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advanced tax c with 100- correct answers.
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Catamount Company had current and
accumulated E&P of $500,000 at December
31, 20X3. On December 31, the company
made a distribution of land to its sole
shareholder, Caroline West. The land's fair
market value was $200,000 and its tax and
E&P basis to Catamount was $250,000. The
tax consequences of the distribution to
Catamount in 20X3 would be:
A) No loss recognized and a reduction in E&P
of $250,000.
B) $50,000 loss recognized and a reduction in
E&P of $250,000.
C) $50,000 loss recognized and a reduction in
E&P of $150,000.
,D) No loss recognized and a reduction in E&P
of $200,000. - answer a
Paladin Corporation had current and
accumulated E&P of $500,000 at December
31, 20X3. On December 31, the company
made a distribution of land to its sole
shareholder, Maria Mendez. The land's fair
market value was $200,000 and its tax and
E&P basis to Paladin was $250,000. Maria
assumed a liability of $25,000 attached to
the land. The tax consequences of the
distribution to Paladin in 20X3 would be:
A) No loss recognized and a reduction in E&P
of $200,000.
B) $50,000 loss recognized and a reduction in
E&P of $200,000.
C) $50,000 loss recognized and a reduction in
E&P of $225,000.
D) No loss recognized and a reduction in E&P
of $225,000. - answer D
This year Truckit reported taxable income of
$160,000 and received $20,000 of municipal
interest. Truckit paid $55,000 in
,entertainment expenses and $15,000 in fines
and penalties Truckit had $50,000 of
accumulated E&P at the beginning of the
year. What is Truckit's current E&P?
A) $180,000.
B) $142,200.
C) $110,000.
D) $76,400. - answer D
Which of the following are subtractions from
taxable income in computing current E&P?
A) Federal income taxes paid.
B) Current charitable contributions in excess
of 10 percent limitation.
C) Current year net capital loss.
D) All of the choices are subtractions from
taxable income in computing current E&P. -
answer A
Which of the following statements is not
considered a timing difference due to
separate accounting methods for taxable
income and E&P?
A) Dividends received deduction.
, B) Installment gain recognized in current
year related to a sale in a prior year.
C) Gain on sale of depreciable assets with
higher E&P basis.
D) Section 179 expense. - answer A
Which of the following stock distributions
would be tax-free to the shareholder?
A) A 2-for-1 stock split to all holders of
common stock.
B) A stock distribution where the shareholder
could choose between cash and stock.
C) A stock distribution to all holders of
preferred stock.
D) A 2-for-1 stock split to all holders of
common stock and a stock distribution to all
holders of preferred stock are tax-free to the
shareholder. - answer A
El Toro Corporation declared a common stock
distribution to all shareholders of record on
June 30, 20X3. Shareholders will receive 1
share of El Toro stock for each 2 shares of
stock they already own. Raoul owns 300
shares of El Toro stock with a tax basis of $60
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