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AC 507 Unit 1 Quiz

1. Question : What is a corporation’s alternative minimum tax rate? Student Answer: 15% 20% 26% 28% 2. Question : Which of the following business entities does not file a separate tax return to report business operations? Student Answer: Sole proprietorship S corporation C corporation Partnership 3. Question : Hoku Corporation (a C corporation) had the following history of income and loss: Year Income (Loss) 2009 $40,0002010 – Essay Writing Service: Write My Essay by Top-Notch Writer $70,0002011 ($10,000)How much of a tax refund can Hoku Corporation receive by carrying back its 2011 loss? Student Answer: $1,500 $2,500 $3,500 None; it cannot carry its loss back 4. Question : Which of these persons never pays taxes directly? Student Answer: Individual Partnership C corporation Fiduciary 5. Question : Which of the following is not a characteristic of an S corporation? Student Answer: Owners have limited liability The corporation is taxed directly on operating income The corporation can have no more than 100 shareholders Shareholders must consent to the S election by the corporation 6. Question : The Mercury Corporation must decide whether to invest in some new machinery for its business. Which tax rate is the most relevant for making this decision? Student Answer: The average tax rate The marginal tax rate The nominal tax rate The effective tax rate 7. Question : What is the gain or loss on the sale of an asset for $68,000 if the asset cost $185,000, depreciation expense deducted was $124,000, repair costs were $12,000, and there was a $19,000 major addition to the asset? Student Answer: $0 $12,000 loss $7,000 gain $24,000 loss

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