Answer the following statements true (T) or false (F)
1. For a cash-basis taxpayer, security deposits received on rental property are taxable to the landlord upon receipt.
2. Improvements to leased property made by a lessee are includible in the lessor's gross income only if made in lieu of rent or if rent is reduced because of the improvements.
3. Rocco Corporation, a C corporation, owns 60% of the stock of Bien Corporation. Bien Corporation is a French corporation which conducts all of its business in France. Bien pays a $100,000 dividend to Rocco Coorporation. Rocco Corporation will have a 100% dividend received deduction on these dividends, resulting no tax on these dividends.
4. Qualified dividends received by individuals are taxed at the same rate as ordinary income.
5. Distributions in excess of a corporation's current and accumulated earnings and profits are treated as a nontaxable recovery of capital unless they exceed the basis of the stock.
1. FALSE
The landlord has a binding obligation to repay the security deposit, assuming the tenant maintains the property under agreed upon conditions.
2. TRUE
This is a form of noncash payment for the use of property.
3. TRUE
A domestic C corporation is entitled to a 100% dividends received deduction for dividends received from a foreign subsidiary in which they have a 10% or greater interest when the subsidiary has only foreign income.
4. FALSE
Qualifying dividends are taxed at a preferential rate, usually 15%. For individuals with taxable income exceeding $425,800, the rate will be 20%
5. TRUE
Dividends are defined as distributions made from earnings and profits. Dividends are subject to tax.
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