not a depreciable asset
d. The LIFO method can be used for tax purposes even if the FIFO method is used for financial statement purposes.
B. LIFO assumes that an entity sells, uses or disposes of its newest inventory first.
d. $6,000
D. I chose C. S Corporations rules are the same as C Corps in regards to formation of the Corp. The shareholder only recognizes a gain/loss on the exchange if boot was received OR COD in excess of the NBV of the asset.
