Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Sarah owns 45% of the stock in a C corporation that had a profit of $260,000 in 2011. Kevin owns a 45% interest in a partnership that had a profit of $260,000 during the year. The corporation distributed $30,000 to Sarah, and the partnership distributed $30,000 to Kevin.

1. How much income does Kevin report for 2011?

2. How much income does Sarah report for 2011?

Jaron and Cheri are going to establish a business entity. They expect the business to be very successful in the long-run, but project losses of approximately $100,000 for each of the first five years. Due to potential environmental concerns, limited liability is a requisite for the owners.

3. Which form of business entity should they select?
a. Sole Proprietorship
b. C Corporation
c. S Corporation

GiGi owns a 60% interest in an S corporation that earned $150,000 in 2011. She also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to GiGi and the C corporation paid dividends of $30,000 to GiGi.

4. How much income must she report from these businesses?
a. $0 income from the S corporation and $30,000 from the C corporation.
b. $90,000 income from the S corporation and $30,000 from the C corporation.
c. $90,000 income from the S corporation and $0 from the C corporation.
d. $30,000 income from the S corporation and $30,000 of dividend income from the C corporation.

Laci is the sole shareholder of a C corporation, and Edmond owns a sole proprietorship. Both businesses were started in 2011, and each business has a long-term capital gain of $20,000 for the year. Neither business made an distributions during the year.

5. With respect to this information, which of the following statements is INCORRECT?
a. Edmond must report a $20,000 long-term capital gain on his 2011 tax return.
b. Laci's corporation does not receive a preferential tax rate on the $20,000 long-term capital gain.
c. Laci must report a $20,000 long-term capital gain on her 2011 tax return.
d. Edmond receives a preferential tax rate on a long term-capital gain of $20,000.

Bob and Chad each own one-half of the stock of WIMP, Inc., a C corporation. Each shareholder has a stock basis of $115,000. WIMP has accumulated E & P of $300,000. WIMP's taxable income for the current year is $80,000, and it distributes $50,000 to each shareholder.

6. Compute Bob's stock basis at the end of the year.
Tim and Ayana each have a 50% ownership is Robert Partnership. On January 1, Tim's outside basis was $43,000. The partnership reports the following items for the current year:
Partnership liabilities increased by $5,000
The partnership received tax exempt interest income of $7,000
Tim received a distribution of $38,000
The partnership paid Ayana's alimony of $12,000
The partnership sustained an ordinary loss of $36,000

7. What is Tim's deductible loss for the current year?

Breanna contributes appreciated property (i.e. adjusted basis of $65,000 and a FMV of $100,000) to a partnership in a transaction which qualifies for non-recognition of gain. Brenda's ownership interest is 60%. The partnership later sells the appreciated property for $120,000. The property is not depreciable.

8. What is the effect of the sale on Breanna's gross income?

9. A corporation may alternate between S corporation and C corporation status each year, depending on which results in more tax savings. TRUE/FALSE

10. Actual dividends paid to shareholders result in double taxation. Constructive dividends also result in double taxation. TRUE/FALSE

11. A major benefit of the S corporation election is the general avoidance of double taxation. TRUE/FALSE

12. If the amounts are reasonable, salary payments to shareholder-employees can reduce or avoid the double taxation result of a C corporation. TRUE/FALSE

13. Andre contributes land with an adjusted basis of $70,000 and a fair market value of $100,000 to White, Inc., an S corporation, in exchange for 50% of the stock of White, Inc. Cathy contributes cash of $100,000 for the other 50% of the stock. If White later sells the land for $110,000, $35,000 [$30,000 + 50%($10,000)] is allocated to Andre and $5,000 (50%($10,000)) is allocated to Cathy. TRUE/FALSE

14. If an S corporation distributes appreciated property as a dividend, it must recognize gain as to the appreciation. TRUE/FALSE

15. Saniyah's basis for her partnership interest is $85,000. If she receives a current distribution of $95,000 in cash, her recognized gain is $10,000 and her basis for her partnership interest is reduced to $0. TRUE/FALSE

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M927808

Have any Question? 


Related Questions in Basic Finance

1 what makes a good theory why are theories so important in

1. What makes a good theory? Why are theories so important in behavioral research? 2. What makes a theory falsifiable? What makes a theory tautological? 3. What is a research hypothesis? Why are research hypotheses, rath ...

Part 11 prospective analysisforecast future financial

Part 1 1. Prospective Analysis Forecast future financial performance. Use the four valuation models outlined in class to produce an estimate of firm value, and compare to stock price. Perform sensitivity analysis and dis ...

A city built a new parking garage in a business district

A city built a new parking garage in a business district. For a random sample of 100 days, daily fees collected averaged $1,800, with a standard deviation of $500. Construct a 90% confidence interval estimate of the mean ...

The unemployment rate in a city is 12 if 9 people from the

The unemployment rate in a city is 12%. If 9 people from the city are sampled at random, find the probability that fewer than 2 of them are unemployed. Carry your intermediate computations to at least four decimal places ...

Part 1 please respond the following question no less then

PART 1 PLEASE RESPOND THE FOLLOWING QUESTION NO LESS THEN 350 WORDS (ORIGINAL WORK, NO PLAGIARISM, 1 Reference Part 1 of our week discussion questions require us to discuss Profitability. Please watch this Youtube lectur ...

1 why do researchers use factor analysis2 imagine that you

1. Why do researchers use factor analysis? 2. Imagine that you conducted a factor analysis on a set of variables that were uncorrelated with one another. How many factors would you expect to find? Why?

Identify general-purpose statements and communication

Identify general-purpose statements and communication objectives for several situations. Read the following situations and write a general-purpose statement and a specific communication objective-the results you want-for ...

An article in the new york times claims in a global market

An article in the New York Times claims, "In a global market, the main reason one currency offers a higher interest rate than another is that it is compensating the holder for exchange rate risk." Briefly explain whether ...

1 how is a hazard different from a disaster2 what is the

1. How is a hazard different from a disaster? 2. What is the most frequent and widespread disaster-causing hazard? 3. What scale is commonly used to describe the effects of earthquakes? 4. How are earthquakes measured?

1 what is the connection between the truth-in-lending act

1. What is the connection between the Truth-in-Lending Act and the annual percentage rate (APR)? 2. What is the effective borrowing cost? 3. What is meant by a nominal rate of interest on a mortgage loan? 4. What is the ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro