| Which of the following requirements does NOT have to be met for a group of corporations to be considered a brother-sister controlled group? |
Under Sec. 1563(a), a brother-sister controlled group means two or more corporations of which 5 or fewer persons who are individuals, estates, or trusts own (1) at least 80% of the voting power or value of each corporation and (2) more than 50% of the voting power or value of the stock of each corporation counting only identical ownership interests (i.e., the smallest amount owned by each person in any of the corporations is all that is counted in the other corporations for the 50% test).
| If a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of | |
The accumulated earnings tax rate is 20%. IRC Section 531 imposes an accumulated earnings tax if a corporation does not distribute enough profits beyond what is needed for the conduct of its business.
| Too Teched, a foreign C corporation, has operations in the United States. The corporation purchased $10,000 of inventory through a U.S. distributor and sold the inventory in Canada. This inventory was shipped FOB destination. Too Teched also received rental income of $6,000 from real estate located in the United States and $8,000 from real estate in Canada. How much of Too Teched’s income is considered U.S. source? |
Rental income is sourced based on where the property is located and used. Therefore, the rental income from U.S. real estate is U.S. source income. Gross income from the sale of inventory purchased for resale is sourced on the basis of where the sale occurs. Because the title of inventory passes in a foreign jurisdiction, the income is not a U.S. source.
| Estimated tax payments must be made if a corporation’s estimated tax is at least |
All corporations must make estimated tax payments except those that have an estimated tax liability of less than $500 [Sec. 6655(f)].
Which of the following statements is false with respect to withholding on nonresident aliens and foreign corporations?
Under Reg. 1.1441-4(a), no withholding is required for income received by a foreign corporation if the income is effectively connected with the conduct of a trade or business within the U.S. Income is considered effectively connected with the conduct of a trade or business within the U.S. only if the income items satisfy an “asset use” test or if the trade or business activities were a material factor in the production of the income.
| Generally, if a C corporation has dissolved, its final income tax return must be filed by the 15th day of the | |
A C corporation must file a Form 1120 on or before the 15th day of the 4th month that follows the close of its tax year. In the case of a dissolved corporation, the tax year ends on the date of the dissolution, even if the corporation dissolved on a date other than the last day of the month.
When is income received by a foreign corporation NOT considered U.S. source income?
| To be classified as a corporation, which of the following characteristics is a newly created entity required to possess? | |
After 1996, the corporate characteristics are not determinative of corporate status. Other than certain entities that are required to be corporations, entities can choose to be corporations whether or not they possess any of the four corporate characteristics of (1) continuity of life, (2) centralization of management, (3) limited liability, and (4) free transferability of interests.
| In each of the following situations, a Form 7004 for an extension of time to file was properly and timely filed for a C corporation. Which one of the following tax returns was filed late? | ||||||||||||||||||||||||
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Section 6072(a) requires calendar-year C corporation taxpayers to file a return by April 15 of the following year. Fiscal-year C corporation taxpayers must file by the 15th day of the 4th month following the close of the fiscal year. Under Sec. 6081(a), in a timely filing of Form 7004, the C corporation with a fiscal year end other than December 31 or June 30 will receive an automatic 6-month extension for filing the tax return. If a C corporation’s tax year ended on July 31, Year 1, and a timely extension was filed, the return is due on May 15, Year 2.
| If a C corporation’s tax year ends December 31, it generally must file its income tax return |
| Which one of the following factors has to be considered in establishing whether fixed or determinable annual or periodic income and similar amounts from U.S. sources are effectively connected with a U.S. trade or business? |
In determining whether certain income from sources within the United States fall within the “effectively connected” rule, two factors are considered. The first is whether the income was derived from assets used in, or held for use in, the conduct of a U.S. business. The second factor is whether the activities of the U.S. business were a material factor in the realization of the income. In analyzing these factors, due regard is given to whether or not the asset or income involved was separately accounted for on the books of account kept for the U.S. business, but this is not a controlling factor by itself.
| Which of the following statements concerning the extension of time to file a calendar-year-end C corporation tax return is false? | |
A C corporation’s entire tax liability is due on the same date as the return. Under Sec. 6072(a), a calendar-year C corporation must file its income tax return on or before the 15th day of April following the close of the calendar year. Fiscal-year corporate taxpayers must file by the 15th day of the 4th month following the close of the fiscal year. Under Sec. 6081(a), in a timely filing of Form 7004, the corporation will receive an automatic 6-month extension for filing the tax return. An extension of time to file the tax return does not provide an extension of time to pay the tax liability without incurring interest and/or penalty.
