ACCT 2148-In 2015, Apricot Corporation had taxable income

1.In 2015, Apricot Corporation had taxable income of $120,000. Included in taxable income was a $10,000 capital gain. The $120,000 of taxable income does not include a $15,000 capital loss carryforward available from the previous year. What is Apricot Corporation's 2015 income tax liability before any tax credits?

a.

$24,200

b.

$26,150

c.

$28,550

d.

$30,050

e.

None of the above

2. For the year ended December 31, 2015, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items:

Interest income on tax-exempt municipal securities$30,000

Loss on sale of land acquired in 1985 as an investment$40,000

Interest expense on loan to purchase tax-exempt municipal securities $10,000

What is the taxable income of Prunus, Inc. for 2015?

a.

$800,000

b.

$820,000

c.

$830,000

d.

$870,000

e.

None of the above

3. Which of the following items isnot generally a schedule M-1 adjustment?

a.

Net capital losses

b.

Interest on tax-exempt bonds

c.

Federal income tax expense

d.

Interest expense on a loan to purchase municipal bonds

e.

All of the above are M-1 adjustments

4. Terry forms the Camphor Corporation during 2015. She transfers property with a value of $700,000 to Camphor Corporation in exchange for 100 percent of the stock in the corporation. Terry's basis in the property transferred was $400,000 and the corporation assumed a $275,000 mortgage on the property. If the fair market value of the stock received by Terry is $450,000, what is the corporation's basis in the property received from Terry?

a.

$125,000

b.

$275,000

c.

$400,000

d.

$450,000

e.

$700,000

5. The Sapote Corporation is a manufacturing corporation. The corporation has accumulated earnings of $450,000 and the corporation cannot establish a reasonable business need for any of that amount. What is the amount of the accumulated earnings tax, if any, that will be imposed on the corporation?

a.

$45,000

b.

$30,000

c.

$50,000

d.

$76,000

e.

None of the above