Log in
Accounting
1
answer
0
watching
141
views
23 Nov 2018

2. LoWay Exterminators, Inc., is a C-corp with two shareholders. Logan owns a 60% interest with a basis of $30,000. Wyatt owns a 40% interest with a 6,000 basis. Accumulated Earnings and Profits of the Corporation as of January 1, 2017 was $10,000 and Earnings and Profits generated during 2017 were 5,000. On December 31, 2017 the C-corp made a non-liquidating distribution in the total amount of $50,000, with $30,000 going to Logan and 20,000 going to Wyatt. The C-corp did not treat any portion of the distribution as wages or salary.

(7 Points). What are the tax consequences of a $30,000 non-liquidating distribution to Logan?



(b) (7 Points). What are the tax consequences of a non-liquidating distribution of

$20,000 of Wyatt?

Watch
1
answer
0
watching
141
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Sixta Kovacek
Sixta KovacekLv2
23 Nov 2018

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

(a) On July first of year two, X Corp., a calendar yeartaxpayer, made distributions of $20,000 to A, its sole shareholder,whose stock had a $5,000 basis. No other distributions were made inyear 2. As of December 31 of year one, X Corp. had no earnings andprofits. In year two, X Corp. had earnings and profits of $15,000as of July first, but only $5,000 for the entire year. Determinethe tax consequences in the following situation.

(b) Suppose in (a) that X Corp. had an accumulated earnings andprofits deficit of $15,000 as of December 31 of year one. Determinethe tax consequences in this situation.

(c) Suppose in (a) that X Corp. had an accumulated earnings andprofits of $15,000 as of December 31 of year one, and that in yeartwo, X Corp. had a $15,000 earnings and profits deficit on Julyfirst, but a $5,000 earnings and profits account for the entireyear. Determine the tax consequences in this situation.

(d) Suppose in (c) that X Corp. had $15,000 of current earningsand profits as of July first of year two, but a deficit of $20,000for the entire year.Determine the tax consequences in thissituation.

True or False questions

Nancy is a 30% partner in the ABC Partnership with an outsidebasis of $20,000. ABC distributes land with a basis of $12,000 andfair value of $18,000 to Cathy in complete liquidation of herinterest. Cathy recognizes a capital loss of $8,000 on thedistribution

In a disproportionate liquidating distribution of cash,inventory and capital gain property, a partner will alwaysrecognize gain

ABC Corporation distributes land with a fair market value of$200,000 to its sole shareholder. ABC's tax basis in the land is$50,000. Assuming sufficient earnings and profits, the amount ofdividend reported by the shareholder is $200,000

John owns 30 percent of ABC Corporation. ABC Corporation owns 50percent of ABCD Corporation. Under the attribution rules applyingto stock redemptions, John is treated as owning 15 percent of ABCDCorporation.

On February 10, 2018, Ace Corporation, a new calendar yearcorporation, elected S corporation status and all shareholdersconsented to the election. There was no change in its shareholdersduring the current year. Ace met all eligibility requirements foran S corporation during the preelection portion of the year. Whatis the earliest date on which Ace can be recognized as an Scorporation?

February 10, 2018

January 1, 2019

February 10, 2019

January 1, 2018

In March of 2017 Frederick acquired an passenger automobile for$45,000 and used the automobile 85% for business. Themaximum depreciation deduction for 2017 is:

$3,160

$11,160

$8,928

$9,486

In August of 2017, Joseph acquires andplaces into services business equipment costing $300,000. Theequipment is classified as 5-year recovery property. No otheracquisitions are made during the year. Joseph elects to expense themaximum amount under Sec. 179. Joseph’s total deductions for theyear are:

$60,000

$500,000

$100,000

$300,000

For the current tax year, VBN, an S Corporation distributes$100,000 to its sole shareholder, Raymond. His basis in the stockwas $140,000 before the distribution. VBN had once been a regular CCorporation and had remaining accumulated earnings and profits(E&P) from those years of $70,000. However, VBN has no balancein its accumulated adjustment account. How should the distributionof $100,000 be handled?

$100,000 as a taxable distribution

$70,000 as a taxable dividend, and $30,000 has a non taxablereturn of capital

$50,000 as a taxable dividend, and $100,000 as a non taxablereturn of capital

$70,000 as a taxable dividend; and $30,000 as a capital gain

Stahl, an individual who owns 100% of Talon, an S corporation,had a basis of $50,000 at the first of the year. During the yearTalon reported the following: Ordinary Loss of $10,000; Municipalinterest income of $8,000, Long term capital gain of $4,000; andLong term capital loss of $9,000. What was Stahl's basis in Talonat year end?

$56,000

$65,000

$53,000

$43,000

Related Documents

ACC 522 Chapter Notes - Chapter 11: Tax Rate, Small Business, Double Taxation
skywombat72
ACC 522 Chapter Notes - Chapter 12: Life Insurance, Fair Market Value, Corporate Tax
skywombat72
ACC 100 Chapter 1: Chapter 1 Definitions
olivetrout85

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in