C Core Consulting is a Canadian C corporation that has operations in the United States. C Core manufactures and sells inventory through a U.S. branch. For the current year, $15,000 of inventory was sold to U.S. customers and $30,000 of inventory was sold to foreign customers. All inventory is shipped FOB shipping point. Also, C Core owns debt securities in a U.S. corporation for which it receives $3,000 of interest income per year. Without considering the effect of tax treaties, how much of C Core’s income is U.S. source income?
| The accumulated earnings tax does NOT apply to which of the following with its own penalty tax on undistributed income? |
The accumulated earnings tax is imposed by Sec. 531 on unreasonably large accumulations of earnings in a corporation. The purpose of the tax is to require the shareholders to include the earnings in their income, usually as dividends. Under Sec. 532, the accumulated earnings tax does not apply to personal holding companies since they are already subject to a penalty tax on undistributed income.
Maple Corporation, a calendar-year corporation, estimated that its income tax for the year will be $20,000. Maple deposited the first two estimated tax installments on April 15, 2021, and June 15, 2021, in the amount of $5,000 each (25% of $20,000). On July 1, 2021, Maple estimated its tax will be $40,000. What are the amounts of the estimated tax payments that Maple Corporation should pay on September 15 and December 15? (Assume that income increased only for the last half of the year.)
Under Sec. 6655(d), the minimum installment is 25% of the required annual payment (the lesser of 100% of current tax or 100% of preceding year’s tax). Although Maple correctly estimated its first two tax payments, the amount of estimated tax for the year increased. The problem assumes that income increased only for the last half of the year. Since Maple has already paid $10,000 ($5,000 × 2) in taxes, it still owes $30,000 ($40,000 estimated tax – $10,000 tax already paid). Thus, each of the remaining two payments must be at least $15,000 ($30,000 amount owed ÷ 2 remaining payments).
ABC, an eligible entity, made an election by filing Form 8832, Entity Classification Election, on December 15, Year 1, to be taxed as a partnership effective for January 1, Year 2. Under the general rule, what is the earliest date ABC can elect to be taxed as a corporation by filing another Form 8832?
Regulation 301.7701-3(c) provides that, if an eligible entity makes an election to change its classification, the corporation cannot change its classification by election again during the 60 months succeeding the effective date (not file date) of the election (January 1, Year 2, to December 31, Year 6). However, if more than 50% of the ownership interests in the entity as of the effective date of the election are owned by persons who did not own any interests in the entity on the filing date or on the effective date of the entity’s prior election, the IRS may allow a corporation to change its classification prior to the 60 months.
WEB Corporation, a calendar-year corporation, estimated its income tax for the current year to be $40,000. WEB deposited the first two estimated tax installments on April 15 and June 15 in the amount of $10,000 each (25% of $40,000). On July 1, WEB estimated its tax to be only $25,000. How much estimated tax should WEB Corporation pay on September 15?
Under Sec. 6655(d), the minimum installment is 25% of the required annual payment (the lesser of 100% of current tax or 100% of preceding year’s tax). Although WEB correctly estimated its first two tax payments, the amount of estimated tax for the year decreased. Since WEB has already paid $20,000 ($10,000 × 2) in taxes, it owes only $5,000 ($25,000 new estimated tax amount – $20,000 tax already paid). Thus, each of the remaining two payments must be at least $2,500 ($5,000 amount owed ÷ 2 remaining payments).
Excluding extensions, a C corporation that uses a fiscal year end of June 30, Year 1, as its tax year must file its tax return on or before which of the following dates?
Section 6072(a) provides that a C corporation with a fiscal year ending on June 30 must file its return on or before the 15th day of the third month following the close of the tax year. For a fiscal-year corporation with a year-end of June 30, Year 1, the return must be filed by September 15, Year 1.
A calendar-year C corporation receives an automatic extension of time for filing its Year 1 return by submitting an application for extension on Form 7004. What is the due date for filing the corporation’s return (not considering weekends and holidays)?
Section 6072(a) provides that a calendar-year-end C corporation must file its return on or before the 15th day of the 4th month following the close of the tax year. For a calendar-year-end C corporation, the due date for a Year 1 tax return is April 15, Year 2. By filing Form 7004, the C corporation will receive an automatic 6-month extension for filing the tax return, which moves the due date to October 15, Year 2.
