"Tax Questions "

Question 1 -2 Indicate whether the statement is true or false.

1)Peach Corporation had $200,000 of net active income, $45,000 of portfolio income, and a $ 230,000 passive activity loss during the current year. If Peach is a PSC, it can deduct $45,000 of the passive activity loss in the year

True or Fale

2)In the current year, Oriole Corporation donated a painting worth $50,000 to the Texas Art Museum, a qualified public charity. The museum included the painting in its permanent collection. Oriole Corporation purchased the painting five years ago for $15,000. Orioles charitable contribution deduction is $50,000 (ignoring the taxable income limitation).

True or False

3)In the current year, Tern, Inc., a calendar year C corporation, has $9,000,000 of adjusted taxable income, $400,000 of business interest income, zero floor plan financing interest, and $3,200,000 million of business interest expense. Tern has average gross receipts for the prior three-year period of $45,000,000. Which of the following statements is correct about the treatment of Tern's business interest expense?

	a.	Current year deduction of $3,200,000.
	b.	Current year deduction of $2,790,000, carryforward of $410,000.
	c.	Current year deduction of $2,790,000, carryback of $410,000.
	d.	Current year deduction of $3,000,000, carryforward of $200,000.

e. none of a through d are correct statements