Question;271 #33;In 2011, Fay Corporation (a calendar year taxpayer) had the following;transactions;Taxable income;$4,000,000;Mining exploration costs claimed;1,000,000;Percentage depletion claimed (the property had a;zero adjusted basis);1,400,000;Donation of stock held since 1988 as investment;(basis of $100,000;and fair;market value of $400,000) to a qualified charity;400,000;For 2011, Fay Corporation?s AMTI is;a.;$6,300,000.;b. $7,150,000.;c. $7,250,000.;d. $7,300,000.;e. None of the above.;272 #34;During 2011, Gold Corporation (a calendar year taxpayer) has $4,000,000 of;taxable income and the following transactions;AMTI (not including adjusted current earnings);$5,000,000;Adjusted current earnings;8,000,000;Gold Corporation?s alternative minimum;tax (AMT) for 2011 is;a.;$1,360,000.;b. $700,000.;c. $500,000.;d. $90,000.;e. None of the above.;273 #35;Ravi Corporation, a calendar year taxpayer, has AMTI (before adjustment for;adjusted current earnings) of $6 million for 2011. If Ravi Corporation?s ACE is;$15 million, its tentative minimum tax for 2011 is;a.;$2.02 million.;b. $2.55 million.;c. $3.45 million.;d. $4.2 million.;e. None of the above.;274 #36;Tanver Corporation, a calendar year corporation, has alternative minimum;taxable income of $7 million in 2011 (before adjustment for adjusted current;earnings). If Tanver?s adjusted current earnings is $16 million, its tentative;minimum tax for 2011 is;a.;$310,000.;b. $2,750,000.;c. $6,750,000.;d. $7,000,000.;e. Some other amount.;275 #37;Which entity is subject to the ACE provisions?;a.;S corporation.;b. Real estate investment trust (REITs).;c. Regulated investment companies.;d. Real estate mortgage investment;conduits.;e. None of the above.;276 #38;The exemption amount is phased out entirely when AMTI reaches;a.;$40,000.;b. $310,000.;c. $1,000,000.;d. $5,000,000.;e. Some other amount.;277 #39;For purposes of the penalty tax on accumulated earnings under ? 531, reasonable;needs of the business does not;include;a.;Product liability losses.;b. Self-insurance.;c. Loans to suppliers and customers.;d. Loans to shareholders.;e. Plant expansion.;278 #40;Cave Corporation, a calendar year taxpayer, has a beginning balance in;accumulated E & P of $3.5 million and current earnings of $1 million. If;Cave can justify accumulations for the needs of the business of $3.7 million;its accumulated earnings credit for ATI purposes is;a.;$3.7 million.;b. $250,000.;c. $200,000.;d. $0.;e. None of the above.;279 #41;Maroon Corporation incurred the following taxes for the year 2011;Regular tax liability;$187,000;Tentative minimum tax;156,000;Personal holding company tax;67,000;Accumulated earnings tax;65,400;Maroon Corporation?s total tax liability is;a.;$187,000.;b. $254,000.;c. $265,000.;d. $421,000.;e. Some other amount.;280 #42;What amount of accumulated earnings of a manufacturing corporation is;considered within the reasonable needs of a business without the corporation;having to show a bona fide business reason for the accumulation?;a.;$150,000 or less.;b. $200,000 or less.;c. $250,000 or less.;d. $300,000 or less.;e. None of the above.;281 #43;Blue, Inc., a calendar year closely held corporation, is not a PHC. If the;company reports the following items, the accumulated taxable income is;Taxable income;$200,000;Long-term capital gain (net of tax);18,300;Federal income tax on LTCG;11,700;Dividends received deduction;18,000;Accumulated earnings credit;80,000;Federal income taxes;65,150;a.;$54,550.;b. $62,850.;c. $80,850.;d. $109,700.;e. None of the above.;282 #44;Which of the following is alwayspersonal;holding company income?;a.;Gas royalties.;b. Rent income.;c. Dividends;d. Personal service contract income.;e. All of the above.;283. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #1;Chase Corporation manufactures and sells birdhouses and feeders. The company;also sells similar items that are imported from foreign countries. During the;current year, Chase had a profit of $600,000 from its own products but a loss;of $50,000 from the imported goods.;a.;What is;Chase?s QPAI?;b.;What is;Chase?s DPAD in 2011?;284. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #2;Emerald, Inc. engages in production activities that generate QPAI of $560,000;and taxable income (without taking into account the DPAD and NOL) of $700,000;in 2011. The company also has an NOL carryover to 2011 of $600,000 and;qualified W-2 wages of $350,000. Calculate any DPAD.;285. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #3;In each of the following independent situations, determine the DPAD for 2011;for the corporation involved.;Taxpayer;QPAI;TI;W-2 wages;a.;Siskin;$400,000;$500,000;$ 30,000;b.;Ibis;800,000;700,000;130,000;c.;Scamp;700,000;900,000;200,000;d.;Pipits;900,000;900,000;280,000;e.;Puffin;900,000;900,000;200,000;Does not;include a $120,000 NOL carryover from the prior year.;Only $60,000;relates directly to manufacturing activities.;286. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #4;Robin Corporation, a calendar year taxpayer, manufactures and sells candles. It;has several factories in the U.S. and one in Jamaica. During 2011, it had DPGR;of $4.1 million from the U.S. factories.;a.;If the gross;receipts from the products made in Jamaica are $200,000, what is Robin?s DPGR;for 2011?;b.;If the gross;receipts sourced to the Jamaica plant are $300,000, what is Robin?s DPGR for;2011?;287. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #5;Ecru Corporation sells customized outdoor grills. The company purchases various;parts and materials from foreign sources for $750 and incurs $240 in labor;costs at a factory in North Carolina to fabricate and assemble the product.;Ecru also incurs packaging, selling, and other costs of $60 and sells the grill;for $1,200. If tax year 2011 is involved, calculate Ecru?s per unit;a.;DPGR;b.;QPAI;c.;DPAD;288. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #6;Scarlet, Inc., has $4 million in gross receipts of which $2.4 million is DPGR.;CGS is $1,700,000 and other deductions (marketing, administrative) are;$700,000. Using the small business simplified deduction method, determine;Scarlet?s QPAI.;289. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #7;Maize Corporation has gross receipts of $3 million of which $1 million are;non-DPGR. CGS identified with DPGR is $1.3 million, while overall selling and;administrative expenses are $600,000. Under the simplified deduction method;determine Maize?s QPAI.;290. CHAPTER;3?CORPORATIONS: SPECIAL SITUATIONS Question PR #8;Swan Corporation has average gross receipts of $5.5 million, $4.7 million, and;$4.6 million in 2008, 2009, and 2010, respectively. Is the company a small;corporation with respect to the AMT?
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