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    Exam 3 Fall 2015 Practice Questions

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    Minh Nguyễn
    In periods subsequent to acquisition and in the absence of intercompany profits or other complicating transactions

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    Exam 3 Fall 2015 Practice Questions

    Uploaded by

    Minh Nguyễn
    210 views3 pages
    In periods subsequent to acquisition and in the absence of intercompany profits or other complicating transactions

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    In periods subsequent to acquisition and in the absence of intercompany profits or other complicating transactions

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    210 views3 pages

    Exam 3 Fall 2015 Practice Questions

    Uploaded by

    Minh Nguyễn
    In periods subsequent to acquisition and in the absence of intercompany profits or other complicating transactions

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Tax 4001

    Fall 2015
    Exam 3 Practice Questions
    Hampton
    1. Which of the following (a-c) is not correct with respect to limited liability companies?
    a. An advantage of an LLC when compared to a C corporation is the ability to
    pass tax attributes through to the owners.
    b. A disadvantage of a partnership when compared with an LLC is the inability of
    all the owners to have limited liability.
    c. An LLC has greater flexibility than does an S Corporation in terms of the
    number of owners, type of owners, special allocation opportunities and capital
    structure.
    d. All of the above (a-c) are correct.
    e. None of the above (a-c) is correct.
    2. Maize Corporation had net operating income of $450,000 for 2015. In addition,
    Maize owns 50% of the stock in Blue Corporation and Blue Corporation paid Maize a
    dividend of $150,000. Maize has no other items of income and expense for the year.
    Compute Maize Corporations taxable income.

    3. Kristy and Karla are equal partners in K&K Partnership. On January 1, 2015, each
    partners adjusted basis in K&K was $120,000. During 2015, K&K borrowed $180,000
    (recourse debt). Also, during 2015, K&K had an ordinary loss of $30,000; and a Net
    Long Term Capital Gain of $10,000. Considering these activities, compute each
    partners basis in her partnership interest at 12/31/2015.

    4. Carole is a partner in CDE partnership. Her allocable share of CDEs passive


    ordinary losses from a non-realty activity for 2015 is ($40,000). Caroles basis in her
    CDE partnership (before consideration of the loss) is $30,000. Her amount at-risk is
    $25,000. She also has $50,000 of passive income from other sources. How much of
    her allocated loss can she deduct in 2015?

    5. Which of the following (a-d), if any, is an eligible S Corporation shareholder?


    a.
    b.
    c.
    d.
    e.

    A resident alien.
    A Partnership.
    A Foreign corporation.
    A nonqualifying trust.
    None of the above (a-d) is an eligible S Corporation shareholder.

    6. Which of the following items (a-d) is not separately stated on an S Corporations


    Schedule K?
    a.
    b.
    c.
    d.
    e.

    Interest Income.
    Advertising expenses.
    Foreign taxes paid.
    Section 1231 gain.
    All of the above (a-d) are separately stated.

    7. Manning Corporation, a personal service corporation, reported the following items of


    income and expense for 2015:
    Gross Profit
    $1,250,000
    Dividends Received (from < 20% owned Domestic corps)
    150,000
    U.S. Treasury Bond Interest
    25,000
    LTCG
    60,000
    STCL
    15,000
    City of Indianapolis Bond Interest
    20,000
    Officer Salary
    150,000
    Salary Expense
    610,000
    Bad Debt Write-Offs
    75,000
    Change in Balance of Allow for Doubtful Accts
    +9,000
    Book Depreciation Expense
    35,000
    MACRS Depreciation Expense
    59,000
    Charitable Contributions
    45,000
    Key-Man Life Insurance Premiums
    12,000
    Other Expenses
    170,000
    Dividends Paid/Distributions to Owners
    50,000
    A. Compute Manning's 2015 C Corp Taxable Income.
    B. Assume instead that Manning is a Partnership with two equal partners, Eli and
    Peyton. Also assume that the Officer Salary is instead guaranteed payments of
    $100,000 to Peyton and $50,000 to Eli; and that in addition each partner received a
    $25,000 distribution from the partnership. Determine the Partnerships Ordinary Income
    and Separately Stated Items. Also indicate how much income Peyton would report on
    his individual income tax return as a result of partnership activities.
    C. Assume instead that Manning Corporation is an electing S Corporation owned 100%
    by Peyton, whose basis in his shares is $120,000 at 1/1/2015. Determine the S
    Corporations Ordinary Income and separately-stated items, and Peytons 12/31/2015
    basis for his S Corporation Shares.

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