Corporate Tax

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Lenoci Inc. paid $310,000 for equipment three years ago. This year, it sold the equipment for $200,000. Through the date of sale, accumulated book depreciation was $93,840 and accumulated tax depreciation was $147,327. Which of the following statements i
Consider a non-current liability that has resulted in a tax liability for Falko Inc. in its 2018 financial statements. Assuming there are no other (current) tax liabilities or assets, Falko's 2018 tax liabilities will be classified as: (a) non-current in
Maxwell Inc. had temporary differences related to the following future (deductible) or taxable amounts on December 31, 2017: a) Prepaid Expenses $25,000 b) Depreciation Expense $75,000 and c) Warranty Expense ($20,000). There were no temporary differe
A deferred tax asset is a temporary, or timing difference, that represents a rule variance between book and income tax accounting. A deferred tax asset represents an expense that is fully recognized in a current period for book accounting purposes, but ca
New Hope Managed Care Inc. is a for-profit managed care company that serves the southwest United States. Last year, it reported $1, 200,000 in income from operations, $250,000 in interest income from bonds it bought in the previous year, and $60,000 in di
Interest revenue on municipal bonds results in a permanent tax difference. True False Explain.
In 2015, Instar decides to add a 24-month warranty on its new product sales. Warranty costs are tax-deductible when claims are settled. In its financial statement for 2015, Instar incurs: a. A decrease in a deferred tax asset. b. An increase in a deferr
Myrna and Geoffrey filed a joint tax return in 2017. Their AGI was $85,000, and itemized deductions were $13,700, which included $4,000 in state income tax. In 2018, they received a $1,800 refund of the state income taxes that they paid in 2017. The stand
Abbey spent the last 75 days of 2019 in a nursing home. The cost of the services provided to her was $24,375 ($325 per day). Medicare paid $8,800 toward the cost of her stay. Abbey also received $14,720 of benefits under a long-term care insurance policy
Ovate, Inc., earns $206,500 in book income before tax and is subject to a 21% marginal Federal income tax rate. Ovate records a single temporary difference. Warranty expenses deducted for book purposes are $31,200 of which only $7,800 are deductible for t
Temporary differences arise when revenues or gains are included in pretax financial income: Prior to the Time After the Time They Are Included in Taxable Income They Are Included in Taxable Income I. Yes Yes II. Yes No III. No Yes IV. No No a. I b. II
For the year ended December 31, 2015, Pering Co. reported pretax financial income of $550,000. Its current tax expense was $144,000. Pering reported a difference between pretax financial statement income and taxable income. This difference is due to accel
Faye is a marketing executive for Healthy Corp. She earns a salary of $100,000 and has received the following benefits. ? Healthy pays 75% of all employees' health and accident insurance coverage.
For the current year, Creative Designs Inc., a C corporation, reports taxable income of $340,000 before paying a salary to Ben the sole shareholder of Creative Designs Inc. (CD). Ben's marginal tax ra
Compute the taxable income for 2016 in each of the following independent situations: a. Drew and Meg, ages 40 and 41, respectively, are married and file a joint return. In addition to four dependent
Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in 000s)201320142015 Pretax accounting income$280$260$250 Taxable income300270290 The difference
Bramble Corporation purchased equipment very late in 2017. Based on generous capital cost allowance rates provided in the Income Tax Act, Bramble Corporation claimed CCA on its 2017 tax return but did
1) Information for Kent Corp. for the year 2016: Reconciliation of pretax accounting income and taxable income: Pretax accounting income $181,000 Permanent differences (15,400) 165,600 Temporary dif
Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2014. 1. Mooney Co. has developed the fol
At the beginning of 2013, Norris Company had deferred tax liability of $6,600, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial repor
Built-in Corporation ("B") was formed in 2000 as a C corporation. The shareholders of B elected S corporation status effective as of January 1, 2004, when it had no Subchapter C earnings and profits a
Samson Company offers its employees a cafeteria plan. Julie is allotted $5000 to spend on fringe benefits. She chooses a health insurance plan that costs $2500 per year, a $50000 whole life insurance
Cardinal Corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. Cardinal also receives interest income of $35,000 from municip
The Accent Corporation shows the following information. On January 1, 2012, Accent purchased a donut machine for $600,000. (a) Pretax financial income is $3,200,000 in 2012 and $3,500,000 in 2013. (b
Packard Corporation reported pretax book income of $501,100. Included in the computation were favorable temporary differences of $11,100, unfavorable temporary differences of $101,100, and unfavorable
What role does the foreign tax credit limitation play in U.S. tax policy?
Wes acquired a mineral interest during the year for 10000000. A geological survey estimated that 250000 tons of the mineral remained in the deposit. During the year, 80,000 tons were mined and 45000 t
The following facts relate to Duncan Corporation. 1. Deferred tax liability, January 1, 2014, $119,280. 2. Deferred tax asset, January 1, 2014, $39,760. 3. Taxable income for 2014, $208,740. 4. Cu
Which of the following decreases adjusted basis? A. Amortization of bond premium B. A corporate distribution to a shareholder treated as a return of capital in which gain is recognized to the shareh
Consider the following data: Before Tax revenue = $22,500, Loan Principal Payment = $5,926, Loan Interest Payment = $2,400, MACRS Depreciation = $16,665. What is the taxable income?
