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2. What happens to a loss on the Corporate Tax Return (Form
1120)? Does it pass through to the shareholders? Is it available for
future or past periods? Please explain in detail. (5 pts.)
3. Please describe the purpose of Sch3edules M-1 and M-3. When is
a Schedule M-3 required in lieu of a Schedule M-1. (5 pts.)
Chapter 17
4. Please define and differentiate a Spin-off, Split-off, and Split-up.
( 5 pts.)
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ACCT 553 Week 5 Quiz
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1. (TCO E) For federal tax purposes, royalty income not derived in
the ordinary course of a business is classified as:
2. (TCO F) When comparing corporate and individual taxation, the
following statements are true, except:
3. (TCO H) Al and Amy file a joint return for the 2012 tax year.
Their adjusted gross income is $80,000. They had a net investment
income of $8,000. In 2012, they had the following interest expenses:
Personal credit card interest: $4,000
Home mortgage interest: $8,000
Investment interest (on loans used to buy stocks): $10,000