1. Before the provision for Federal income tax, Karas Corporation had book income of $400,000 for...

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1. Before the provision for Federal income tax, KarasCorporation had book income of $400,000 for the current year. Thebook income included $100,000 of dividends received from a 15%owned domestic corporation. What was Karas Corporation's taxableincome for the current year?
a.$300,000
b.$335,000
c.$350,000
d.$400,000
2. Hirsch, Incorporated, is a calendar year corporation that hashad revenues of less than $500,000 since inception. In 2017, Hirschhad a net operating loss that was able to be used in full via acarryback to 2016. For 2018, Hirsch expects to have taxable incomeof $100,000. How will Hirsch avoid a penalty for underpayment ofestimated Federal taxes in the current year?
a.Hirsch must pay 100% of the tax shown on its 2018 return viaestimated taxes to avoid an underpayment penalty.
b.Hirsch must pay the amount of taxes owed on its 2017 returnvia estimated taxes to avoid an underpayment penalty.
c.Hirsch must pay 90% of the tax shown on its 2018 return viaestimated taxes to avoid an underpayment penalty.
d.Hirsch may pay the lower of the amount of taxes owed in 2017or 100% of the tax shown on the return for 2018 via estimated taxesto avoid an underpayment penalty.
3.
The dividends received deduction (DRD) is a tax deduction thatmay be taken by which of the following?
a.An individual
b.An S corporation
c.A partnership
d.A C corporation
4. In the current year, Acorn, Inc., had the following items ofincome and expense:
Sales $500,000
Cost of sales 250,000
Dividends received 25,000
The dividends were received from a corporation of which Acornowns 30%. In Acorn's current-year corporate income tax return, whatamount should be reported as income before special deductions?
a.$525,000
b.$505,000
c.$275,000
d.$250,000
5. Parent Corp. owns 40% of Sub Corp. In the current year,Parent has gross income of $43,000 and allowable deductions of$30,000 before considering any dividends received deduction (DRD).Included in the $43,000 gross income is $8,000 of dividends fromSub. What is the maximum DRD available to Parent?
a.$4,000
b.$5,200
c.$8,000
d.$8,450

Answer & Explanation Solved by verified expert

4.3 Ratings (726 Votes)

1 d 400000 As per IRS the company receiving the dividend from any other comapany will get dividend received reduction DRD based on its of holding For a company holding less than 20 holding can get 70 deduction from the dividend received Income before DRD 400000 Less DRD 70000 10000070 Income after DRD 330000 However this DRD is See Answer

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1. Before the provision for Federal income tax, KarasCorporation had book income of $400,000 for the current year. Thebook income included $100,000 of dividends received from a 15%owned domestic corporation. What was Karas Corporation's taxableincome for the current year?a.$300,000b.$335,000c.$350,000d.$400,0002. Hirsch, Incorporated, is a calendar year corporation that hashad revenues of less than $500,000 since inception. In 2017, Hirschhad a net operating loss that was able to be used in full via acarryback to 2016. For 2018, Hirsch expects to have taxable incomeof $100,000. How will Hirsch avoid a penalty for underpayment ofestimated Federal taxes in the current year?a.Hirsch must pay 100% of the tax shown on its 2018 return viaestimated taxes to avoid an underpayment penalty.b.Hirsch must pay the amount of taxes owed on its 2017 returnvia estimated taxes to avoid an underpayment penalty.c.Hirsch must pay 90% of the tax shown on its 2018 return viaestimated taxes to avoid an underpayment penalty.d.Hirsch may pay the lower of the amount of taxes owed in 2017or 100% of the tax shown on the return for 2018 via estimated taxesto avoid an underpayment penalty.3.The dividends received deduction (DRD) is a tax deduction thatmay be taken by which of the following?a.An individualb.An S corporationc.A partnershipd.A C corporation4. In the current year, Acorn, Inc., had the following items ofincome and expense:Sales$500,000Cost of sales250,000Dividends received25,000The dividends were received from a corporation of which Acornowns 30%. In Acorn's current-year corporate income tax return, whatamount should be reported as income before special deductions?a.$525,000b.$505,000c.$275,000d.$250,0005. Parent Corp. owns 40% of Sub Corp. In the current year,Parent has gross income of $43,000 and allowable deductions of$30,000 before considering any dividends received deduction (DRD).Included in the $43,000 gross income is $8,000 of dividends fromSub. What is the maximum DRD available to Parent?a.$4,000b.$5,200c.$8,000d.$8,450