Shared Flashcard Set

Details

Taxation-II
Taxation for business entities
16
Accounting
Graduate
08/02/2016

Additional Accounting Flashcards

 


 

Cards

Term
Organizational Expenditures
Definition
When formed, a corporation may incur some organizational expenditures such as legal fees and accounting fees incident to the incorporation process. These expenditures normally must be capitalized
Term
Section 291 results in the recapture, as ordinary income, of up to ___% of the gain on sales of Sec. 1250 property. This recapture requirement reduces the amount of net Sec.1231 gains that can be offset by corporate capital losses.
Definition
20%
Term
under Sec. 248, a corporation may elect to deduct the first $_______ of organizational expenditures
Definition
$5,000
Term
Sigma incurs $52,000 of organizational expenditures. Because these expenditures exceed $_______, Sigma must reduce the first $5,000 by $2,000 ($52,000 − $50,000), leaving a $3,000 deduction. Sigma amortizes the remaining $49,000 ($52,000 − $3,000) over 180 months beginning in March of its first year. This portion of the deduction equals $1,906 ($49,000/180 × 7 months). Accordingly, its total first-year deduction is $4,906 ($3,000 + $1,906).
Definition
$50,000
Term
Specific organizational expenditures include:
Definition
-Legal services incident to the corporation’s organization (e.g., drafting the corporate charter and bylaws, minutes of organizational meetings, and terms of original stock certificates)
-Accounting services necessary to create the corporation
-Expenses of temporary directors and of organizational meetings of directors and stockholders
Fees paid to the state of incorporation
Term
Organizational expenditures DO NOT include
Definition
expenditures connected with issuing or selling the corporation’s stock or other securities (e.g., commissions, professional fees, and printing costs) and expenditures related to the transfer of assets to the corporation.
Term
Start-up expenditures are:
Definition
ordinary and necessary business expenses paid or incurred by an individual or corporate taxpayer
-To investigate the creation or acquisition of an active trade or business
-To create an active trade or business
-To conduct an activity engaged in for profit or the production of income before the time the activity becomes an active trade or business
Term
f a corporation accrues an obligation to pay compensation, the corporation must make the payment within
Definition
2½ months after the close of its tax year. Otherwise, the deduction cannot be taken until the year of payment
Term
Accrued charitably expenses are allowed if:
Definition
-The board of directors authorizes the contribution in the year accrued
-The corp pays the contribution on or before the 15th day of the 3rd month of the following year.
Term
ordinary income property is
Definition
property whose sale would have resulted in a gain other than a long-term capital gain (i.e., ordinary income or short-term capital gain).
Term
Examples of ordinary income property include
Definition
investment property held for one year or less, inventory property, and property subject to depreciation recapture under Secs. 1245 and 1250
Term
The deduction allowed for a donation of such property is limited to the property’s ...
Definition
FMV minus the amount of ordinary income or short-term capital gain the corporation would have recognized had it sold the property.
Term
Section 170(f)(11) imposes substantiation requirements for noncash charitable contributions
Definition
If the contribution deduction exceeds $500, the corporation must include with its tax return a description of the property and any other information required by Treasury Regulations.
If the contribution deduction exceeds $5,000, the corporation must obtain a qualified appraisal and include with its tax return any information and appraisal required by Treasury Regulations.
If the contribution deduction exceeds $500,000, the corporation must attach a qualified appraisal to the tax return.
Term
Contribution deductions by corporations are limited to
Definition
10% of adjusted taxable income
Term
Adjusted taxable income is the corporation’s taxable income computed without regard to any of the following amounts:
Definition
The charitable contribution deduction
An NOL carryback
A capital loss carryback
The dividends-received deduction
The U.S. production activities deduction
Term
Contributions that exceed the 10% limit are not deductible in the current year. Instead, they carry forward to the next.....
Definition
Five tax years.
Any excess contributions not deducted within those five years expire.
Supporting users have an ad free experience!