ACC 455 Final Exam

ACC 455 Final Exam

1)
Regulations are

2)
Identify which of the following statements is false.

3)
Which of the following statements regarding proposed regulations is not
correct?

4)
Which of the following statements about a partnership is true?

5)
Which of the following is an advantage of a sole proprietorship over other
business forms?

6)
Which of the following statements is incorrect?

7)
Three members form an LLC in the current year. Which of the following
statements is incorrect?

8)
Identify which of the following statements is true.

9)
Identify which of the following statements is false

10)
Barry, Dan, and Edith together form a new corporation; Barry and Dan each
contribute property in exchange for stock. Within 2 weeks after the formation,
the corporation issues additional stock to Edith in exchange for property.
Barry and Dan each hold 10,000 shares and Edith will receive 9,000 shares.
Which transactions will qualify for non recognition?

11)
Matt and Sheila form Krupp Corporation. Matt contributes property with a FMV of
$55,000 and a basis of $35,000. Sheila contributes property with a FMV of
$75,000 and a basis of $40,000. Matt sells his stock to Paul shortly after the
exchange. The transaction will

12)
Identify which of the following statements is true.

13)
Identify which of the following statements is false.

14)
Identify which of the following statements is true.

15)
Identify which of the following statements is true.

16)
Trail Corporation has gross profits on sales of $140,000 and deductible
expenses of $180,000. In addition, Trail has a net capital gain of $60,000.
Trail’s taxable income is

17)
Richards Corporation has taxable income of $280,000 calculated before the
charitable contribution deduction and before its dividends-received deduction
of $34,000. Richards makes cash contributions of $35,000 to charitable
organizations. What is Richards Corporation’s charitable contribution deduction
for the current year?

18)
Edison Corporation is organized on July 31. The corporation starts business on
August 10. The corporation adopts a November 30 fiscal year end. The following
expenses are incurred during the year: Date Type Amount 6-30 Attorneys fees
associated with obtaining charter $10,000 7-10 Underwriter fees for stock sale
25,000 7-15 Transfer cost for property contributed to the corporation for stock
3,000 6-30 Costs of organizational meetings 2,000 12-6 Legal fees to modify
charter 4,000 What is the maximum amount of organizational expenditures that
can be deducted by the corporation for its first tax year ending November 30?

19)
Which of the following items are tax preference items for purposes of arriving
at alternative minimum taxable income?

20)
Which of the following is not an adjustment in calculating AMTI?

21)
When computing a corporation’s alternative minimum taxable income, its taxable
income is

22)
Boxer Corporation buys equipment in January of the current year with a 7-year
class life for $15,000. The corporation expensed the $15,000 under Sec. 179.
The deduction in the year of purchase for E&P purposes due to the
acquisition and expensing of the equipment is

23)
For purposes of determining current E&P, which of the following items
cannot be deducted in the year incurred?

24)
Identify which of the following increases Earnings & Profits

25)
Identify which of the following statements is true

26)
Poppy Corporation was formed 3 years ago. Poppy’s E&P history is as
follows: Year Current E&P Distributions 2005 $6,000 $4,000 2006 5,000 1,000
2007 1,000 -0- Poppy Corporation’s accumulated E&P on January 1 will be
27)
Identify which of the following statements is true

28)
Hogg Corporation distributes $30,000 to its sole shareholder, Ima. At the time
of the distribution, Hoggs’ E&P is $14,000 and Ima’s basis in her stock is
$10,000. Ima’s gain from this transaction is

29)
Wills Corporation, which has accumulated and current E&P totaling $65,000,
distributes land to its sole shareholder, an individual. The land has a FMV of
$75,000 and an adjusted basis of $55,000. The shareholder assumes a $15,000
liability associated with the land. The shareholder will recognize

30)
Crossroads Corporation distributes $60,000 to its sole shareholder Harley.
Crossroads has earnings and profits of $55,000 and Harley’s basis in her stock
is $20,000. After the distribution, Harley’s basis is

31)
Joshua owns 100% of Steeler Corporation’s stock. Joshua’s basis in the stock is
$8,000. Steeler Corporation has E&P of $40,000. If Steeler Corporation
redeems 60% of Joshua’s stock for $50,000, Joshua must report dividend income
of

32)
Which of the following is not a reason for a stock redemption?

33)
Which of the following is not a condition that permits a stock redemption to be
treated as a sale?

34)
The definition of a partnership does not include

35)
Identify which of the following statements is true

36)
Which one of the following individuals or entities is ineligible to be an S
corporation shareholder?

37)
Identify which of the following statements is true.
38)
In computing the ordinary income of a partnership, a deduction is allowed for
39)
Cactus Corporation, an S Corporation, had accumulated earnings and profits of
$100,000 at the beginning of 2008. Tex and Shirley each own 50% of the stock.
Cactus does not make any distributions during 2008, but had $200,000 of
ordinary income. In 2009, ordinary income was $100,000 and distributions were
$100,000. What is Tex’s ordinary income for 2009?

40)
Identify which of the following statements is true.

41)
On the first day of the partnership’s tax year, Karen purchases a 50% interest
in a general partnership for $30,000 cash and she materially participates in
the operation of the partnership for the entire year. The partnership has
$40,000 in recourse liabilities when Karen enters the partnership. Partners
share the economic risk of loss from recourse liabilities in the same way they
share partnership losses. There is no minimum gain related to the nonrecourse
liability. During the year the partnership incurs a $120,000 loss and a $20,000
increase in liabilities. How much of the loss can Karen report on her tax
return for the current year?

42)
George pays $10,000 for a 20% interest in a general partnership which has
recourse liabilities of $20,000. The partners share the economic risk of loss
from recourse liabilities in the same way they share partnership losses.
George’s basis in his partnership interest is

43)
Identify which of the following statements is true

44)
Identify which of the following statements is true

45)
For purposes of Sec. 751, inventory includes all of the following EXCEPT

46)
Identify which of the following statements is false

47)
Identify which of the following statements is true

48)
On June 30 of the current year, the S election of Great Corporation is
terminated thus creating a 6-month S short year and a 6-month C short year.
Great Corporation is a calendar-year taxpayer. The S short year return is due