Question

The tax laws limit a C corporation’s deduction for compensation paid to the CEO to:

Question 14 options:

	$500,000.
	$1,000,000.
	$1,500,000.
	$2,000,000.
	There is no deduction limit for compensation paid to a corporation’s CEO.

Question 15 (4 points)

Which of the following increases a corporation’s earnings and profits (E&P)?

Question 15 options:

	Charitable contributions carried over to other tax years.
	Tax-exempt interest income.
	Distributions to shareholders.
	All of the above increase E&P.
	None of the above increases E&P.

Question 16 (4 points)

A corporation has organizational costs totaling $45,000 in 2017. The corporation begins operations on March 1, 2017. The maximum amount of organizational costs that the corporation can deduct on its 2017 tax return is:

Question 16 options:

	$3,000.
	$2,500.
	$7,667.
	$7,222.
	None of the above.

Answer 1

The tax laws limit a C corporation’s deduction for compensation paid to the CEO to:
Question 14 options:
$500,000.00
$1,000,000.00
$1,500,000.00
$2,000,000.00
There is no deduction limit for compensation paid to a corporation’s CEO.
Ans is $ 1,000,000.
Which of the following increases a corporation’s earnings and profits (E&P)?
Question 15 options:
Charitable contributions carried over to other tax years.
Tax-exempt interest income.
Distributions to shareholders.
All of the above increase E&P.
None of the above increases E&P.
Earnings & profits (E&P) is the measure of a corporation’s economic ability to pay dividends to its shareholders. An up-to-date E&P calculation is important for many corporate transactions, including determining whether a distribution to shareholders is a taxable dividend.
Ans is Tax-exempt interest income.
A corporation has organizational costs totaling $45,000 in 2017. The corporation begins operations on March 1, 2017. The maximum amount of organizational costs that the corporation can deduct on its 2017 tax return is:
Question 16 options:
$3,000.00
$2,500.00
$7,667.00
$7,222.00
None of the above.
You may elect to deduct up to $5,000 of start-up costs in the year your business begins operations. The $5,000 first-year deduction limit is reduced by the amount of start-up costs exceeding $50,000. Start-up costs that exceed the first-year limit of $5,000 may be amortized ratably over 15 years. The amortization period starts with the month you begin operating your active trade or business.
So answer is $ 45,000/15
I.e. $ 3,000.