Week 5: Homework
Chapter 14
1. Please explain how Charitable Contributions come into play in determining "Corporate" taxable income. (5 pts)
In order to determine what your taxable income may be, you must first determine your charitable contribution donation. The deduction of charitable contributions is dependent upon what type of property is donated, when it was donated, and who it was donated to, as well as the corporation’s adjusted taxable income. The maximum deduction amount is 10 percent of the corporation’s adjusted taxable income.
(2014 CCH Federal Taxation: Comprehensive Topics, 2013)
2. What happens to a loss on the Corporate Tax Return (Form 1120)? Does it pass through to the shareholders? Is it available for future or past periods? Please explain in detail. (5 pts.)
Corporations may claim capital losses against their capital gains. Net capital losses can be carried back three preceding tax years to offset capital gains in those years. If some loss remains, then it is carried forward for period of five tax years. Unused losses at the end of the five-year period are lost forever.
(2014 CCH Federal Taxation: Comprehensive Topics, 2013)
3. Please describe the purpose of Schedules M-1 and M-3. When is a Schedule M-3 required in lieu of a Schedule M-1. (5 pts.)
Schedule M-1 and M-3 is attached to Form 1120. Schedule M-1 is the Reconciliation of Income (Loss) per books with Income Per Return; this schedule is needed when net income differs from taxable income that was reported on the return. Schedule M-3 Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 million or more is required of large and midsize corporations in lieu of Schedule M-1.
(2014 CCH Federal Taxation: Comprehensive Topics, 2013)
Chapter 17
4. Please define and differentiate a Spin-off, Split-off, and Split-up. ( 5 pts.)
A spin-off is when a corporation transfers one of its businesses to a newly formed subsidiary in exchange for its stock.
A split-off is similar to
1. Please explain how Charitable Contributions come into play in determining "Corporate" taxable income. (5 pts)
In order to determine what your taxable income may be, you must first determine your charitable contribution donation. The deduction of charitable contributions is dependent upon what type of property is donated, when it was donated, and who it was donated to, as well as the corporation’s adjusted taxable income. The maximum deduction amount is 10 percent of the corporation’s adjusted taxable income.
(2014 CCH Federal Taxation: Comprehensive Topics, 2013)
2. What happens to a loss on the Corporate Tax Return (Form 1120)? Does it pass through to the shareholders? Is it available for future or past periods? Please explain in detail. (5 pts.)
Corporations may claim capital losses against their capital gains. Net capital losses can be carried back three preceding tax years to offset capital gains in those years. If some loss remains, then it is carried forward for period of five tax years. Unused losses at the end of the five-year period are lost forever.
(2014 CCH Federal Taxation: Comprehensive Topics, 2013)
3. Please describe the purpose of Schedules M-1 and M-3. When is a Schedule M-3 required in lieu of a Schedule M-1. (5 pts.)
Schedule M-1 and M-3 is attached to Form 1120. Schedule M-1 is the Reconciliation of Income (Loss) per books with Income Per Return; this schedule is needed when net income differs from taxable income that was reported on the return. Schedule M-3 Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 million or more is required of large and midsize corporations in lieu of Schedule M-1.
(2014 CCH Federal Taxation: Comprehensive Topics, 2013)
Chapter 17
4. Please define and differentiate a Spin-off, Split-off, and Split-up. ( 5 pts.)
A spin-off is when a corporation transfers one of its businesses to a newly formed subsidiary in exchange for its stock.
A split-off is similar to