Taxation of Business Entities - Chapter Five Graded Problems

AC 404Taxation of Business EntitiesChapter Five Graded ProblemsSpring, 2022 Name ___________________________________________ Instructions: For each of the following computational and non-noncomputational multiple choice questions, research all topics and prepare all required computations to enable oneself to correctly select answers for each problem. Then, check the box next to the best answer for each question. You should complete your manual work on a separate computational sheet of paper, ONLY AFTER COMPLETING CHAPTER FIVE GRADED PROBLEMS DOWNLOAD are to you proceed to the module for Chapter Five Grade Problems Answers to be submitted in Canvas. You will then submit your answers in Canvas in the assignment area labeled Chapter Five Graded Problems Answers to be submitted in Canvas. Since Canvas shuffles the order of each question's answers, please be sure to indicate your answers accurately in Canvas. After the assignment answers have been submitted, Canvas will present explanations of correct answers to all problems/questions, even if you answered with a correct answer. 1.Trisha (an individual) and nine other unrelated individuals own all of Hammond Corporation's stock. Trisha owns 10 percent of Hammond's stock and each of the nine other individuals own 10 percent of Hammond's stock. Based upon the stock ownership test, Hammond Corporation ____ a Personal Holding Company. isis not 2.Sally (an individual) and eight other unrelated individuals own all of Crowley Corporation's stock. Sally owns 28 percent of Crowley's stock and each of the eight other individuals own 9 percent of Crowley's stock. Based upon the stock ownership test, Crowley Corporationa Personal Holding Company. isis not 3.Towne Corporation, a personal holding company, reports the following: DescriptionAmount Rental receipts60,000 Depreciation12,000 Administrative expenses2,000 Mortgage interest4,000 Maintenance expenses6,000 Real estate taxes3,000 Towne's Adjusted Income from Rents (AIRS) is $_____. 39,00045,00037,00041,000 4.Which ONE of the following reasons generally IS considered a reasonable justification for accumulating earnings? loans to shareholders expenditure of corporate funds for the personal benefit of the shareholders planned expansion of business facilities investment in an asset not having a reasonable connection to business operations Planned expansion of business facilities is a justifiable reason for accumulating earnings.