Q1) ABC Corporation reported the following items in 2016:
|
Gross Profit on Sales
|
180,000
|
|
|
Operating Expenses
|
150,000
|
|
Dividends
|
100,000
|
---> From less than 20% owned corporation
|
|
Charitable Contributions
|
50,000
|
|
|
Net Capital Gains
|
8,000
|
|
Other Information:
|
|
|
Capital Loss Carryforward
|
10,000
|
---> From 2015
|
|
Net Operating Loss Carryforward
|
30,000
|
---> From 2011
|
|
Federal Income Tax
|
3,000
|
|
Based on the information provided, compute ABC Corporation's Taxable Income for 2016.
List all items included in calculation (Similar to presentation on Form 1120)
Using the calculated Taxable Income, calculate current E&P for 2016.
Q2) Calculate Current E&P using the following information:
|
Taxable Income
|
400,000
|
|
|
Additional Information:
|
|
|
|
Current Year Long Term Capital Losses
|
80,000
|
---> No Capital Gains in current year
|
|
Dividend (15% owned Corp)
|
100,000
|
---> DRD was not limited by TI
|
|
Fines and Penalties
|
10,000
|
|
|
NOL Carryfoward
|
25,000
|
---> Used in caclulating Taxable Income
|
|
U.S. Prod. Activities Deduction
|
15,000
|
---> Used in caclulating Taxable Income
|
|
Assume a 34% Tax Rate
|
|
|
Q3) ABC Corporation had the following E&P Balances and made a distribution of cash and land:
|
Current E&P:
|
35,000
|
|
|
Accumulated E&P:
|
75,000
|
|
|
Distribution of Cash:
|
10,000
|
|
|
Distribution of Land: FMV
|
50,000
|
|
|
Adj. Basis
|
15,000
|
---> Adj Basis for Tax & E&P
|
|
Subject to Mortgage
|
60,000
|
|
What amount of income will the shareholder recognize?
What is the shareholder's basis in the land?
What is the amount of gain or loss reported by ABC Corporation as a result of the distribution?