Unit 3 assignment
May 7, 2012
C:3-1 High Corporation incorporates on May 1 and begins on May 10 of the current year. What alternative tax years can High elect to report its initial year’s income? The High Corporation can choose either the calendar year or the fiscal year. A calendar year a 12 month period ending on December 31th and a fiscal period is also a 12 month period ending on the last day of each month other than December. For the fiscal year the High Corporation would start on the set up date of May 1th and end April of the following year. High Corporation decides to use the calendar year then it would be the day it opened its doors May 10th to Dec 31th of the same year.
C:3-11 Why are corporations ...view middle of the document...
Brother-sister control group-There are two ways in this category the 50%-80% and the 50%-only definition. The 50%-80% is that the group of two or more corporations is a brother-sister controlled group if five or fewer individuals, trust or estate owns at least 80% of the classes of voting stock or at least 80% of the total value of the outstanding stock of each corporation. More than 50% of the voting power of all classes of stock or more than 50% of the total value of the outstanding stock of each corporation, taking into account the only the stock ownership that is common with respect to each corporation. The 50%-only definition is that the five or fewer shareholders must satisfy 50% of the common ownership test as described for the 50%-80%.
Combined control group-three or more corporations each corporation is a member of a parent subsidiary controlled group or a brother-sister controlled group At least one of the corporation is both the parent corporation of a parent subsidiary controlled group and a member of brother-sister control group.
C:3-39 A. $6,000 limit and $5,000 carried over to the next year
B. $12,000 excess carryover in charity contribution for other tax years
C:3-52 Which of the following groups constitute controlled group?
A. Parent –subsidiary controlled group
B. Brother-sister controlled group the 50% -only definition Tom owns 60% of the Jones Corporation.
C. Parent-subsidiary controlled group
D. This is not constituted as a control group because two or more corporations are not owned by each shareholder as defined as a controlled group owned directly or indirectly.