Acme Corporation has a fiscal year beginning April 1 and ending March 31. Acme Corporation’s estimated tax for the fiscal year is $4,000. When is the first installment of Acme Corporation’s estimated tax due (excluding Saturdays, Sundays, or holidays)?
A corporation that anticipates a tax bill of $500 or more must estimate its income tax liability for the current tax year and pay four quarterly estimated tax installments. Installments of fiscal-year corporations are due on the 15th day of the 4th, 6th, 9th, and 12th months of the year. Therefore, Acme’s first installment is due on July 15.
Which of the following statements about a controlled group of corporations is false?
| If a corporation is required to make estimated tax payments because it expects its tax to be $500 or more for the year, the first installment payment of estimated tax is due by the 15th day of the |
A corporation that anticipates a tax bill of $500 or more must estimate its income tax liability for the current tax year and pay four quarterly estimated tax installments. Installments of fiscal-year corporations are due on the 15th day of the 4th, 6th, 9th, and 12th months of the year.
On March 31, G, a calendar-year corporation, determined its estimated tax liability to be $12,000. It should have made estimated tax payments of
A corporation is required to pay one-fourth of its estimated taxes each quarter. However, the first payment is not due until April 15, for calendar-year taxpayers, or the 4th month of the fiscal calendar, for fiscal-year taxpayers. Therefore, G must pay $3,000 (25% × $12,000) on the 15th day of the 4th, 6th, 9th, and 12th months of the year.
Fixed, determinable, annual, or periodical (FDAP) income from U.S. sources is generally taxed at a rate of 30% through mandatory withholding if the income
FDAP income of a foreign corporation received from U.S. sources not effectively connected with the conduct of a U.S. trade or business is taxed at a flat 30% rate.
Charm Corporation, a calendar-year corporation, determined that it needed to pay $35,000 in estimated tax for the year. Installments were correctly made on April 15, 2021, and June 15, 2021. On July 1, 2021, Charm determined that it needed to pay estimated tax of only $26,000. What is the amount of each estimated tax payment that Charm Corporation should pay on September 15 and December 15?
Under Sec. 6655(d), the minimum quarterly installment is 25% of the required annual payment (the lesser of 100% of current tax or 100% of preceding year’s tax). Thus, Charm’s minimum quarterly installments under the earlier estimation for 2021 were $8,750 ($35,000 estimated tax × 25%). Although Charm correctly estimated its first two tax payments, the amount of estimated tax for the year decreased. Since Charm has already paid $17,500 ($8,750 + $8,750) in taxes, it only owes $8,500 ($26,000 – $17,500). Thus, each of the remaining payments must be at least $4,250 ($8,500 ÷ 2). Alternatively, Charm could adjust the third installment down to fully compensate for the overage ($2,000) and pay $6,500 as the fourth installment.
| Which of the following statements is false? |
Under Sec. 1563(a), a controlled group of corporations may be a parent-subsidiary controlled group, a brother-sister controlled group, or a combined group. Either a parent-subsidiary controlled group or the parent-subsidiary portion of a combined group may file a consolidated tax return because there is a common parent corporation and the includible corporations are all 80%-owned. However, a brother-sister controlled group exists when two or more corporations are owned by 5 or fewer persons who own at least 80% of the voting stock or 80% of the value of the outstanding stock. There is no common parent corporation, so a consolidated tax return could not be filed. The affiliated group definition requires ownership of 80% of the voting stock and 80% of the value of the controlled corporation. The controlled group definition is an “or” test, and some controlled groups may meet one but not both of the tests and will not be able to file a consolidated return.
| Norm Corporation, a C corporation, ends its tax year on October 31. When must Norm’s income tax return be filed for the year ending October 31, Year 1? | |
Section 6072(a) provides that a C corporation must file its return on or before the 15th day of the 4th month following the close of the tax year. For a fiscal-year C corporation with a year end of October 31, Year 1, the return must be filed by February 15, Year 2.
The following statements regarding personal service corporations are true EXCEPT
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Like corporations, a personal service corporation is taxed at a flat rate of 21%. A PSC is a regular C corporation whose principal activity is the performance of personal services (such as accounting, engineering, and law), and an owner-employee is an employee who owns more than 10% of the value of the stock. One of the requirements for a PSC is for employee-owners to perform the services of more than 20% of the corporation’s compensation costs for its activities of performing personal services during the testing period.
| The accumulated earnings tax |
The accumulated earnings tax is applied to accumulated taxable income, defined in Sec. 535(a) as taxable income subject to certain limitations. The rate of this tax is 20%.
