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Question;239. #1;Which statement is false?;a.;The AMT is not limited to C corporations.;b. The DPAD is not limited to C;corporations.;c. The penalty tax on PHCs is not;dependent on the existence of a tax avoidance motive.;d. In the case of a sole proprietor, the;DPAD is a deduction from adjusted;gross income.;e. All are true.;240. #2;Staff, Inc., has taxable income of $14 million in 2011. What is the maximum;DPAD tax savings for this C corporation?;a.;None.;b. $204,000.;c. $210,000.;d. $428,400.;e. $441,000.;241. #3;Lemon, Inc., has taxable income of $15 million in 2011. What is the maximum;DPAD tax savings for this C corporation?;a.;$132,600.;b. $265,200.;c. $273,000.;d. $472,500.;e. None of the above.;242. #4;Which, if any, of the following is a characteristic of the DPAD?;a.;Not applicable in situations involving S corporations.;b. Applicable only to manufactured goods;that are exported from the U.S.;c. Can never apply when the rendition of;personal services is involved.;d. Can sometimes apply when some of the;components of a product are manufactured in foreign countries.;e. None of the above.;243. #5;In a sole proprietorship situation, a DPAD would be a;a.;Deduction from AGI.;b. Deduction for AGI.;c. Possible deduction from and deduction for.;d. 9% credit.;e. All of the above.;244. #6;Which statement is false?;a.;The overall tax effect of a DPAD is a rate reduction or a tax credit.;b. For a flow-through entity, modified;AGI is substituted for taxable income.;c. FASB requires the DPAD to be reported;as a special charge.;d. MPGE refers to a merge, paid, gain;and expense.;e. All of the above are correct.;245. #7;Which formula is correct for DPAD?;a.;Smaller of 9% of QPAI or 9% of modified AGI, not to exceed 50% of allocable;wages.;b. Larger of 9% of QPAI or 9% of taxable;income, not to exceed 50% of allocable wages.;c. Smaller of 9% of QPAI or 9% of;taxable income, not to exceed 60% of allocable wages.;d. Larger of 9% of QPAI or 9% of;alternative minimum tax, not to exceed 60% of allocable wages.;e. None of the above.;246. #8;Yvonne Corporation manufactures and sells ceramic dinnerware. The company also;sells dinnerware that is purchased from unrelated foreign producers. During tax;year 2011, Yvonne had a U. S. profit of $1.2 million (QPAI) and a loss from the;imported merchandise of $100,000. What is Yvonne?s DPAD?;a.;$33,000.;b. $66,000.;c. $99,000.;d. $1,080,000.;e. None of the above.;247. #9;Tanweer, Inc., manufactures and sells glassware. The company also sells;dinnerware that is purchased from unrelated foreign producers. During tax year;2011, Tanweer had a U.S. profit of $1.2 million (QPAI) and a loss from the;imported dinnerware of $200,000. What is Tanweer?s DPAD?;a.;None.;b. $33,000.;c. $66,000.;d. $99,000.;e. None of the above.;248. #10;May Corporation manufactures and sells ceramic dinnerware. The company also;sells dinnerware that is purchased from unrelated foreign producers. During the;tax year 2011, May had a U.S. profit of $1.2 million (QPAI) and a profit from;the imported merchandise of $100,000. What is May?s DPAD?;a.;$36,000.;b. $72,000.;c. $108,000.;d. $117,000.;e. None of the above.;249. #11;Bacon Corporation manufactures an exercise machine at a cost of $800 and sells;the machine to Kershaw Corporation for $1,000 in 2011. Kershaw incurs TV;advertising expenses of $300 and sells the machine by phone order for $1,600.;If Bacon and Kershaw corporations are members of an expanded affiliated group;(EAG), their DPGR is;a.;$30.;b. $500.;c. $1,000.;d. $1,600.;e. None of the above.;250. #12;Boasso Corporation manufactures an exercise machine at a cost of $800 and sells;the machine to Kirby Corporation for $1,000 in 2011. Kirby incurs TV;advertising expenses of $300 and sells the machine by phone order for $1,700. If;Boasso and Kirby corporations are members of an expanded affiliated group;(EAG), their QPAI is;a.;$30.;b. $600.;c. $1,000.;d. $1,600.;e. None of the above.;251. #13;Bow Corporation manufactures an exercise machine at a cost of $800 and sells;the machine to Kite Corporation for $1,000 in 2011. Kite incurs TV advertising;expenses of $300 and sells the machine by phone order for $1,600. If Bow and;Kite corporations are members of an expanded affiliated group (EAG), their DPAD;is;a.;$30.;b. $45.;c. $72.;d. $500.;e. None of the above.;252. #14;Which of the following statements does;not reflect the rules regarding pass-through entities and DPAD?;a.;Since the deduction is determined at the owner level, each owner must make the;computation separately.;b. The entity allocates to each owner;his or her share of any QPAI.;c. In the case of partnerships;guaranteed payments are regarded as W-2 wages.;d. A partner cannot be allocated any W-2;wages if the share of QPAI is zero.;e. None of the above.;253. #15;Which statement is false?;a.;The stock ownership requirement for the EAG rules is 80%.;b. Members of an EAG are treated as a;single taxpayer for purposes of the DPAD.;c. For an EAG, the DPAD is allocated;among the members in proportion to each member?s respective amount of QPAI.;d. The DPAD of a consolidated group must;be allocated to the group?s members