Iron Corporation incurred net short-term capital gains of $40,000 in 2003...

Spent today cooped up in an H&R Block office in Glen Burnie, studying for the IRS Enrolled Agent exam. I took the exam last September and passed three of the four sections -- the parts on stuff I had actually seen and used before, like individual returns, sole proprietorships and ethics. The part I failed covers corporations, gift taxes, estates and fiducaries. This summer, then, I'm waist-deep in corporate tax law and fun things like that.

So, I found myself on the road at 7:30 on a Saturday morning for a 2+ hour drive to Glen Burnie, a suburb of Baltimore, for what was expected to be a four- to five-hour class, but ended up taking closer to eight. It was worth it, though. I know exactly what I need to study and what I need to just review.

Just for fun, here are a few questions I spent yesterday studying. All are questions I missed on last year's test but now understand. We'll start with an easy one:

True or False. A corporation that has individuals as shareholders and has less than 75 shareholders qualifies for S corporation status even if it has more than one class of stock.

--

Iron Corporation incurred net short-term capital gains of $40,000 and net long-term capitol losses of $90,000 during 2003. Taxable income from other sources was $500,000. How are the capital gains and losses treated on the 2003 tax return, Form 1120?

a. $3,000 of the excess net long term capital losses are deducted currently and the $47,000 remainder is carried forward indefinitely.
b. None of the excess net long term capital losses are currently deductible, but may be carried back to the three preceding years and then forward five years as short term capital losses.
c. Excess net long term capital losses are fully deductible in 2003.
d. Excess net long term capital losses of $50,000 are carried back two years and then carried forward 20 years as short term capital losses.

---

Carol Corporation and Brown Corporation are domestic corporations. The Carol Corporation owns 25% of the Brown Corporation. Carol Corporation's income from business for tax year 2003 is $500,000 and business expenses are $750,000. In addition to income received from business, Carol Corporation also received dividends from Brown Corporation in the amount of $100,000. Carol Corporation's dividend received deduction is:

a. $70,000
b. $80,000
c. $100,000
d. $20,000

---

The Bob Trust is a simple trust. Per the information below, how much taxable income in passed through to the beneficiaries?

- Taxable Interest: $1,000
- Tax-exempt Interest: $1,000
- Fiduciary Fee: $400

a. $1,600
b. $600
c. $800
d. $1,800


Answers: false, b, b, c. As you can see, it will be a fun six weeks for me...


By the way, I *was* on You Bet Your Garden this weekend. At least I didn't sound like an idiot.