ACC 4250
Corporate Assignment
Part I
Yves Bofossa

True or False

1. It is possible for a trust managed by a trustee to be treated as a corporation for income tax purposes. Answer: False

2. If the taxpayer creates a legal corporation under state law, the government cannot disregard the entity and tax the taxpayer on the income. Answer: False

3. Generally, corporate taxable income is more closely related to accounting income than individual taxable income is related to accounting income. Answer: False

4. Corporations should try to reclassify initial expenditures as expenses other than organization costs because organization costs do not give rise to any tax benefit. Answer: False

5. A corporation is not allowed a dividends-received deduction in computing its net operating loss for any given year. Answer: False

6. A corporation’s annual charitable contribution deduction is limited to 10 percent of its taxable income without reduction for charitable contributions, the dividends -received deduction, net operating loss carrybacks, and capital loss carrybacks.
Answer: True

7. Capital losses are more advantageous to corporations than individuals because there is a three year carry back for corporations but no carry back for individuals.
Answer: False

8. Corporations compute gains and losses on the sale of depreciable property in the same way as individuals. Answer: False

9. An accrual basis corporation must use the cash method in claiming deductions for amounts paid to its sole shareholder, who is an individual on the cash method.
Answer: False

10. Generally, corporations pay a lower marginal tax rate than individuals pay.
Answer: True

11. Corporations are required to pay an alternative minimum tax at the same rate as individuals. Answer: False

12. A corporation with alternative minimum taxable income of $20,000 will be subject to