Question : 11. Brokers’ fees incurred in the issuance of a corporation’s stock : 1313621

 

 

11. Brokers’ fees incurred in the issuance of a corporation’s stock are considered organizational expenditures.

a. True

b. False

 

ANSWER:  False

RATIONALE:  Brokers’ fees incurred on the issuance of a corporation’s stock are not considered organizational expenditures.

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-03 – LO:11-03

 

 

12. To prevent triple taxation, a corporation is entitled to deduct 50 percent of the dividends received from other domestic corporations.

a. True

b. False

 

ANSWER:  False

RATIONALE:  To prevent triple taxation, corporations are allowed a deduction for 70 percent to a 100 percent of dividends received from domestic corporations, depending upon the ownership percentage in the corporation paying the dividend.

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-03 – LO:11-03

 

 

13. A regular corporation with excess charitable contributions may carry the excess forward to the 5 succeeding tax years.

a. True

b. False

 

ANSWER:  True

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-03 – LO:11-03

 

 

14. Corporations can elect to deduct up to $5,000 of organizational costs in the year they begin business, assuming their total organizational expenses do not exceed $50,000.

a. True

b. False

 

ANSWER:  True

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-03 – LO:11-03

 

 

15. A corporation must reconcile, to the IRS’s satisfaction, the differences between net income as shown on the company’s books and taxable income (before special deductions and net operating losses) as shown on the tax return.

a. True

b. False

 

ANSWER:  True

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-04 – LO:11-04

 

 

16. Schedule M-1 on Form 1120 shows the reconciliation of a corporation’s tax liability to the tax expense on the corporation’s books.

a. True

b. False

 

ANSWER:  False

RATIONALE:  Schedule M-1 on Form 1120 reconciles a corporation’s accounting income to its taxable income, computed before the net operating loss and special deductions.

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-04 – LO:11-04

 

 

17. An S corporation files a Form 1120S.

a. True

b. False

 

ANSWER:  True

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-06 – LO:11-06

 

 

18. If the shareholders of an S corporation voluntarily revoke the corporation’s S corporation status in the sixth month of the tax year and the revocation does not specify a prospective revocation date, the corporation is a regular corporation for that tax year.

a. True

b. False

 

ANSWER:  False

RATIONALE:  If the shareholders of an S corporation voluntarily revoke the corporation’s S corporation status in the sixth month of the tax year and the revocation does not specify a prospective revocation date, the corporation will remain an S corporation until the end of the year. The earliest that the S corporation status can be terminated is the first day of the following year.

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-06 – LO:11-06

 

 

19. The income of an S corporation is computed in much the same manner as that of a partnership.

a. True

b. False

 

ANSWER:  True

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-06 – LO:11-06

 

 

20. Charitable contributions made by an S corporation are not deductible by the corporation; therefore, the shareholders receive no tax benefit from the contributions as itemized deductions.

a. True

b. False

 

ANSWER:  False

RATIONALE:  Charitable contributions made by an S corporation are passed through to the shareholders and reported on the individual shareholders’ tax returns.

POINTS:  1

QUESTION TYPE:  True / False

HAS VARIABLES:  False

LEARNING OBJECTIVES:  ITF.WABG.15.LO:11-06 – LO:11-06