in proportion to each member?s QPAI.;e. None of the above is false.;254. #16;Peggy?s sole proprietorship consists of a bakery and retail food sales. The;bakery?s DPGR is $700,000, but after CGS, direct expenses, and a ratable;portion of indirect expenses are deducted, QPAI is $100,000. W-2 wages related;to DPGR are significant. The retail food sales have a loss of $1 million. If;Peggy files a joint return and her modified AGI is $119,500, what is her;allowable DPAD, if any, for 2011?;a.;None.;b. $6,000.;c. $9,000.;d. $10,755.;e. Some other amount.;255. #17;Lee, Inc., an S corporation, has taxable income of $15 million in 2011. Assume;there are two shareholders, each in the top individual tax bracket. What is the;maximum total DPAD tax savings for the S corporation shareholders?;a.;None.;b. $294,000.;c. $472,500.;d. $1,260,000.;e. None of the above.;256. #18;Which reason is unlikely to cause a;regular corporation to have to pay AMT?;a.;A service-type of company with little inventory.;b. A high level of investment in assets;such as equipment and structures.;c. Low taxable income due to a cyclical;downturn, strong international competition, a low-margin industry, or other;factors.;d. Investment at low real interest;rates, which increases the company?s deductions for depreciation relative to;those for interest payments.;e. None of the above.;257. #19;Nickel Corporation has average gross receipts of $5.6 million, $4.6 million;and $4.7 million in 2009, 2010, and 2011, respectively. Nickel is;a.;Not subject to the corporate income tax.;b. A small corporation with respect to;the AMT.;c. Subject to the AMT.;d. Not a small corporation with respect;to the AMT.;e. None of the above.;258. #20;A corporation has the following items related to the AMT.;Alternative minimum tax base;$98,502,900;Regular tax;11,201,520;Foreign AMT tax credit;1,400,000;The corporation?s AMT, if any, is;a.;$0.;b. $7,099,060.;c. $8,703,900.;d. $18,300,580.;e. None of the above.;259. #21;Primeline, Inc., has the following items related to the AMT;Alternative minimum tax base;$102,755,000;Regular corporate tax;11,125,000;Foreign AMT tax credit;2,300,000;The corporation?s AMT, if any, is;a.;$0.;b. $7,126,000.;c. $9,426,000.;d. $18,251,000.;e. None of the above.;260. #22;Which of the following would not be a positive tax preference item in 2010?;a.;Accelerated depreciation on real property in excess of straight-line.;b. Intangible drilling costs.;c. Private activity bond interest;income.;d. Percentage depletion in excess of;adjusted basis.;e. None of the above.;261. #23;Which statement, if any, is false?;a.;An S corporation is not subject to the corporate AMT.;b. A high level of investment in assets;(e.g., equipment or structures) is a reason a company may be subject to the;AMT.;c. Many of the adjustments that apply to;individuals also apply to corporations.;d. The AMT is a separate tax system from;the corporate income tax.;e. None of the above.;262. #24;Which AMT adjustment would only be negative?;a.;Passive activity losses.;b. AMT NOL deduction.;c. DPAD.;d. Completed contract method.;e. None of the above.;263. #25;Which of the following items will be a deduction;from unadjusted AMTI in arriving at ACE?;a.;Federal income tax.;b. 80% dividends received deduction.;c. Penalties and fines.;d. Premiums paid on key employee;insurance.;e. None of the above.;264. #26;Which of the following items will be an addition to AMTI in arriving at ACE?;a.;Excess capital loss.;b. Federal income tax.;c. Tax-exempt income.;d. Excess charitable contributions.;e. None of the above.;265. #27;Which of the following has no effect in arriving at ACE?;a.;Tax-exempt income (net of expenses).;b. Excess charitable contributions.;c. Key employee insurance proceeds.;d. Deferred gain on installment sales.;e. Premiums paid on key employee;insurance.;266. #28;Which of the following is added in arriving at ACE?;a.;Tax-exempt income (net of expenses).;b. Federal income tax.;c. Premiums paid on key employees;insurance.;d. Loss on sale between related parties.;e. None of the above.;267. #29;Which statement is false?;a.;The starting point for computing AMTI is taxable income.;b. A tax preference is added to taxable;income.;c. The ACE adjustment can be a negative;amount.;d. The starting point for computing ACE;is taxable income.;e. None of the above.;268. #30;Which of the following items will have an effect (add or subtract) on unadjusted;AMTI to arrive at ACE?;a.;Federal income tax.;b. Tax-exempt interest income.;c. Excess capital losses.;d. 80% dividends received deduction.;e. None of the above.;269. #31;A small corporation with unused minimum tax credits may use what percentage of;regular tax as a minimum credit in 2011?;a.;0.;b. 25%.;c. 50%.;d. 75%.;e. None of the above.;270. #32;Ford Corporation, a calendar year corporation, has alternative minimum taxable;income (before any exemption) of $1.28 million for 2011. The company is not a small corporation. If the regular;corporate tax is $211,050, Ford?s alternative minimum tax for 2011 is;a.;$44,950.;b. $209,000.;c. $256,000.;d. $1,280,000.;e. None of the above.

 

Paper#59211 | Written in 18-Jul-2015

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