Download Corporations: Special Situations, Examination Questions | ACC 334.00 and more Exams Business Taxation and Tax Management in PDF only on Docsity! Corporations: Special Situations 3-1 Caroline Craig Acc 334 CHAPTER 3 CORPORATIONS: SPECIAL SITUATIONS EXAMINATION QUESTIONS ____1. A large NOL carryover from a prior year when combined with large QPAI for the current year may substantially increase a corporation’s DPAD for the current year. ____2. DPAD decreases as the cost of manufacturing a product increases. 3. For 2008, Cedar Corporation has QPAI of $2 million, TI of $2.5 million, and qualified W-2 wages of $200,000. Its DPAD is: a. $0. b. $100,000. c. $120,000. d. $150,000. e. None of the above. 4. Hemlock Corporation, a calendar year taxpayer, has the following results for 2008: QPAI of $4 million; TI of $3.1 million; and qualified W-2 wages of $2.5 million. Not included in TI is an NOL carryover of $1 million from 2007. Hemlock’s DPAD for 2008 is: a. $246,000. b. $240,000. c. $186,000. d. $126,000. e. None of the above. 5. In 2008, Sequoia, Inc. has QPAI of $2.2 million and taxable income of $1.7 million. Due to outsourcing, much of its work is by independent contractors, so its W-2 wage base relating to domestic production activities is $100,000 with another $50,000 of salaries related to its nonproduction activities. Sequoia’s DPAD for 2008 is: a. $50,000. b. $75,000. c. $102,000. d. $132,000. e. None of the above. 3-2 2009 Corporation Edition 6. A corporation has the following items related to the AMT. AMT Base $44,251,450 Regular tax 5,052,000 Foreign AMT tax credit 1,200,000 The corporation’s AMT, if any, is: a. $0. b. $2,598,290. c. $3,798,290. d. $7,650,290. e. None of the above. 7. In 2008, Pine Corporation (a calendar year taxpayer) had the following transactions: Taxable income $1,000,000 Mining exploration costs claimed 250,000 Percentage depletion claimed (the property had a $300,000 adjusted basis) 1,200,000 Donation of stock held since 1988 as investment (basis of $100,000 and fair market value of $200,000) to a qualified charity 200,000 For 2008, Pine Corporation’s AMTI is: a. $2,125,000. b. $2,575,000. c. $2,875,000. d. $2,900,000. e. None of the above. 8. A personal service corporation engaged in health care has $320,000 of accumulated earnings and profits at the end of 2007. During 2008, the corporation accumulated an additional $80,000 of after-tax earnings. The corporation at the end of 2008 can justify the retention of $370,000 for its reasonable needs of the business. The amount subject to the § 531 tax in 2008 is a. $30,000. b. $80,000. c. $170,000. d. $220,000. e. None of the above.
