ACCOUNTING

Question 1

Which of the following indicates that a decision has precedential value for future cases?

A. Stare decicis
B. Golsen doctrine
C. En banc
D. Reenactment doctrine
E. None of the above

 

Question 2

The Golsen doctrine applies to which court?

A. U.S. Tax Court
B. U.S. District Court
C. U.S. Court of Federal Claims
D. U.S. Supreme Court
E. Some other court

 

Question 3

Interpret the following citation: 64-1 USTC ¶ 9618, aff’d in 344 F. 2d 966.

A. A U.S. Tax Court Small Cases Division decision that was affirmed on appeal.
B. A U.S. Tax Court decision that was affirmed on appeal.
C. A U.S. District Court decision that was affirmed on appeal.
D. A U.S. Circuit Court of Appeals decision that was affirmed on appeal.
E. None of the above.

 

Question 4

A Memorandum decision of the U.S. Tax Court could be cited as:

A. T.C. Memo. 1990-650
B. 68-1 USTC ¶ 9200
C. 37 AFTR 2d 456
D. All of the above
E. None of the above

Question 5

Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2011. He also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn. How much income must Bjorn report from these businesses?

A. $0 income from the S corporation and $30,000 income from the C corporation.
B. $90,000 income from the S corporation and $30,000 income from the C corporation.
C. $90,000 income from the S corporation and $0 income from the C corporation.
D. $30,000 income from the S corporation and $30,000 of dividend income from the C corporation.
E. None of the above

Question 6

In 2011, Bluebird Corporation had net income from operations of $75,000. Further, Bluebird recognized a long-term capital loss of $30,000, and a short-term capital gain of $10,000. Which of the following statements is correct?

A. Bluebird Corporation may use the capital loss to offset the capital gain and must carry the net capital loss of $20,000 forward five years as a long-term capital loss.
B. Bluebird Corporation may deduct $13,000 of the capital loss in 2011 and may carry forward the remainder of the capital loss indefinitely to offset capital gains.
C. Bluebird Corporation will have taxable income in 2011 of $55,000.
D. Bluebird Corporation will have taxable income in 2011 of $75,000 and will have a net capital loss of $20,000 that can be carried back 3 years and forward 5 years.
E. None of the above

Question 7

Which of the following statements is correct regarding the taxation of C corporations?

A. The due date for a corporate income tax return (ignoring extensions) is the fifteenth day of the third month following the close of the corporation’s tax year.
B. A corporation with taxable income of less than $500 need not file a tax return.
C. The alternative minimum tax does not apply.
D. In general, the required annual payment for corporate estimated taxes is 90% of the corporation’s final tax for the current year.
E. None of the above

Question 8

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

Question 9

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

Question 10

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

Question 11

Gander, a calendar year corporation, has a deficit in current E & P of $100,000 and a $290,000 positive balance in accumulated E & P. If Gander determines that a $500,000 distribution to its shareholders is appropriate at some point during the year, what is the maximum amount of the distribution that could potentially be treated as a dividend?

A. $0
B. $190,000
C. $240,000
D. $290,000
E. None of the above

Question 12

Purple Corporation has accumulated E & P of $100,000 on January 1, 2011. In 2011, Purple has current E & P of $130,000 (before any distribution). On December 31, 2011, the corporation distributes $250,000 to its sole shareholder, Cindy (an individual). Purple Corporation’s E & P as of January 1, 2012 is:

A. $0
B. ($20,000)
C. $100,000
D. $130,000
E. None of the above

Question 13

In the current year, Dove Corporation (E & P of $1 million) distributes all of its property in a complete liquidation. Alexandra, a shareholder, receives land having a fair market value of $200,000. Dove Corporation had purchased the land as an investment three years ago for $150,000, and the land was distributed subject to a $100,000 liability. Alexandra took the land subject to the $100,000 liability. What is Alexandra’s basis in the land?

A. $50,000
B. $100,000
C. $150,000
D. $200,000
E. None of the above

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