Corporate Tax in the United States Essay

1682 Words Nov 28th, 2013 7 Pages
• 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
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• Question 8
1 out of 1 points Red Corporation, which owns stock in Blue Corporation, had net operating income of $200,000 for the year. Blue pays Red a dividend of $40,000. Red takes a dividends received deduction of $28,000. Which of the following statements is correct?
Answer
Selected Answer:
Red owns less than 20% of Blue Corporation.
Correct Answer:
Red owns less than 20% of Blue Corporation.
Response Feedback: Red’s dividends received deduction is 70% of the dividend received ($28,000 ÷ $40,000). The 70% dividends received deduction applies if ownership is less than 20%. • Question 9
1 out of 1 points Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2012. He also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn. How much income must Bjorn report from these businesses?
Answer
Selected Answer:
$90,000 income from the S corporation and $30,000 income from the C corporation.
Correct Answer:
$90,000 income from the S corporation and $30,000 income from the C corporation.
Response Feedback: Bjorn must report his $90,000 share ($150,000  60%) of the S corporation’s income on his individual tax return. He will report $30,000 of dividend

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