The accumulated earnings tax is applied to accumulated taxable income, defined in Sec. 535(a) as taxable income subject to certain limitations. The rate of this tax is 20%.
The accumulated earnings tax is applied to accumulated taxable income, defined in Sec. 535(a) as taxable income subject to certain limitations. The rate of this tax is 20%.
| Which of the following items is NOT considered U.S. source income of a foreign corporation? | |
Storing foreign manufactured inventory within the U.S. does not meet the effectively connected with the conduct of a trade or business within the U.S. standard. Therefore, this is not considered U.S. source income.
Generally, a short-period income tax return of a new C corporation must be filed by the 15th day of the
Section 6072(a) provides that a C corporation must file its return on or before the 15th day of the 4th month following the close of the tax year. A return may cover less than a year if a C corporation was formed during the year.
| York, Inc., directly owns stock of Ajax Corporation. To determine if Ajax is a member of a controlled group with York as the common parent, York must own at least what percentage of the voting and total value of the Ajax stock? | |||||||||
A controlled group of corporations includes corporations with a specified degree of relationship by stock ownership. If one corporation owns stock in another corporation, the group can be considered a controlled group if the parent owns either 80% of the total voting power or 80% of the total value outstanding of the stock of the other. Thus, York must own at least 80% of the stock of Ajax for the group to be a controlled group.
| Finbury Corporation’s taxable income for the year ended December 31, Year 2, was $2 million. Finbury’s Year 1 income tax liability was $600,000. For Finbury to escape the estimated tax underpayment penalty for the year ending December 31, Year 2, its total Year 2 estimated tax payments must equal at least | |
Tyler Corporation, a C corporation, uses a fiscal year ending October 31 and generally requests the automatic extension of time for filing its return. Including the extension period, when is the due date of Tyler Corporation’s tax return for the fiscal year ended October 31 (excluding Saturdays, Sundays, or holidays)?
Section 6072(a) requires calendar-year C corporate taxpayers to file a return by April 15 of the following year. Fiscal-year C corporate taxpayers must file by the 15th day of the 4th month following the close of the fiscal year. Under Sec. 6081(a), in a timely filing of Form 7004, the C corporation with a fiscal year end other than June 30 will receive an automatic 6-month extension for filing the tax return. If a C corporation’s tax year ended on October 31, Year 1, and a timely extension was filed, the return is due on August 15, Year 2.
| Which of the following is required for income to be considered effectively connected with the conduct of a trade or business in the United States? | ||||||||||||||||||||||||
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Income is considered effectively connected with the conduct of a trade or business in the United States if it satisfies one of two tests: (1) income is derived from assets used in, or held for use in, the conduct of a U.S. business (the “asset use” test), or (2) the U.S. trade or business was a material factor in the production of income.
Westover Health Services, Inc., a personal service corporation, has two shareholders. Westover was incorporated 17 years ago and has made irregular and infrequent distributions to its shareholders. The balance sheet of Westover Health Services, Inc., reflects unappropriated retained earnings in the amount of $800,000 and no marketable securities. Westover has no specific, definite, and feasible plans for use of the earnings accumulation in its business. It has been determined that the amount needed to redeem a deceased shareholder’s stock is $500,000 for estate taxes and administrative expenses. What is the amount of Accumulated Earnings Tax that Westover Health Services, Inc., could be subject to for tax year ended December 31, 2021?
The corporation is allowed an Accumulated Earnings Credit for the greater of $150,000 or the reasonable needs (if there is a definite plan for its use) of the business but not both. The $500,000 qualifies as a reasonable need. The accumulated earnings tax is $60,000 [($800,000 unappropriated retained earnings – $500,000 reasonable needs) × 20% accumulated earnings tax rate].
ABC Company, a C corporation, has a fiscal year ending September 30. The due date, excluding extension, for filing its return is
Section 6072(a) provides that a C corporation with a fiscal year end other than June 30 must file its return on or before the 15th day of the 4th month following the close of the tax year. For a fiscal-year C corporation with a year end of 9/30/Yr 1, the return must be filed 1/15/Yr 2.
For a domestic corporation, the General Business Tax Credit is limited to the lesser of (1) its net income tax, with certain adjustments for other credits, over the greater of its tentative minimum tax for the year or (2) 25% of its net regular tax liability for the year that exceeds $25,000. How does a controlled group of corporations treat the $25,000?
