Corporate Tax in the United States
• Question 1
1 out of 1 points Schedule M-2 is used to reconcile unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at the end of the year.
Answer
Selected Answer: True
Correct Answer: True • Question 2
1 out of 1 points For a corporation in 2012, the domestic production activities deduction is equal to 9% of the higher of (1) qualified production activities income or (2) taxable income. However, the deduction cannot exceed 50% of the W-2 wages related to qualified production activities income.
Answer
Selected Answer: False
Correct Answer: False
Response Feedback: For a corporation in 2012, the domestic production activities deduction is equal to 9% of the lower of (1) qualified production activities income or (2) taxable income. The deduction cannot exceed 50% of the W-2 wages related to qualified production activities income. • Question 3
1 out of 1 points During the current year, Violet, Inc., a closely held corporation (not a PSC), has $130,000 of passive loss, $90,000 of active business income, and $70,000 of portfolio income. How much is Violet’s taxable income for the current year?
Answer
Selected Answer:
$70,000.
Correct Answer:
$70,000.
Response Feedback: A closely held corporation that is not a PSC can deduct passive losses against active income but not portfolio income. Thus, Violet’s taxable income is $70,000 [$90,000 (active income) + $70,000 (portfolio income) – $90,000 (passive loss limited to active income)]. • Question 4
1 out of 1 points A corporation with $5 million or more in assets must file Schedule M-3 (instead of Schedule M-1).
Answer
Selected Answer: False
Correct Answer: False
Response Feedback: A corporation with $10 million or more in assets must file Schedule M-3 (instead of Schedule M-1). • Question 5
0 out of 1 points During the current year, Thrasher, Inc., a closely held
1 out of 1 points Schedule M-2 is used to reconcile unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at the end of the year.
Answer
Selected Answer: True
Correct Answer: True • Question 2
1 out of 1 points For a corporation in 2012, the domestic production activities deduction is equal to 9% of the higher of (1) qualified production activities income or (2) taxable income. However, the deduction cannot exceed 50% of the W-2 wages related to qualified production activities income.
Answer
Selected Answer: False
Correct Answer: False
Response Feedback: For a corporation in 2012, the domestic production activities deduction is equal to 9% of the lower of (1) qualified production activities income or (2) taxable income. The deduction cannot exceed 50% of the W-2 wages related to qualified production activities income. • Question 3
1 out of 1 points During the current year, Violet, Inc., a closely held corporation (not a PSC), has $130,000 of passive loss, $90,000 of active business income, and $70,000 of portfolio income. How much is Violet’s taxable income for the current year?
Answer
Selected Answer:
$70,000.
Correct Answer:
$70,000.
Response Feedback: A closely held corporation that is not a PSC can deduct passive losses against active income but not portfolio income. Thus, Violet’s taxable income is $70,000 [$90,000 (active income) + $70,000 (portfolio income) – $90,000 (passive loss limited to active income)]. • Question 4
1 out of 1 points A corporation with $5 million or more in assets must file Schedule M-3 (instead of Schedule M-1).
Answer
Selected Answer: False
Correct Answer: False
Response Feedback: A corporation with $10 million or more in assets must file Schedule M-3 (instead of Schedule M-1). • Question 5
0 out of 1 points During the current year, Thrasher, Inc., a closely held