Question

Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $90,000. In addition, Trail has a net capital loss of $30,000. Trail's taxable income is

$50,000

$20,000

$140,000

$60,000

Burt and Tiffany form Owl Corporation. Burt transfers property (basis of $20,000 and fair market value of $130,000), while Tiffany agrees to serve as Owl’s manager for one year. Each receives 100 shares of Owl Corporation stock. The value of Tiffany’s services for one year is $130,000. Which of the following is false?

Burt has a $110,000 recognized gain

Owl Corporation's basis in the property received from Burt is $130,000

Burt has no recognized income

Burt has no recognized income

Marvel Corporation's taxable income for the current year was $200,000 after a reduction of $90,000 for charitable contributions. What is the maximum allowable deduction for contributions on Marvel's federal income tax return?

$29,000

$90,000

$26,000

$20,000

Vernon, the sole owner of Berry Truck Company, received a truck as a distribution. The truck had an adjusted basis of $12,000 and a fair market value on the date of the distribution of $30,000. There is also a $5,000 loan on the truck which Vernon assumed. What is the taxable income that Vernon recognizes, if any, on this distribution?

$25,000

$20,000

$2,000

$30,000

Hogg Corporation distributes $30,000 to its sole shareholder, Ima. At the time of the distribution, Hoggs' E&P is $16,000 and Ima's basis in her stock is $10,000. Ima's taxable income from this distribution is

$16,000 of dividends; and $4,000 capital gain.

$16,000 of dividends, and $14,000 of capital gain

$30,000 of dividends

$16,000 of dividends

Olson had a E&P deficit of $160,000 at the end of the previous taxable year. Its current earnings and profits for the current year was $80,000. Cash dividends on common stock totaling $40,000 were paid on December 31 of the end of the current year. The distribution is

Ordinary dividends of 100%

Ordinary dividends of 25%; return of capital of 75%

Return of capital of 100%

Ordinary dividends of 50%; return of capital of 50%

Super Corporation gives a painting to a museum for public display on August 6. The painting was purchased five years ago for $20,000 and is worth $25,000 at the date of gift. Also, Super accrues a charitable contribution on December 30 and pays the $12,000 contribution on May 1 of the next year. Super Corporation is a calendar-year corporation that uses the accrual method of accounting. Before considering the 10% limitation rule, the maximum deduction for the current year is

$25,000.

$12,000.

$20,000.

$37,000.

In the current year, Best Corporation received $40,000 in dividend income from an investment in which they own 10% of the voting stock. Best Corporation had taxable income, before the dividends received deduction, of $30,000. Best's dividends received deduction would be:

$28,000

$35,000

$0

$21,000

Answer 1