Mel & Judy, LLC transferred an old asset with a $53,100 adjusted tax basis plus $5,000 cash in exchange for a new asset worth $75,000. Which of the following statements is false? Explain. A. The old a
Carol has recently incorporated her sole proprietorship and is considering making an S election. The corporation has $200,000 of gross revenue and expenses of $75,000 before Carol's salary. She plans
PDQ, Inc., expects EBIT to be approximately $11.8 million per year for the foreseeable future, and it has 100,000, 20-year, 7 percent annual coupon bonds outstanding. What would the appropriate tax ra
Is the profit earned on Zebpay by selling Bitcoin taxable?
Indicate and explain whether each of the following independent situations should be treated as a temporary difference or a permanent difference. (a) For accounting purposes, a company reports revenue
Monie, an individual taxpayer, owns 50% of Monie & Co, an S Corporation. At the beginning of 20X4, Monie's basis in Monie & Co stock was $55,000. During 20X4, Monie & Co realized an ordinary loss in t
Chris Green, CPA, is auditing Rayne Co.'s 2013 financial statements. For the year ended December 31, 2013, Rayne is applying GAAP for income taxes. Rayne's controller, Dunn, has prepared a schedule of
Beta Corporation reports the following results for the current year: Gross Income from Operations $180,000 ; Dividends from less-than-20 % owned domestic corporations $100,000 ; Op
PTNI before the following information = TI before the following information = 10,000,000 in Year 1. Additional information: Life insurance premiums in Year 1 = 100,000 Life insurance proceeds in Ye
Giant Corporation (a U.S. corporation) forms Small Corporation in a foreign country. Giant owns 70% of Small Corporation's stock and the remaining stock is owned by citizens of the country in which Sm
The following facts relate to Krung Thep Corporation: |1. Deferred tax liability, January 1, 2014, $59,520 |2. Deferred tax asset, January 1, 2014, $0. |3. Taxable income for 2014, $141,360. |4. Preta
Diane is the beneficiary of a $70,000 insurance policy on the life of her mother, Juanita. To date, Juanita has paid premiums of $20,000. What amount of gross income must be reported in each of the fo
Carlos, age 55, is married with no children. During the year, Carlos had the following income and expense items: A. In April last year, he purchased some Alpha Corporation stock for $5,000. In March
A company begins business in Year A. The company reports the following: Pretax income: Year A is $150,000 Year B is $230,000 Year C is $180,000 Tax rate is 15% in all years. In each of the follo
Mr. Hines received a $6,200 grant from a local university for the fall of 2016. Mr. Hines was a candidate for a degree and was required to be a research assistant, for which services he received payme
Which of the following is a true statement? a. Expenses associated with a "hobby" are never deductible. b. The deductibility of an activity's expenses in excess of revenues depends upon whether the
The following information is available for Wenger Corporation for 2013. 1. Excess of tax depreciation over book depreciation, $44,000. This $44,000 difference will reverse equally over the years 2014
Mrs. Norman has the following sources of income: Social security benefits $10,000 Interest income; 5,000 Dividend income; 5,000 Tax-exempt interest income; 14,000 Mrs. Norman is 68 years of age, a wid
Maul, Inc., a calendar year S corporation, incurred the following items. Tax-exempt interest income $7,000 Sales 140,000 Depreciation recapture income 12,000 Long-term capital gain 20,000 Section 1231
Sunland Company reports pretax financial income of $63,900 for 2017. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greate
Pina Company reports pre-tax financial income of $66,000 for 2017. The following items cause taxable income to be different than pre-tax financial income. 1. Depreciation on the tax return is greater
Grouper Company reports pretax financial income of $63,800 for 2017. The following items cause taxable income to be different than pretax financial income. 1) Depreciation on the tax return is greate
The City of Springfield donates land worth $250,000 to Deuce Corporation to induce it to locate in Springfield and provide 1,000 jobs for its citizens. How much gross income must Deuce Corporation rec
Perk Corporation is subject to tax only in State A. Perk generated the following income and deductions: Federal taxable income $300,000 State A income tax expense 15,000 Refund of State A income tax 3
Roger, an individual, owns a proprietorship called Green Thing. For the year 2014, Roger has the following items: -Business Income- $20,000 -Business Expense-$150,000 -Loss on a completely destroye
Compute the taxable income for 2015 for Aiden on the basis of the following information. Aiden is married but has not seen or heard from his wife since 2013. Salary $ 80,000 Interest on bonds issued b
Explain why gains from depreciable property sold to a related taxpayer are treated as ordinary income under �1239.
Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2018. The information that follows pertains to Esther Food Products: a. At December 31,
Sheffield Company reports pretax financial income of $63,900 for 2017. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is grea
Ulmus Corporation has 1,230,000 in taxable income for 2014. Calculate the corporation's income tax liability for 2014.