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Kaplan University AC 507 Unit 5 Quiz




Question;1. Trudi Corporation has a building that it needs to sell or exchange because of growth in its business. If Trudi sells the building, it will have a gain of $450,000. What is the amount of taxes that Trudi will avoid paying if it can exchange the building? The corporation has $1,000,000 of taxable income from operations for the current year. (Points: 1) $90,000 $153,000 $175,500 $450,000 None of the above2. In early 2011, Conrad Corporation discovered their bookkeeper had embezzled $30,000 over the last three years at a rate of approximately $10,000 per year. Conrad also suffered uninsured hurricane damage of $40,000 late in 2011 in a presidentially declared disaster area. If Conrad wants to deduct its losses at the earliest time possible, what are the amounts and year(s) of its loss deduction? (Points: 1) 2011 = $70,000 2010 = $30,000, 2010 = $40,000 2010 = $40,000, 2011 = $30,000 2009 = $10,000, 2010 = $10,000, 2011 = $50,000 None of the above3. Sam's land was condemned for a sewage treatment plant. He received $600,000 for the land that had a basis of $650,000. What is his realized and recognized gain or loss, respectively, on this involuntary conversion? (Points: 1) ($50,000), ($50,000) ($50,000), 0 $50,000, $50,000 0, 0 None of the above4. Which of the following is not a characteristic of involuntary conversions? (Points: 1) Gain only is deferred The taxpayer can receive cash to invest in qualifying replacement property The provision applies to both realty and personalty All of these are characteristics None of these are characteristics5. The taxpayer-use test for qualifying replacement property (Points: 1) applies only to personalty requires replacement property used by the taxpayer to be used in the same business as the converted property only requires leased realty to be replaced with other leased realty Is more restrictive than the functional-use test6. Which of the following would be an indication that corporate debt is disguised equity? (Points: 1) Debt is issued to the shareholders in the same proportion as stock The debt has a specified maturity date The debt has a specified interest rate Interest is paid annually None of the above7. A corporation that owns 72 percent of all the outstanding stock of another corporation: (Points: 1) May not file a consolidate return May file a consolidated return May take a 100 percent dividend received deduction May take a 70 percent dividend received deduction Is the parent of the 72 percent-owned company8. A clothing manufacturing corporation donates last year's inventory to the Red Cross for use in its disaster relief efforts. The clothes have a fair market value of $200,000 and a basis to the corporation of $75,000. What is its charitable contribution deduction? (Points: 1) $200,000 $150,000 $137,500 $75,0009. A corporation has pre-tax book income of $324,000. In determining this income, the corporation included $2,000 of tax-exempt interest, $6,000 of dividends from an affiliated corporation, a capital loss of $50,000 and $3,000 of excess book depreciation. What is the corporation?s taxable income? (Points: 1) $369,000 $328,000 $269,000 $263,00010. The Willow Corporation reported $400,000 of taxable income. In making a conversion to book income, the accountant had to adjust for the following: a $25,000 Section 179 deduction, but book depreciation would have been $5,000, a fine of $12,500 for overweight trucks, and a net capital loss of $10,000. What is Willow Corporation?s book income? (Points: 1) $422,500 $412,500 $402,500 $397,500 None of the above


Paper#42828 | Written in 18-Jul-2015

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