All of the following, except one, are requisites in the carry-over of net operating loss? There must be no substantial change in the ownership of the business. Carry-over is not allowed if the corporation is subject to MCIT during the taxable year. Even if the corporation paid MCIT, the running of the prescriptive period is not interrupted. The carry-over is good for one year.

All of the following, except one, are requisites in the carry-over of net operating loss? There must be no substantial change in the ownership of the business. Carry-over is not allowed if the corporation is subject to MCIT during the taxable year. Even if the corporation paid MCIT, the running of the prescriptive period is not interrupted. The carry-over is good for one year.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter13: Corporations: Earning & Profits And Distributions

Section: Chapter Questions

Problem 13P

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Which of the following statements with respect to the depreciation of property under MACRS is incorrect? Under the half-year convention, one-half year of depreciation is allowed in the year the property is placed in service. If a taxpayer elects to use the straight-line method of depreciation for property in the 5 -year class, all other 5 -year class property acquired during the year must also be depreciated using the straight-line method. In some cases, when a taxpayer places a significant amount of property in service during the last quarter of the year, real property must be depreciated using a mid-quarter convention. Real property acquired after 1986 must be depreciated using the straight-line method. The cost of property to which the MACRS rate is applied is not reduced for estimated salvage value.
Which of the following statements is incorrect with respect to the treatment of a net operating loss arising in 2022? a.Unlike individuals, corporations do not adjust their NOLs for net capital losses or nonbusiness deductions. b.The deduction for any carryover year of the NOL is limited to 80% of taxable income (determined without regard to the NOL deduction). c.A corporation may claim a dividends received deduction in computing an NOL. d.An NOL is generally carried back 2 years and forward 20 years.
On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,710,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $670,000 of the goodwill had been impaired and wrote down the goodwill by $670,000 for book purposes. Required: What book–tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? What book–tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary?
A corporation receives no dividends for the year and has no carryovers into the year. Its taxable income before any charitable contribution was $80,000. It donates land held for several years worth $50,000 in which it has a basis of $15,000. What would the deductible amount of the contribution be if the taxable income of $80,000 was after deducting a capital loss carryforward of $5,000 into the current year.
George operates a business that generated revenues of $61 million and allocable taxable income of $1.36 million. Included in the computation of allocable taxable income were deductible expenses of $245,500 of business interest and $255,500 of depreciation. What is the business interest limitation that George will be subject to this year if the business does not qualify under the gross income test?
which of the following statements correctly describes the carryback or carryover period for net capital losses? 1 the excess loss is then carried forward indefinitely for corporations and back three years and forward five years for noncorporations. 2. the excess loss is then carried forward indefinitely for noncorporations and back three years and forward five years for corporations. 3. there is no carryback period. Taxpayer may only carry forward for 5 years 4. the excess loss is then carried forward indefinitely for both corporations and noncorporations.
Green Corporation is required to change its method of accounting for federal income tax purposes. The change will require an adjustment to income to be made over three tax periods. Joe, the sole shareholder of Green, wants to better understand the implications of this adjustment for E&P purposes, because he anticipates a distribution from Green in the current year. Explain to Joe the impact of the adjustment on E&P.
Losses from wash sales of stocks or securities shall not be deductible, except The taxpayer is a dealer of securities or stocks and made in the course of business of suchdealer. The shares of stock are sold and then reacquired or repurchased are identical stocks orsecurities. The shares of stock are sold and then reacquired within a period beginning 30 days before thedate of such sale or disposition. The shares of stock are sold and then reacquired within a period of ending 30 days after suchsale or disposition.
During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On the date of distribution, the land has a basis of $100,000, a fair market value of $800,000, and is subject to a liability of $900,000. Kena, who takes the land subject to the liability, has a basis of $200,000 in the Ecru stock. What are the income tax Consequences to Kena and Ecru Corporation with respect to the liquidating distribution of the land?
Last year, Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2018 (effective immediately), in preparation for taking it public. At the time of the election, the corporation had an accumulated adjustments account balance of $189,000 and $482,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $164,250. During 2019, Miley’s corporation reported $0 taxable income or loss. Also, during 2019 the corporation made distributions to Miley of $99,500 and $73,000.How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) a. Both distributions are in cash. The first was paid on June 15, 2019, and the second was paid on November 15, 2019.
Last year, Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2018 (effective immediately), in preparation for taking it public. At the time of the election, the corporation had an accumulated adjustments account balance of $189,000 and $482,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $164,250. During 2019, Miley’s corporation reported $0 taxable income or loss. Also, during 2019 the corporation made distributions to Miley of $99,500 and $73,000.How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) c. The first distribution was a property (noncash) distribution (fair market value of distributed property equal to basis) and was paid on June 15, 2019; the second distribution was a cash distribution, and was paid on September 30, 2019.
In the current year, Nighthawk Corporation, a calendar year C corporation, has $3,700,000 of adjusted taxable income, $125,000 of business interest income, zero floor plan financing interest, and $1,400,000 of business interest expense. Assume that Nighthawk has average gross receipts for the prior three-year period of $33,000,000. Determine Nighthawk’s current-year deduction for busi- ness interest. Assume that Nighthawk has average gross receipts for the prior three-year period of $23,000,000. Determine Nighthawk’s current-year deduction for busi- ness interest.