Corporate Taxation Paper 2

1

Bass Corp., a calendar-year C corporation, made qualifying 2012 estimated tax deposits based on its actual 2011 tax liability. On March 15, 2013, Bass filed a timely automatic extension request for its 2012 corporate income tax return. Estimated tax deposits and the extension payment totaled $7,600. This amount was 95% of the total tax shown on Bassí final 2012 corporate income tax return. Bass paid $400 additional tax on the final 2012 corporate income tax return filed before the extended due date. For the 2012 calendar year, Bass was subject to pay
I. Interest on the $400 tax payment made in 2013.
II. A tax delinquency penalty.






2

Edge Corp., a calendar-year C corporation, had a net operating loss and zero tax liability for its 2012 tax year. To avoid the penalty for underpayment of estimated taxes, Edge could compute its first quarter 2013 estimated income tax payment using the
Annualized income method
Preceding year method






3

A corporationís tax year can be reopened after all statutes of limitations have expired if
I. The tax return has a 50% nonfraudulent omission from gross income.
II. The corporation prevails in a determination allowing a deduction in an open tax year that was taken erroneously in a closed tax year.






4

A corporationís penalty for underpaying federal estimated taxes is






5

Blink Corp., an accrual-basis calendar-year corporation, carried back a net operating loss for the tax year ended December 31, 2012. Blinkís gross revenues have been under $500,000 since inception. Blink expects to have profits for the tax year ending December 31, 2013. Which method(s) of estimated tax payment can Blink use for its quarterly payments during the 2013 tax year to avoid underpayment of federal estimated taxes?
I. 100% of the preceding tax year method
II. Annualized income method






6

When computing a corporationís income tax expense for estimated income tax purposes, which of the following should be taken into account?
Corporate tax credits . . . . . .Alternative minimum tax






7

Finbury Corporationís taxable income for the year ended December 31, 2012, was $2,000,000 on which its tax liability was $680,000. In order for Finbury to escape the estimated tax underpayment penalty for the year ending December 31, 2013, Finburyís 2013 estimated tax payments must equal at least






8

Green Corp. was incorporated and began business in 2010. In computing its alternative minimum tax for 2011, it determined that it had adjusted current earnings (ACE) of $400,000 and alternative minimum taxable income (prior to the ACE adjustment) of $300,000. For 2012, it had adjusted current earnings of $100,000 and alternative minimum taxable income (prior to the ACE adjustment) of $300,000. What is the amount of Green Corp.ís adjustment for adjusted current earnings that will be used in calculating its alternative minimum tax for 2012?






9

Eastern Corp., a calendar-year corporation, was formed during 2011. On January 3, 2012, Eastern placed five-year property in service. The property was depreciated under the general MACRS system. Eastern did not elect to use the straight-line method, and elected not to use bonus depreciation. The following information pertains to Eastern:
Easternís 2012 taxable income $300,000
Adjustment for the accelerated depreciation taken on 2012 5-year property 1,000
2012 tax-exempt interest from private activity bonds issued in 2008 5,000
What was Easternís 2012 alternative minimum taxable income before the adjusted current earnings (ACE) adjustment?






10

If a corporationís tentative minimum tax exceeds the regular tax, the excess amount is






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