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ACC - Three Problems

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Question;1. Determine the basis of stock in the hands of the shareholder in each of the following instances. Assume that the 80% rule is met in all cases.a. Contribution of property with a basis of $ 1,000 and a FMV of $ 1,400.b. Contribution of property with a basis of $ 3,000 and a FMV of $ 3,800. The stockholder also received $ 500 cash from the corporation as part of the stock transaction.c. Contribution of property with a basis of $ 8,200 and a FMV of $ 12,500. The stock-holder also received property with a FMV of $ 1,700 from the corporation as part of the stock transaction.d. Contribution of a building with a FMV of $ 200,000, a mortgage (assumed by the corporation) of $ 100,000, and a basis of $ 125,000.e. Contribution of a building with a FMV of $ 1,700,000, a mortgage (assumed by the corporation) of $ 1,000,000, and a basis of $ 635,000.2. Determine taxable income in each of the following instances. Assume that the corporation is a C corporation and that book income is before any income tax expense.a. Book income of $ 50,000 including capital gains of $ 2,000, a charitable contribution of $ 1,000, and travel and entertainment expenses of $ 3,000.b. Book income of $ 92,000 including capital losses of $ 3,000, a charitable contribution of $ 12,000, and travel and entertainment expenses of $ 3,000.c. Book income of $ 76,000 including municipal bond interest of $ 2,000, a charitable contribution of $ 5,000, and dividends of $ 3,000 from a 10% owned domestic corporation. The corporation also has an $ 8,000 charitable contribution carryover.d. Book income of $ 129,000 including municipal bond interest of $ 2,000, a charitable contribution of $ 5,000, and dividends of $ 7,000 from a 70% owned domestic corporation. The corporation has a capital loss carryover of $ 6,000 and a capital gain of $ 2,500 in the current year.3. Determine the amount of taxable dividend, nontaxable distribution, and capital gain for the distributions made in each of the following cases:a. Corporate E& P of $ 10,000, shareholder stock basis of $ 12,000, distribution of $ 6,000.b. Corporate E& P of $ 7,500, shareholder stock basis of $ 7,000, distribution of $ 6,500.c. Corporate E& P of $ 16,000, shareholder stock basis of $ 5,000, distribution of $ 17,000.d. Corporate E& P of $ 14,000, shareholder stock basis of $ 11,000, distribution of $ 26,000.

 

Paper#41668 | Written in 18-Jul-2015

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