Section 38(c)(6)(B) provides that, for members of a controlled group, the $25,000 amount must be apportioned among the members as the regulations provide. The regulations allow the members to apportion the $25,000 amount in any manner they choose [Reg. 1.46-1(p)(2)]. They need to agree on an apportionment plan. In default, it is divided equally among the members.
Which of the following types of domestic business entities formed after 1996 cannot be taxed as a corporation?
An entity that has elected to be treated as a real estate mortgage investment conduit has elected to be taxed as a partnership and thus cannot be taxed as a corporation. An insurance company is required to be classified as a corporation. An entity classified as a joint-stock company or a joint-stock association is taxed as a corporation. A limited liability company with two or more members may elect to be taxed as a corporation.
| In 2021, Panda Corp. has passive losses of $250,000 from a rental activity. Its active business income is $150,000 and its portfolio income is $50,000. What is Panda Corp.’s 2021 taxable income if (a) Panda is a closely held corporation, and (b) Panda is a personal service corporation? | |||||||||||||||||
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A closely held corporation can offset net active income with its passive activity loss. However, it cannot offset its portfolio income with its passive activity loss. The closely held corporation has $50,000 of portfolio income left. The personal service corporation receives no benefit for its passive loss and has $200,000 taxable income ($150,000 active + $50,000 portfolio income). |
| The Dana Corporation has two subsidiary corporations. In order to determine that the subsidiary corporations are in a controlled corporate group, which of the following must be true? |
If otherwise qualified, a “large corporation” (defined as a corporation with at least $1 million of modified taxable income in any of the last 3 years) may use all of the following methods to figure all four required installments of estimated tax EXCEPT
The Snow Corporation, a calendar-year taxpayer, estimates at the end of March 2021 that its federal income tax for 2021 will be $800,000. It pays $200,000 of estimated tax by April 15, 2021, and pays another $200,000 on June 15, 2021. At the end of August 2021, a recalculation shows that its 2021 tax is expected to be $900,000. Which of the following is true?
Section 6655(e) requires that the estimated payment in the subsequent quarter be large enough so that 100% of the shortfall is paid in. A corporate taxpayer who continues to use the annualization exception for making its estimated tax payments will, in later quarters, have paid in 100% of the tax due on the new annualized income. If this amount is paid in when income is increasing, 100% of the shortfall will be paid in as is required by Sec. 6655(e). Although Snow correctly estimated its first two tax payments, the amount of estimated tax for the year increased to $900,000. Since Snow should have made quarterly payments of $225,000 ($900,000 ÷ 4), it must adjust the next quarterly payment by the amount of the shortfall. Therefore, the payment due September 15 is $275,000 ($225,000 quarterly payment + $50,000 shortfall), and the payment due December 15 is $225,000.
Most unincorporated businesses formed after 1996 can choose whether to be taxed as a partnership or a corporation. The regulations provide for a default rule if no election is made. If an election is NOT made and the default rules apply, which of the following is true?
Under a “check-the-box” system, certain business entities are automatically treated as corporations for federal tax purposes, while others may elect to be treated as corporations for federal tax purposes. If an entity has one owner and is not automatically considered a corporation, it may nevertheless elect to be treated as a corporation or, by default, will be treated as a sole proprietorship. Similarly, if an entity has two or more owners and is not automatically considered a corporation, it can elect to be taxed as a corporation for federal tax purposes; otherwise, it will be taxed as a partnership. Further, if all members of a new foreign entity have limited liability, the entity is classified as a corporation. One type of a corporation as defined in the Internal Revenue Code is an association.
| John and Jim each own 50% of J&J Partnership, which was founded 15 years ago. J&J is a calendar-year taxpayer. On March 20, Year 1, it elected to be treated as a corporation for federal tax purposes by filing a Form 8832. What is the earliest date that J&J can be treated as a corporation? | |||||||||
Answer (A) is correct. Instructions for Form 8832 state that, “. . . an election specifying an entity’s classification for federal tax purposes can take effect no more than 75 days (28 days in Jan. + 28 days in Feb. + 19 days in Mar. before election date) prior to the date the election is filed . . .” |
| Consultants, Inc., is a personal service corporation. Its taxable income for the current year was $45,000. What would the amount of tax be for Consultants, Inc., for the current year, before any credits? |
Under Sec. 448(d)(2), a personal service corporation has two main characteristics: (1) Substantially all of its activities must involve the performance of services in the field of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting, and (2) substantially all of its stock must be owned by employees who perform the services. Section 11(b) provides that the taxable income of a personal service corporation is taxed at a flat rate of 21%. Therefore, Consultants, Inc., will have a $9,450 tax liability ($45,000 × 21%).
