108. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest34 Ed an individual incorporates two separate businesses that he owns by establishing two new corporations. Each corporation generates taxable income of $50 000. Each corporation will have a tax liability of $7 500. a. True b. False 109. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest35 Generally corporations with no taxable income must file a Form 1120. a. True b. False 110. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest36 The due date (not including extensions) for filing a 2010 Federal income tax return for a calendar year C corporation (Form 1120) is April 15 2011. a. True b. False 111. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest37 For purposes of the estimated tax payment rules a “large corporation” is defined as a corporation that had an average taxable income of $1 million or more over the preceding three-year period. a. True b. False 112. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest38 Income that is included in net income per books but not included in taxable income is an addition item on Schedule M-1. a. True b. False 113. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest39 An expense that is deducted in computing net income per books but not deductible in computing taxable income is an addition item on Schedule M-1. a. True b. False 114. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest40 On December 31 2011 Flamingo Inc. a calendar year accrual method C corporation accrues a bonus of $50 000 to its president (a cash basis taxpayer) who owns 75% of the corporation’s outstanding stock. The $50 000 bonus is paid to the president on February 1 2012. For Flamingo’s 2011 Form 1120 the $50 000 bonus will be a subtraction item on Schedule M-1. a. True b. False 115. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest41 Canary Corporation which sustained a $5 000 net capital loss during the year will enter $5 000 as a addition item on Schedule M-1. a. True b. False 116. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest42 Schedule M-2 is used to reconcile unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at the end of the year. a. True b. False 117. CHAPTER 2—CORPORATIONS: INTRODUCTION AND OPERATING RULES Quest43 A corporation with $10 million or more in assets must file Schedule M-3 (instead of Schedule M-1). a. True b. False
