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7 Cards in this Set

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A corporation will not be subject to the alternative minimum tax for calendar year 2005 if
A corporation is exempt from the AMT for its first tax year. After the first year, a corporation is exempt from the AMT for each year that it passes a gross receipts test. A corporation is exempt for its second year if its gross receipts for the first year did not exceed $5 million. For all subsequent years, a corporation is exempt if its average annual gross receipts for the testing period do not exceed $7.5 million. Exemption from the AMT is not based on asset size nor number of shareholders.
discuss AMTI exemption...
AMTI is offset by a $40,000 exemption. However, the exemption is reduced by 25% of AMTI over $150,000, and completely phased out once AMTI reaches $310,000.
Sec. 1244 stock permits shareholders to deduct an ordinary loss on sale or worthlessness of stock.
a. Shareholder must be the original holder of stock, and an individual or partnership
b. Stock can be common or preferred; voting or nonvoting.
c. Ordinary loss limited to $50,000 ($100,000 on joint return); any excess is treated as a capital loss.
d. The corporation during the five-year period before the year of loss, received less than 50% of its total gross receipts from royalties, rents, dividends, interest, annuities, and gains from sales or exchanges of stock or securities.
Capital losses are deductible only to the extent of ______ _____ (i.e., may not offset ordinary income).

(a) Unused capital losses are carried back ____ years and then carried forward ____ years to offset capital gains.

(b) All corporate capital loss carrybacks and carryforwards are treated as _____-____.
-capital gains
-3 years
-5 years
-short-term
1. Foreign income taxes on US taxpayers can either be deducted or used as a credit at the option of the taxpayer each year.

2. The credit is limited to the overall limitation of
TI from all foreign countries
divided by
Taxable income + Exemptions
multiplied by
(US tax – Credit for elderly)
For organizational expenditures paid after October 22, 2004, a corporation may elect to deduct up to $______ of organizational expenditures for the tax year in which the corporation begins business. The $5,000 amount must be reduced (but not below zero) by the amount by which organizational expenditures exceed $________.
-$5,000
-$50,000
>Organizational expenditures include...
>Expenditures connected with issuing or selling shares of stock, or listing stock on an exchange are neither _______.
>expenses of temporary directors and organizational meetings, state fees for incorporation, accounting and legal service costs incident to incorporation (e.g., drafting bylaws, minutes of organizational meetings, and terms of original stock certificates).
>deductible nor amortizable