1. [ 1 ] Bob and Charles, as a group, transfer a building with a basis of $100,000 to the ABC Corporation
in exchange for 66.67% of each class of stock with a fair market value of $300,000. The other 33.33%
of the stock was already issued to Alice. What is the gain, if any, that Bob, Charles, or the ABC
Corporation must recognize?
a.
b.
c.
d.
Bob and Charles, $0; ABC Corporation, $0.
Bob and Charles, $0; ABC Corporation, $300,000.
Bob and Charles, $200,000; ABC Corporation, $0.
Bob and Charles, $0; ABC Corporation, $200,000.
2. [ 3 ] Mr. Smith and Mr. Jones each transfer property with a basis of $10,000 to a corporation in
exchange for stock with a fair market value of $30,000. The total stock received by them represents
75% of each class of stock of the corporation. The other 25% of each class of stock was issued earlier
to Mr. Brown, an unrelated person. The taxable consequences are
a.
b.
c.
d.
None because it is transfer of property for stock.
Mr. Smith and Mr. Jones each recognize a gain of $20,000.
Mr. Smith and Mr. Jones each recognize a gain of $30,000.
80% of the transaction is recognized as a taxable gain.
3. [ 7 ] Pietro transfers property worth $50,000 to Vino, Inc., and also provides personal services worth
$5,000 in exchange for stock valued at $55,000. Immediately after the exchange, Pietro owns 90% of
Vino’s outstanding stock. What is Pietro’s income recognition, if any?
a.
b.
c.
d.
$55,000 capital gain, $0 ordinary income.
$0 capital gain, $5,000 ordinary income.
$0 capital gain, $5,000 ordinary income.
$5,000 capital gain, $0 ordinary income.
4. (HW) In exchange for Buc Corporation stock, Trent performed legal services for Buc valued at
$14,000 and paid Buc $36,000 cash. The stock received by Trent had a fair market value at the time
of the exchange of $50,000. What is the amount of Trent's recognized gain from this exchange?
a.
b.
c.
d.
$50,000
$36,000
$14,000
$0
5. [ 18 ] Shelly transferred property having an adjusted basis to her of $40,000 and a fair market value
of $54,000 to DLW Corporation. In exchange for the property, she received $12,000 cash and 100%
of DLW’s only class of stock. If the stock received by Shelly had a fair market value of $42,000 at the
time of the transfer, what is the amount of her recognized gain?
a.
b.
c.
d.
$0
$12,000
$14,000
$42,000
6. [ 34 ] In 2017, Pine Corporation had losses of $20,000 from operations. It received $180,000 in
dividends from a 25%-owned domestic corporation. Pine’s taxable income is $160,000 before the
dividends-received deduction. What is the amount of Pine’s dividend-received deduction for 2017?
a.
b.
c.
d.
$0
$144,000
$128,000
$180,000
7. [ 31 ] Corporation ZAM, a calendar-year corporation, started business on May 1 of the current year.
The corporation incurred the following expenses relating to the organization of the business:
Fee paid to state for incorporation
$3,600
Legal fees for drafting corporation charter and bylaws
9,600
Cost of printing stock certificates
2,400
Commission expense on sale of stock
4,600
Expenses of temporary directors
4,800
If Corporation ZAM elects to amortize all of its organizational expenses, what is its maximum
allowable amortization for the year?
a.
b.
c.
d.
$160
$750
$800
$1,200
8. [ 29 ] The Lux Corporation incurred $10,000 in start-up costs when it opened for business in 2017.
What is the minimum amortization period over which these expenses can be recovered?
a.
b.
c.
d.
12 months
36 months
60 months
180 months
9. [ 40 ] Which of the following statements concerning the charitable contribution deduction by a
corporation is true?
a. A corporation cannot deduct contributions in the current year that exceed 10% of its taxable
income.
b. A corporation can deduct contributions to charitable organizations only if they are made in cash.
c. A corporation using the accrual basis of accounting must have made the charitable donation by
the close of its tax year.
d. A corporation is not permitted to carry over any charitable contributions that were not
deducted in the current year.
10. [ 48 ] For the current year, accrual-basis Corporation A’s books and records reflected the following:
Net income per books
$104,000
Accrued federal income tax – estimated
35,000
Net capital loss
4,000
Tax-exempt interest
5,000
Book depreciation in excess of allowable tax depreciation
2,000
Based on the above facts, what is the amount of Corporation A’s taxable income?
a.
b.
c.
d.
$69,000
$70,000
$140,000
$150,000