Week 5 : C Corporations Concluded - Homework Es Essay

Page 1




1. (TCO E) For federal tax purposes, royalty income not derived in the ordinary course of a business is classified as: (Points : 5)
      active income.
      portfolio income.
      passive income.
      None of the above


2. (TCO F) When comparing corporate and individual taxation, the following statement is true: (Points : 5)
      Unlike individual taxpayer, corporate may not have a long-term capital loss carryforward.
      Both types of taxpayers have percentage limitations on the charitable contribution deduction, coupled with a carryover of the excess contribution.
      All taxpayers may carry net operating losses back two years, forward 20 years.
      All of the above


3. (TCO H) Al and Amy file a joint return for the 2007 tax year. Their adjusted gross income is $80,000. They had net investment income of $7,000. In 2007, they had the following interest expenses:

Personal credit card interest: $4,000
Home mortgage interest: $8,000
Investment interest (on loans used to buy stocks): $10,000

What is the interest deduction for Al and Amy for the 2007 tax year? (Points : 5)
      $8,000
      $15,000
      $12,000
      $18,000


4. (TCO B) Charitable contribution deductions for cash donations made by individuals to public charities are limited to: (Points : 5)
      50% of AGI.
      40% of AGI.
      30% of AGI.
      20% of AGI.


5. (TCO A) The following taxes were paid by Tim:
Real estate taxes on his home: $2,000
State income taxes: $900
State gasoline tax (personal use of automobile): $150

In itemizing his deductions, what is the amount that Tim may claim as a deduction for taxes? (Points : 5)
      $2,000
      $2,900
      $3,050
      $0


6. (TCO F) Hoover, Inc. had gross receipts from operations of $230,000, operating and other expenses of $310,000, and dividends received from a 45 percent-owned domestic corporation of $120,000. Hoover's tax position for the...