A personal holding company (PHC) has a regular income of $100,000, dividend-rece

Question

A personal holding company (PHC) has a regular income of $100,000, dividend-received deductions of $10,000 and a net operating loss of $20,000. The PHC pays $5000 in foreign income taxes and $15,000 in dividends. What is its tax liability if the PHC has a tax rate of 20%?
>$22,000
>$90,000
>$110,000
>$18,000

What is a tax consequence of reorganization for the acquiring corporation?
>The holding period for property received starts the day after the exchange
>No gain or loss is reorganized when it receives cash or other boot property in exchange for its stock or debt obligations.
>The basis of the non-cash property received is recorded at its fair market value
>No gain or loss is recognized when it transfer appreciated or depreciated noncash boot property to the target corporation.

What is a strength of a spin-off divisive reorganization?
>It can be used to resolve the dispute between two distinct shareholder groups.
>It can be used to separate distinct operations when there is little goodwill
>It can be used to prevent a distinct bootstrap acquisition
>It can be used to minimize the risk associated with distinct operations.

A corporation reports taxable income of $400,000 for the year it placed equipment in service. The equipment cost $350,000. The corporation expensed the equipment under the Sec 179. For earnings and profit (E&P) purposes, the company only expensed $50,000 for the equipment. What should be the company’s current E&P after accounting for the equipment?
>$400,000
>$700,000
>$750,000
>$350,000

Explanation / Answer

1

There is typographical mistake and zero should come and as dividend are also allowed as tax deductible expenses.

2.

The holding period for property received starts the day after the exchange.

3.

It can be used to minimize the risk associated with distinct operations

4.

$400,000

Incomes Amount Expenses and losses Amount Taxable amount = income-expenses Income tax payable Net operating losss Net income tax payable Foreign income taxes regular income 100000 20000 5000 100000 0 100000 20000 20000 0

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