| Sincere, Inc., a C corporation, overestimated how successful it would be in the Year 1 tax year. Final calculations show it will have an NOL for Year 1 and owe no taxes. It had overpaid its estimated taxes for the year by $700. Sincere, Inc., wants its tax refund as soon as possible. What should it do? |
A corporation may obtain a quick refund of the estimated tax paid, but adjustment is allowed only if the overpayment is both ≥ $500 and ≥ 10% of the corporation’s estimate of its tax liability. Application is filed (Form 4466) after the close of the tax year but before the return due date (without extensions).
| What percentage of the excess of the minimum tax credit over the amount of the credit allowable for the year against regular tax liability can the AMT credit offset regular tax liability for the years 2018-2020? | |
For tax years 2018-2020, the AMT credit is refundable and can offset regular tax liability in an amount equal to 100% of the excess of the minimum tax credit over the amount of the credit allowable for the year against regular tax liability.
Bob Moon forms Moon Enterprises LLC (Limited Liability Company) during the year. What form must Moon Enterprises LLC file in order to elect to be taxed as a C corporation?
An eligible entity may elect its classification on Form 8832, Entity Classification Election.
Hinges, Inc., a C corporation, has a fiscal year end of June 30, Year 1. What is the last date on which Hinges, Inc., can request an extension of time to file its tax return for the year ended June 30, Year 1?
As a general rule, the tax return for a C corporation with a fiscal year ending on June 30 is due by the 15th day of the third month after the end of the corporation’s tax year. Therefore, Hinges, Inc., must make the request for an extension by September 15, Year 1.
Richard Crepe, M.D., owns 100% of the outstanding stock of Crepe Corporation. All of Crepe Corporation’s income and expenditures are derived from the medical services provided by Dr. Crepe. At the end of 2021, Crepe Corporation had $10,000 in reportable taxable income. How much federal income tax was Crepe Corporation required to pay for the 2021 year?
Correct B
PSCs are taxed at a flat rate of 21%. Crepe Corporation is required to pay $2,100 (21% of $10,000).
| A group of six individuals organized an LLC to conduct a software publishing business in Florida. No individual is specifically authorized to make the election. What individual(s) is(are) required to make the election? |
An eligible entity may elect its classification on Form 8832. The election must be signed by every member of the entity, or any officer, manager, or member of the entity who is authorized to make the election. Since no member is authorized to make the election, every member must sign the election for it to be effective. The election must include all required information and the entity’s taxpayer identification number. A copy of Form 8832 must be attached to the entity’s tax return for the election year.
| Which of the following items is considered U.S. source income to a foreign corporation? | |
Income received by a foreign corporation is considered U.S. source income if the income is effectively connected with the conduct of a trade or business within the United States. The income from the sale of widgets was derived from assets used in the conduct of a U.S. business, as all production equipment for the inventory was located in the U.S. Therefore, it is considered U.S. source income.
| All of the following businesses, formed after 1996, are automatically classified as corporations EXCEPT | |
After 1996, the corporate characteristics are not determinative of corporate status. Only certain entities are required to be corporations. Other entities, such as limited liability companies, can choose partnership taxation even though the entity may possess all four of the corporate characteristics of (1) continuity of life, (2) centralization of management, (3) limited liability, and (4) free transferability of interests.
| In what circumstance would income earned by a foreign company in the United States NOT be considered U.S. source income? | |
Rabid Corporation, a C corporation, uses a fiscal year ending November 30 and receives an automatic extension of time for filing its tax return for the fiscal year ending November 30, Year 1. Including the extension, what is the due date for filing Rabid’s tax return (excluding weekends and holidays)?
Section 6072(a) requires calendar-year C corporate taxpayers to file a return by April 15 of the following year. C corporations with a fiscal years end other than June 30 must file by the 15th day of the 4th month following the close of the fiscal year. Under Sec. 6081(a), in a timely filing of Form 7004, the corporation will receive an automatic 6-month extension for filing the tax return. If a corporation’s tax year ended on November 30, Year 1 and a timely extension was filed, the return is due on September 15, Year 2.
