A corporation may alternate between S corporation and C corporation status each year depending on which results in more tax savings.
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A corporation may alternate between S corporation and C corporation status each year depending on which results in more tax savings.
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- In appropriate situations the IRS may assert That the Corporation be disregarded as a sham or nominee That income reported by the Corporation belongs on the shareholder’s personal Form 1040 Schedule C under the assignment of income principles. Income is reallocated under §482 to unrelated organizations Tax benefits may be denied under §269 if control of a Corporation is acquired for a purpose of avoiding federal income tax. All of the above All of the above except C All of the above except D All of the above except C & DHana has prepared the following list of statements about corporations. Identify each statement as true or false. 1. A corporation is an entity separate and distinct from its owners. 2. As a legal entity, a corporation may buy, own, and sell property: borrow money; and enter into legally binding contracts. 3. Shareholders have the right to vote, and to receive dividends on an annual basis. 4. The profit of a corporation is not taxed as a separate entity. 5. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. 6. Ina public company, the transfer of shares from one owner to another requires the approval of either the corporation or other shareholders. The board of directors of a corporation is elected by the shareholders. 7. 8. Corporations are subject to fewer provincial and federal regulations than partnerships or proprietorships. > >Which of the following factors does the IRS consider irrelevant when determining reasonable compensation for a shareholder-employee of an S corporation? Timing and manner of paying bonuses to key people. Dividend history. Consistent amount of compensation year after year. Compensation agreements.
- Which of the following entities is taxed as a C corporation and will file Form 1120, U.S. Corporation Income Tax Return? (a) Kenneth, Inc., a pass-through entity taxed at the shareholder level. (b) Plushpuppies, Inc., which has made a valid subchapter S election. (c) Minors Financial, an unincorporated organization formed in 1995. Minors has been filing as a corporation since 1995. (d) Rescue Dogs, Inc., which has been recognized as a tax-exempt organizationCredits are more valuable than deductions to a corporation because O only 50% of all deductions may be subtracted. deductions only apply to interest received on a municipal bond. O deductions are subtracted from income tax expense. credits are subtracted after the income tax expense has been computed. O credits are more valuable because they are the expenses of operating a business.Corporations taxed as S corporations offer the same legal protection to owners as corporations taxed as C corporations. True or false
- Which of the following statements is true regarding the calculation of a C corporation's taxable income and tax liability? A. Business bad debts are allowed as an ordinary business deduction if the direct write-off method is used. B. Charitable contributions are considered a special deduction rather than part of ordinary business deductions. C. The foreign tax credit is applied to taxable income before multiplying by the tax rate to determine gross tax liability. D. The dividends received deduction is used to determine income before NOL and special deductions. 2. As the result of an IRS audit of a C corporation and its sole shareholder, the IRS agent proposes that a portion of the shareholder's salary is unreasonable. Because the corporation has significant earnings and profits, the agent has determined that the unreasonable portion of the salary is a dividend. Which of the following is correct regarding the impact of the proposed adjustment to both the…PC:5-25 (similar to) Quest In the current year, Murray Corporation is deemed to be a PHC and reports the following results: E (Click the icon to view the results.) Read the requirements. Requirement a. What is Murray's regular tax liability (ignoring any AMT implications)? Requirements Murray's regular income tax liability is Data Table a. What is Murray's regular tax liability (ignoring any AMT implications)? b. What is Murray's PHC tax liability? с. What measures can Murray take to eliminate its PHC tax liability after year-end and before it files its tax return? After it files its tax return? Taxable income $ 210,000 Dividend received from an 18%-owned domestic corporation 45,000 Print Done Dividends paid in the sixth month of the current year 20,0001st statement Government owned and controlled corporation are exempt from tax. 2nd statement Tax liabilities of a corporation will not extend to the stockholders as a rule. True, True False, False False, True True, False
- Shareholders in a corporation are obligated to pay income tax twice on one stream of income in a process called double taxation. Other than personal income taxes, which type of tax must shareholders pay? a) Self Employment Tax b) Corporate Dividend Tax c) Federal Income Tax d) Capital Gains TaxWhich of the following describes when a corporation pays income tax on its profits, and when the corporation distributes the after-tax profits as dividends, the shareholders may tax on the dividends? Multiple Choice Shareholder taxation International double taxation Federal income taxation Double taxation
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