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Practice CPA®CPA TCP Practice Exam 5Question 57

Easy1 markMultiple Choice

Area II: Entity Tax ComplianceTCPEntity TaxC Corporation

CPA · Question 57 · Area II: Entity Tax Compliance

A C Corporation has $100,000 of taxable income. It makes a charitable contribution of $20,000. What is the allowable deduction?

Answer options:

A.

$20,000

B.

$10,000

C.

$5,000

D.

$60,000

How to approach this question

Corporate Charitable Limit: 10% of Taxable Income (before charitable, DRD, NOL carryback). $100k * 10% = $10k.

Full Answer

B.$10,000✓ Correct

B

IRC §170(b)(2). The deduction is limited to 10% of taxable income. $10,000 is allowed; $10,000 is carried forward.

Common mistakes

Using individual limits (50%/60%); deducting full amount.

Question 56 All questions Question 58

Practice the full CPA TCP Practice Exam 5

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