P2-U13 · PART 2 · SOURCE CYCLE 2026-2027
Corporate Transactions
How to complete this unit
This unit uses 17 source-gated recall cards and 16 admissible practice questions. Complete the sequence in order; the unreleased wiki prose remains outside the learner path.
- 1 · LearnBuild the rule
Answer each recall prompt before opening it. Then learn the exact rule, test the controlling facts through four quick challenges, explore common questions, and finish with one own-words teach-back.
- 2 · ApplyUse it in context
Complete at least 16 mapped questions over two sessions. Review the explanation even when the answer is correct.
- 3 · ProveTest readiness
Use the Part 2 mock under time pressure. Return here for every flagged or missed concept before the next attempt.
Verified recall questions
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here. Stable unit ownership gathers this lesson across 1 textbook collection.
Q1.Alder transfers property for corporate stock and controls the corporation immediately afterward. What is the usual result?
The exchange is not taxable
Q2.What voting-power threshold generally establishes control for Alder’s property-for-stock exchange?
At least 80%
Q3.Subject to applicable limits, what dividends-received deduction percentage generally applies when a corporation owns less than 20% of the distributing domestic corporation?
50%
Q4.How does a service provider generally treat corporate stock received for services?
Include the value of the stock in income
Q5.What can happen when a transferor receives money or other property in addition to corporate stock in an otherwise nontaxable exchange?
The transferor may have to recognize gain
Q6.What is the general section 351 treatment when the corporation assumes the transferor’s liabilities?
The assumption generally is not treated as money or other property received
Q7.Which additional schedule generally applies to a corporation that is a member of a controlled group?
Schedule O (Form 1120)
Q8.Which of the following individuals is not considered a related party with regard to the rules for the disposition of assets?
Step-brother
Q9.When can a C corporation that uses the accrual method of accounting deduct business expenses and interest owed to a related person or related entity that uses the cash method of accounting?
When the corporation makes the related payment and the amount is included in the related person’s income.
Q10.Which of the following statements is correct about a controlled group of corporations?
All of the above.
Q11.In 2025, Reliable Motors, Inc. made cash contributions totaling $20,000 to qualified charitable organizations. Due to income limitations, Reliable Motors could deduct only $15,000 of the contributions on its corporate return. Which of the following correctly states the treatment of the excess $5,000 of charitable contributions?
The excess contributions can be carried forward for 5 years. They cannot be carried back.
Q12.Pacific Holdings, Inc. is a cash-basis C corporation. In 2025, the corporation sold various capital assets. The company has a net short-term capital gain of $23,000 from the sale of stock, and a net long-term capital loss of ($29,000) from the sale of cryptocurrency. How should these capital gains and losses be treated?
The corporation can carry back the $6,000 net capital loss to a prior year, where it may be deducted against capital gains in those years.
Q13.During 2025, Nashville Apparel Inc., a domestic C corporation, had the following income, expenses, and deductions: Gross receipts $105,000 Net capital gains from the sale of cryptocurrency $10,000 Business expenses (not including charitable contributions) $65,000 Cash charitable contributions $30,000 All the contributions were made to qualifying 501(c)(3) charities. What is the amount of Nashville Apparel's allowable charitable contribution deduction in 2025?
$5,000
Q14.Milieu Capital, Inc. owns 25% of Wilson Fine Foods, Inc. In 2025, Milieu Capital received $10,000 of dividends from Wilson's Fine Foods. Assuming no other limitations apply, Milieu Capital's dividends received deduction is:
$6,500
Q15.Which of the following is characteristic of a "closely held" corporation?
A corporation with a small number of shareholders and no public market for its stock.
Q16.Freshfields Farms, Inc. is a calendar-year C corporation. It is a qualified farming business. The company had a small NOL of $1,000 in 2025. The business does not wish to carryback its losses, because the cost of filing the forms with the company's accountant would exceed the benefit. Which of the following statements is correct?
Freshfields can forgo the 2-year carryback period and elect to carryforward the entire loss.
Q17.What happens to the deduction of a loss on the sale or trade of property between related corporations?
The deduction is disallowed.
Ready to move on?
- ▸ Explain at least 80% of these 17 rules without opening the answer, twice on different days.
- ▸ Score 80% across 16 or more mapped questions over two sessions, not one memorized round.
- ▸ Complete a timed Part 2 mock and return to this unit if its concepts remain flagged or missed.
Use these checks to choose your next study action. They do not predict a PSI scaled score.