ACC 317 Week 6 Quiz 2

This pack of ACC 317 Week 6 Quiz 2 contains the answers on:

1. Distributions by a corporation to its shareholders are presumed to be a dividend unless the parties can prove otherwise.
a. True
b. False

2. A distribution from a corporation will be taxable to the recipient shareholders only to the extent of the corporationsE & P.
a. True
b. False

3. Distributions that are not dividends are a return of capital and decrease the shareholders basis.
a. True
b. False

4. Cash distributions received from a corporation with a positive balance in accumulated E & P at the beginning of the year will be taxed as dividend income.
a. True
b. False

5. A distribution in excess of E & P is treated as capital gain by shareholders.
a. True
b. False

6. The terms earnings and profits and retained earnings are identical in meaning.
a. True
b. False

7. To determine E & P, some (but not all) previously excluded income items are added back to taxable income.
a. True
b. False

8. When computing E & P, taxable income is not adjusted for 179 expense.
a. True
b. False

9. When computing current E & P, taxable income must be adjusted for the deferred gain in a 1031 like kindexchange.
a. True
b. False

10. An increase in the LIFO recapture amount must be added to taxable income to determine E & P.
a. True
b. False

11. Use of MACRS cost recovery when computing taxable income does not require an E & P adjustment.
a. True
b. False

12. No E & P adjustment is required for regular tax gains under the installment method.
a. True
b. False

13. A corporation borrows money to purchase State of Texas bonds. The interest on the loan has no impact on either taxable income or current E & P.
a. True
b. False

14. Federal income tax paid in the current year must be subtracted from taxable income to determine E & P.
a. True
b. False

15. To determine current E & P, taxable income must be increased for any domestic production activities deduction.
a. True
b. False