Reference no: EM131643280
Q1. In 2015, Apricot Corporation had taxable income of $120,000. Included in taxable income was a $10,000 capital gain. The $120,000 of taxable income does not include a $15,000 capital loss carry forward available from the previous year. What is Apricot Corporation's 2015 income tax liability before any tax credits?
a. $24,200
b. $26,150
c. $28,550
d. $30,050
e. None of the above
2. For the year ended December 31, 2015, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items:
Interest income on tax-exempt municipal securities $30,000
Loss on sale of land acquired in 1985 as an investment $40,000
Interest expense on loan to purchase tax-exempt municipal securities $10,000
What is the taxable income of Prunus, Inc. for 2015?
a. $800,000
b. $820,000
c. $830,000
d. $870,000
e. None of the above
3. Which of the following items is not generally a schedule M-1 adjustment?
a. Net capital losses
b. Interest on tax-exempt bonds
c. Federal income tax expense
d. Interest expense on a loan to purchase municipal bonds
e. All of the above are M-1 adjustments
4. Terry forms the Camphor Corporation during 2015. She transfers property with a value of $700,000 to Camphor Corporation in exchange for 100 percent of the stock in the corporation. Terry's basis in the property transferred was $400,000 and the corporation assumed a $275,000 mortgage on the property. If the fair market value of the stock received by Terry is $450,000, what is the corporation's basis in the property received from Terry?
a. $125,000
b. $275,000
c. $400,000
d. $450,000
e. $700,000
5. The Sapote Corporation is a manufacturing corporation. The corporation has accumulated earnings of $450,000 and the corporation cannot establish a reasonable business need for any of that amount. What is the amount of the accumulated earnings tax, if any, that will be imposed on the corporation?
a. $45,000
b. $30,000
c. $50,000
d. $76,000
e. None of the above