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Exam 3: Corporations: Special Situations

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Question 21

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Maize Corporation,a Miami contractor,pays Crane Engineering a fee to design bridges for a highway Maize will build in the Dominican Republic.The fee Crane receives is DPGR.

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Question 22

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A positive ACE adjustment is beneficial to a corporation.

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Question 23

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Which,if any,of the following is a characteristic of the DPAD?

Once a small corporation for AMT purposes,always a small corporation.

The domestic production activities deduction is limited to corporations.

In the case of corporations that are members of an expanded affiliated group (EAG),the DPAD is determined by treating the group as a single taxpayer.

NOLs are negative adjustments.

The ACE adjustment cannot be negative.

Which of the following items will be an addition to AMTI in arriving at ACE?

Which statement is false?

Under some circumstances,the sale of prepared food at a taxpayer's retail facility can qualify as DPGR.

Owl Corporation,a calendar year taxpayer,has a beginning balance in accumulated E & P of $3.5 million and current earnings of $1 million.If Owl can justify accumulations for the needs of the business of $3.7 million,its accumulated earnings credit for ATI purposes is:

In the case of an individual,modified AGI is substituted for taxable income in the DPAD formula.

Cordinal,Inc.engages in production activities that generate QPAI of $460,000 and taxable income (without taking into account the DPAD and NOL)of $600,000 in 2010.The company also has an NOL carryover to 2010 of $500,000 and qualified W-2 wages of $300,000.Calculate any DPAD.

Rose Corporation sells customized outdoor grills.It purchases various parts and materials from foreign sources for $500 and incurs $160 in labor costs at a factory in South Carolina to fabricate and assemble the product.Rose also incurs packaging,selling,and other costs of $40 and sells the grill for $800.If tax year 2010 is involved,calculate Rose's per unit:

Which of the following items will have an effect (add or subtract) on unadjusted AMTI to arrive at ACE?

In connection with the construction of a housing project,a contractor pays an architect to design the homes being built.The architect's fee is an embedded service that does not qualify as DPGR.

A small corporation with unused minimum tax credits may use what percentage of regular tax as a minimum credit in 2010?

As taxable income is reduced by an NOL carryback,there is a corresponding increase in the DPAD.

Tanver Corporation,a calendar year corporation,has alternative minimum taxable income of $7 million in 2010 (before adjustment for adjusted current earnings) .If Tanver's adjusted current earnings is $16 million,its tentative minimum tax for 2010 is: