Under Section 243 (post-TCJA), the dividends-received deduction for a C corporation that owns 20% or more but less than 80% of the distributing corporation is 65%. Since Westbrook owns 25% of the stock, it qualifies for the 65% DRD. DRD = $100,000 x 65% = $65,000. Answer D is correct. Answer A (50%) applies to ownership below 20% under current law. Answer B (80%) is not a valid DRD percentage; 80% is the ownership threshold for the 100% DRD tier, not a DRD rate. Answer C (100%) applies when ownership is 80% or more and the corporations are part of an affiliated group.

Under Section 165(g)(3), when a domestic corporation's stock in an affiliated subsidiary (80% or more owned) becomes worthless and the subsidiary is an operating company (deriving more than 90% of its gross receipts from active business sources), the loss is treated as an ordinary loss, not a capital loss. This allows the parent to deduct the full loss against ordinary income. Answer B is incorrect because the Section 165(g)(3) exception converts the loss to ordinary for qualifying affiliated subsidiaries. Answer C is incorrect because worthless stock is not a Section 1231 asset; it is capital unless the ordinary loss election applies. Answer D is incorrect because worthless stock deductions are specifically allowed under Section 165(g).

Under the TCJA (effective for NOLs arising in tax years beginning after December 31, 2017), corporate NOLs have an indefinite carryforward period but are limited to offsetting 80% of taxable income (before the NOL deduction) in any given year. The carryback provision was eliminated for most taxpayers (though a temporary 5-year carryback was allowed for 2018-2020 NOLs under the CARES Act, that provision has expired). Answer A describes pre-TCJA rules. Answer B describes CARES Act rules that are no longer in effect for 2022 NOLs. Answer D describes the old 20-year carryforward rule without the 80% limitation.

Under Section 404(a)(11) and the recurring item exception, accrual-method corporations may deduct bonuses accrued at year-end if the liability is fixed by year-end and the bonuses are paid within 2.5 months after year-end (by March 15 for a calendar-year corporation). This is the 2.5-month rule for deferred compensation. Answer A is incorrect because the deduction is allowed even if paid after year-end, provided the 2.5-month window is met. Answer C (April 15) is too late for the 2.5-month rule. Answer D (end of following year) does not meet the requirement for current-year deductibility under the 2.5-month rule.

Under Section 248, a corporation may elect to deduct up to $5,000 of organizational expenditures in the tax year the business begins. This $5,000 immediate deduction is reduced dollar-for-dollar by the amount of organizational expenditures that exceed $50,000. Any remaining organizational expenditures are amortized ratably over 180 months (15 years) beginning with the month the corporation begins business. Answer B is incorrect because immediate full deduction of all organizational costs is not permitted. Answer C is incorrect because the election allows both a current deduction and amortization. Answer D (60 months) was the rule under prior law but has been replaced by the 180-month amortization period.

C corporations may not deduct net capital losses; capital losses can only offset capital gains. Since Moreland has no capital gains, the $25,000 net capital loss is not deductible in Year 1 (it carries back 3 years or forward 5 years). The charitable contribution is limited to 10% of taxable income before the contribution: 10% x $400,000 = $40,000; since $30,000 is less than $40,000, the full $30,000 is deductible. Taxable income = $400,000 - $30,000 = $370,000. Answer A ($345,000) would result from also deducting the $25,000 capital loss, which is not permitted. Answer C ($375,000) would result from limiting the charitable contribution to $25,000. Answer D ($400,000) takes no deductions.

Under Section 195, a corporation may elect to deduct up to $5,000 of start-up expenditures in the first year, but this is reduced dollar-for-dollar when total start-up costs exceed $50,000. Here, costs of $600,000 exceed $50,000 by $550,000, reducing the immediate deduction to $0 ($5,000 - $550,000). All $600,000 is amortized over 180 months. Because the business began January 1 (a full 12 months), the first-year amortization = $600,000 / 180 x 12 = $40,000. Answer D is correct. Answer A is incorrect because full immediate deduction is not allowed when costs exceed $50,000 by this magnitude. Answer B (60 months) was the old rule. Answer C ($100,000) is not a statutory amount under Section 195.

Under post-TCJA Section 243, the DRD for a corporation owning less than 20% of the distributing corporation is 50%. Stanton owns 15% of Verdant, which is less than 20%, so the 50% DRD applies. DRD = $200,000 x 50% = $100,000. Answer A (65%) applies when ownership is 20% or more but less than 80%. Answer C (100%) applies for affiliated group members with 80% or more ownership. Answer D is incorrect because the DRD is available at 50% for all eligible corporate shareholders, not only those with 20% or more ownership.

Under Section 1504(a), an affiliated group for consolidated return purposes requires that the common parent directly own at least 80% of the total voting power and 80% of the total value of at least one includible corporation, and each other member is connected through stock ownership meeting the 80% voting/value threshold (directly or through other group members). Answer A (51%) is not the statutory threshold. Answer B (50%, all classes) does not meet the 80% voting and value requirement. Answer D (100%) is not required; 80% is the threshold, and minority interests are permitted.

The corporate tax on $1,000,000 is $1,000,000 x 21% = $210,000. The shareholder receives $400,000 as a qualified dividend. A taxpayer in the 22% ordinary income bracket falls within the 15% qualified dividend rate. Shareholder tax = $400,000 x 15% = $60,000. Total federal tax burden = $210,000 + $60,000 = $270,000. This illustrates the double taxation of C corporation earnings. Answer A is correct. Answer B is incorrect because dividends are subject to shareholder-level tax. Answer C (37%) is the top ordinary income rate, not the applicable qualified dividend rate for this taxpayer. Answer D uses 20%, which applies to taxpayers in the highest income brackets, not a 22% bracket individual.