29 Jun Question Question 1 Chris owns 70 percent of ABC Corporation
. ABC Corporation had acquired land known as Parcel A in 1984 for $68,000 and held Parcel A for investment purposes. During the current taxable year, ABC Corporation sold Parcel A to Chris for $65,000 which amount was equal to the fair market value of Parcel A. Shortly after receiving Parcel A, Chris sold Parcel A to his friend from college for $73,000. How much gain or loss is realized and recognized by the respective parties as a result of each of the sales?
A. ABC Corporation realized a loss of $3,000 and recognized a loss of $3,000 on the distribution; Chris realized a gain of $8,000 and recognized a gain of 8,000 on the sale.
B. ABC Corporation realized a loss of $3,000 and recognized a loss of 3,000 on the distribution; Chris realized a gain of $5,000 and recognized a gain of $5,000.
C. ABC Corporation realized a loss of $3,000 and recognized a loss of 0; Chris realized a gain of $8,000 and recognized a gain of $5,000.
D. ABC Corporation realized a loss of $3,000 and recognized a loss of 0; Chris realized a gain of $5,000 and recognized a gain of$5,000.
Question 2
For the current taxable year, HIJ Inc. had gross receipts from operations of $230,000, operating and other expenses of $310,000, and $120,000 of dividends that it received from a 45 percent-owned domestic corporation. For the current taxable year, HIJ Inc. has taxable income or a net operating loss of what amount?
A. $8,000 taxable income.
B. $40,000 taxable income.
C. $56,000 net operating loss.
D. $80,000 net operating loss.
Question 3
NOP Inc. had the following income and expenses during the current taxable year. Its income from operations was $250,000, its expenses from operations were $120,000, its dividends received (from a 30 percent-owned corporation)) were $80,000, and it made cash charitable contributions of $30,000
How much is NOP Inc.’s charitable contribution deduction for the current taxable year?
A. $14,600.
B. $21,000.
C. $26,000.
D. $30,000.
Question 4
For the current taxable year, RST Inc.’s gross income from operations was $1,000,000 and its expenses from operations were $1,500,000. RST Inc. also received a $600,000 dividend from a 10 percent-owned corporation. How much is RST Inc.’s dividends-received deduction?
A. 0.
B. $70,000.
C. $320,000.
D. $420,000.
Question 5
Books and Toys Corporation, a calendar year corporation, had a net operating loss of $50,000 for 2011. Books and Toys Corporation made a proper election to forego the carryback period. For 2012, Books and Toys Corporation correctly deducted $40,000 of the 2011 loss. Books and Toys Corporation will lose the remaining $10,000 of the loss if the loss cannot be deducted by the end of which tax year?
A. 2018.
B. 2021.
C. 2026.
D. 2031.
Question 6
LMN Inc. liquidated. As part of the liquidation, one shareholder, Larry, who owned 30 percent of the stock of LMN Inc., received as a distribution in exchange for all of his stock in the corporation, inventory worth $90,000 that had a basis to the corporation of $70,000. How much gain was recognized by LMN Inc. as a result of this liquidating distribution and what was the character of the gain?
A. $0 gain.
B. $20,000 capital gain.
C. $20,000 ordinary income.
D. $20,000 Section 1231 gain.
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