📏CPA EXAM PREP

C Corporations

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Question

What is the federal corporate tax rate?

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Answer

A flat 21%.

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Question

How do corporate capital losses differ from individual capital losses?

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Answer

They offset only capital gains; no $3,000 ordinary offset.

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Question

When does a distribution become a return of capital?

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Answer

After E&P is exhausted, up to the shareholder's stock basis.

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Question

Why can a corporation recognize gain on a property distribution but not loss?

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Answer

The property is treated as sold at FMV for gain recognition only.

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