TrueFalse 5 points eachAnswer 1 Every taxable entity must us

True/False (5 points each)-Answer 1, Every taxable entity must use a calendar fiscal year 2. \"Book income\" is the financial statement income. J. To qualifty as Section 1231 property, the property must be used in a taxpayer the property must be used in a taxpayer\'s trade or business and must be held for more than one year 4, Incentive stock options are an AMT adjustment. Personal property depreciated using straight-line depreciation is not subject to Section 1245 recapture 6, Charitable contributions are limited to 60% of for corporations. 7. Capital gains are taxed as \"capital income for corporations. 8. Capital losses can only be offset by capital gains. 9 Pederal income tax is tax deductible 10. Section 197 covers the tas issues regarding intangible assets, like goodwill. 11. A taxpayer\'s holding period is always measured from the day after the taxpayer acquires the property 12. The \"dividends received\" deduction is to offset \"triple-taxation\" 13. Section 1245 recapture does not apply to depreciable real property 4. Both C and S corporations recognize gain on the distribution of appreciated property and recognize a loss when it distributes property that has declined in value. 15. The \"dividends received\" deduction cannot create a \"net operating loss\" 16. A corporation that owns 80 % of the stock in another corporation is not taxed on the dividends it receives from the other corporatiorn. 17. Corporations can use capital losses to offset ordinary income. 18. Book income and taxable income are normally the same. 19, C corporations cannot use the cash method of accounting if their average annual taxable income for the three previous tax years exceed $5 million. 20. C Corporations must pay estimated tax payments if the previous year\'s income tax was $500 or more. 21. The differences between book income and taxable income are reconciled in Schedule M-1. 22. Large corporations (assets>$10,000,000) must use a Schedule M-3 for the income differences. 23. C Corporations do not pay Alternative Minimum Tax 24. Controlled groups must allocate tax attributes between them. 5. C Corporation must file Form 1120 to report their taxes by April 15

Solution

A 1) False

Every taxable entity must follow a fiscal year which need not necessarily be a calendar year.

A 2) True

Book income is a pre tax financial income that is reported on the financial statements.

A 3) True

A \"sec 1231 property is a category of property defined in sec 1231 of the U.S. IRC. 1231 property includes depreciable property and real property used in trade or business and held for more than one year.\"

A 4) True

If you exercise an incentive stock option & don\'t sell the share before the end of the calendar year, you will report additional income for the AMT. Hence the statement is true.