C and S Corporations and Deprecation: TRUE FALSE 1. MACRS is an accelerated depr
ID: 2407016 • Letter: C
Question
C and S Corporations and Deprecation: TRUE FALSE 1. MACRS is an accelerated depreciation systems that is used to stimulate the economy by providing longer lives for depreciation items. 2. A 5-year life, $25,000 piece of equipment will be depreciated $5,000 in 2017 in its first year of depreciation if using the half year convention and did not elect bonus. 3. Without Section 351, any gain realized on the transfer of property to a corporation in exchange for stock of the corporation would be recognized. 4. Corporate distributions that exceed earnings and profits are always capital gains. 5. Amounts of the Sec. 179 election in excess of the taxable income limitation cannot be carried forward. 6. A 5-year life, $25,000 piece of equipment will be depreciated $25,000 in 2018 in its first year of depreciation if bonus is elected.. 7. To avoid the accumulated earnings tax, a corporation needs to have a definite plan for expending the accumulated earnings. 8. Under the Mid Quarter Convention, one half of the first year's depreciation is allowed in the year year in which the property is placed in service, regardless of when the property is put in service. 9. If a company purchases 35% of their personal property in the last quarter, they can use the half year convention. 10. For 2018, the qualified business income deduction is based on the business income of the entity and the W-2 wages of the entity. 11. A company purchased a five year piece of property for $10,000 (using half year convention) and would depreciate it $1,600 in the second year, if it was sold in it is second year and did not elect bonus. 12. An S corporation is a pass through entity that generally has double taxation. 13. Separately stated items of an S Corporation can flow to the owners in a lump sum. 14. in 2017, if a corporation purchases over $2,500,000 of personal property, they can elect to write $500,000 of additional first year depreciation under Section 179. 15. Earnings and Profits (E & P) determines whether corporate distributions are taxable dividends. 16. For an S Corporation, a husband and wife shareholder are considered two shareholders. 17. An S Corporation election made within the first 3 and 1/2 months of the beginning of the corporation's tax year is effective from the first day of that tax year. 18. Both a C and an S Corporation will not recognize a gain on the distribution of appreciated property. 19. The pro rata share of tax exempt interest increases the basis of a shareholder's stock. 20. A C Corporation recognizes a gain on the distribution of their own stock through a stock dividend. C and S Corporations and Deprecation: TRUE FALSE 1. MACRS is an accelerated depreciation systems that is used to stimulate the economy by providing longer lives for depreciation items. 2. A 5-year life, $25,000 piece of equipment will be depreciated $5,000 in 2017 in its first year of depreciation if using the half year convention and did not elect bonus. 3. Without Section 351, any gain realized on the transfer of property to a corporation in exchange for stock of the corporation would be recognized. 4. Corporate distributions that exceed earnings and profits are always capital gains. 5. Amounts of the Sec. 179 election in excess of the taxable income limitation cannot be carried forward. 6. A 5-year life, $25,000 piece of equipment will be depreciated $25,000 in 2018 in its first year of depreciation if bonus is elected.. 7. To avoid the accumulated earnings tax, a corporation needs to have a definite plan for expending the accumulated earnings. 8. Under the Mid Quarter Convention, one half of the first year's depreciation is allowed in the year year in which the property is placed in service, regardless of when the property is put in service. 9. If a company purchases 35% of their personal property in the last quarter, they can use the half year convention. 10. For 2018, the qualified business income deduction is based on the business income of the entity and the W-2 wages of the entity. 11. A company purchased a five year piece of property for $10,000 (using half year convention) and would depreciate it $1,600 in the second year, if it was sold in it is second year and did not elect bonus. 12. An S corporation is a pass through entity that generally has double taxation. 13. Separately stated items of an S Corporation can flow to the owners in a lump sum. 14. in 2017, if a corporation purchases over $2,500,000 of personal property, they can elect to write $500,000 of additional first year depreciation under Section 179. 15. Earnings and Profits (E & P) determines whether corporate distributions are taxable dividends. 16. For an S Corporation, a husband and wife shareholder are considered two shareholders. 17. An S Corporation election made within the first 3 and 1/2 months of the beginning of the corporation's tax year is effective from the first day of that tax year. 18. Both a C and an S Corporation will not recognize a gain on the distribution of appreciated property. 19. The pro rata share of tax exempt interest increases the basis of a shareholder's stock. 20. A C Corporation recognizes a gain on the distribution of their own stock through a stock dividend.Explanation / Answer
1) Flase
2) True
3) True
4) False
5)True
6) False
7) True
8)True
9) False
10) True
11) False
12) True
13) False
14)True
15) False
16) True
17) True
18) False
19) True
20) True
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