Question

Similar to individuals, corporations are not subject to any limitations relating to the carryforward of unused net capital losses.

True or False

All-Star Corporation has a net operating loss in 2018. It can carry the loss back to the previous two years, starting with 2016.

True or False

Lansing, Inc. incurred a net operating loss of $10,000,000 in 2018. Lansing, Inc. reports $10,000,000 of taxable income before any NOL carryover in 2019. Lansing, Inc. can offset all of its 2019 taxable income with the 2018 NOL carryover.

True or False

All taxable corporations are required to file a Schedule M-3 with their tax returns.

True or False

Boise Corporation has gross receipts according to the following schedule:

Year 1	$23 million
Year 2	$22 million
Year 3	$25 million
Year 4	$27 million
Year 5	$28 million
Year 6	$27 million

If Boise began business as a cash-method corporation in Year 1, in which year would it first have been required to use the accrual method?

Multiple Choice

Year 3

Year 4

Year 5

Year 6

None of the choices are correct.

Which of the following does not create a permanent book-tax difference?

Multiple Choice

Federal income tax expense.

Municipal bond interest income.

Charitable contributions in excess of the 10% of taxable income limitation.

Fines and penalties.

Ski Inc. owns 30 percent of Snow Inc., both of which are domestic C corporations. Snow pays Ski a dividend of $20,000 in 2018. What is the amount of Ski’s dividend’s received deduction, assuming the taxable income limitation does not apply?

Multiple Choice

$0

$10,000

$13,000

$20,000

None of the choices are correct.

Answer 1

1) Solution: False

Explanation: Corporations are subject to the limitations in regard to the carryforward of unused net capital losses

2) Solution: True

Explanation: Corporation can carry the loss back to the previous two years

3) Solution: True

Explanation: Corporation can carry the loss back to the previous two years

4) Solution: False

Explanation: The taxable corporations are not mandated to file a Schedule M-3 with their tax returns

5) Solution: Year 6

Explanation: The gross receipts start falling from Year 6

6) Solution: Charitable contributions in excess of the 10% of taxable income limitation

Explanation: Excess charitable contributions may be carried forward a period of 5 years. If applied, the temporary book-tax difference will reverse

7) Solution: 16,000

Explanation: Since Ski owns 30% of the stock of Snow Inc thus is entitled to an 80% dividends reduction thus amount equals $16,000 (= $20k*80%)