Busn 379 Week 6 100 All Answers Taxation Of S Corporations And

BUSN 379 Week 6

100% All correct answers

Week 6 : Taxation of S Corporations and Their Shareholders – Homework

1. (TCOs 1 and 8) Kim owns 100% of the stock of Cardinal Corporation. In the current year Kim transfers an installment obligation, tax basis of $30,000, and fair market value of $200,000 for additional stock in Cardinal worth $200,000. As a result of the transfers, (Points : 5)
Kim recognizes no taxable gain on the transfer.
Kim has a taxable gain of $170,000.
Kim has a taxable gain of $180,000.
Kim has a basis of $200,000 in the additional stock she received in Cardinal Corporation.
None of the above

2. (TCOs 1 and 8) Carl transfers land to Cardinal Corporation for 90% of the stock in Cardinal Corporation worth $20,000 plus a note payable to Carl in the amount of $40,000 and the assumption by Cardinal Corporation of a mortgage on the land in the amount of $100,000. The land, which has a basis to Carl of $70,000, is worth $160,000.
Amount realized:
Stock $20,000
Note $40,000
Release of mortgage $100,000
$160,000
Less: Basis of land ($70,000)
Realized gain $90,000
Recognized gain ($30,000 + $40,000) $70,000

Cardinal Corporation will have a basis of $140,000 in the land [$70,000 (Carl’s basis in the land) + $70,000 (gain recognized by Carl with respect to the transfer of the land)]. (Points : 5)
Carl will have a gain on the transfer of $70,000.
Carl will have a gain on the transfer of $30,000.
Cardinal Corporation will have a basis in the land transferred by Carl of $70,000.
Cardinal Corporation will have a basis in the land transferred by Carl of $160,000.
None of the above

3. (TCOs 1, 8, and 9) Eagle Corporation owns stock in Hawk Corporation and has taxable income of $160,000 for the year before considering the dividends received deduction. Hawk Corporation pays Eagle a dividend of $200,000, which was considered in calculating the $160,000. What amount of dividends received deduction may Eagle claim if it owns 15% of Hawk’s stock? (Points : 5)
$0
$112,000
$140,000
$160,000
None of the above

4. (TCOs 1 and 8) During 2010, Sparrow Corporation, a calendar year C corporation, had operating income of $510,000, operating expenses of $370,000, a short-term capital loss of $25,000, and a long-term capital gain of $80,000. How much is Sparrow’s tax liability for 2010? (Points : 5)
$46,100
$59,300
$69,050
$76,050
None of the above

5. (TCOs 1 and 9) Beige Corporation (a calendar year taxpayer) has taxable income of $150,000, and its financial records reflect the following for the year.
Federal income taxes paid $75,000
Net operating loss carry forward deducted currently $35,000
Gain recognized this year on an installment sale from a prior year $22,000
Depreciation deducted on tax return (ADS depreciation would have been $5,000) $20,000
Interest income on Iowa state bonds $4,000

What is Beige Corporation’s current E & P? (Points : 5)
$68,000
$77,000
$103,000
$107,000
None of the above

6. (TCOs 1 and 9) Yellow Corporation has a deficit in accumulated E & P of $600,000 and has current E & P of $450,000. On July 1, Yellow distributes $500,000 to its sole shareholder, Eugene, who has a basis in his stock of $105,000. As a result of the distribution, Eugene has (Points : 5)
dividend income of $450,000 and no adjustment to stock basis.
dividend income of $105,000 and reduces his stock basis to zero.
dividend income of $450,000 and reduces his stock basis to $55,000.
no dividend income, reduces his stock basis to zero, and has a capital gain of $500,000.
None of the above

7. (TCOs 1 and 10) Identify a disadvantage of an S corporation. (Points : 5)
Generally, trusts cannot be shareholders.
Losses flow through to the shareholders.
The AMT on corporations is avoided.
Tax-exempt income flows through to the shareholders.
None of the above

8. (TCOs 1 and 10) Samantha owned 1,000 shares in Evita, Inc. an S corporation, that uses the calendar year. On October 11, 2010, Samantha sells all of her Evita stock. Her basis at the beginning of 2010 was $60,000. Her share of the corporate income for 2010 was $22,000, and she receives a distribution of $37,000 between January 1 and October 11, 2010. What is her basis at the time of the sale? (Points : 5)
$45,000
$60,000
$75,000
$82,000

9. (TCOs 1 and 10) Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama. At a time when his stock basis is $10,000, the corporation distributes appreciated property worth $100,000 (basis of $10,000). There is no built-in gain. What is Fred’s taxable gain? (Points : 5)
$0
$10,000
$90,000
$100,000
None of the above

10. (TCOs 1 and 10) Apple, Inc. a cash basis S corporation in Orange, Texas, formerly was a C corporation. Apple has the following assets and liabilities on January 1, 2010, the date the S election is made:
Adjusted Basis Fair Market Value
Cash $200,000 $200,000
Accounts receivable -0- $105,000
Equipment $110,000 $100,000
Land $1,800,000 $2,500,000
Accounts payable -0- $110,000

During 2010, Apple collects the accounts receivable and pays the accounts payable. The land is sold for $3 million, and taxable income for the year is $590,000. What is Apple’s built-in gains tax?
(Points : 5)
$0
$206,500
$590,000
$695,000
None of the above

Our Essay Format
  • Times New Roman, 12 pt
  • 1 Inch Margins
  • Double/ Single Spacing
  • 275/ 550 Words Per Page
  • MLA/ APA/ Turabian/ Chicago style, etc

A standard double-spaced page contains 275 words

Free Features
  • Hiring a preferred expert
  • Bibliography & cover page
  • Revisions within 14-30 days
  • 24/7 customer support
payments

Team of Professional Essay Writers

With our essay service, you'll find an essay writer for any task. Their rating is based on previous customer reviews and successful orders. Before you hire a writer, you can familiarize yourself with their track record in detail.