4.2.1 Basic Quiz -- Double Taxation of C Corporations

With a C corporation there is only one level of income tax and that is at the corporate level.

True False

When an individual transfers appreciated property to a C corporation in exchange for shares of stock, the individual must recognize the gain on the transfer and the corporation receives the asset with a stepped-up basis.

True False

If a corporation sells an asset with a fair market value greater than its basis, the corporation will realize capital gains tax.

True False

If a corporation recognizes capital gains, those capital gains are taxed at the individual capital gains rate.

True False

The primary way for a shareholder to receive capital gains treatment on a distribution from a C corporation is to redeem his or her stock.

True False

Family C corporations can retain an unlimited amount of cash and/or securities within the corporation without any penalties.

True False

A shareholder may give stock to his or her favorite charity for a tax deduction and at a later date the corporation may repurchase the stock from the charity.

True False

If a C corporation gives its own stock to a charity, the corporation receives a tax deduction usable for up to 30% of its taxable income.

True False

If a corporation makes a gift of inventory, the corporation's deduction will always be its basis in the inventory.

True False

If stock of a closely held C corporation is given to charity and the value of the stock is greater than $10,000, a qualified appraisal is necessary.