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Harry and Warren form Brown Corporation. Harry transfers

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Question;Harry and Warren form Brown Corporation. Harry transfers1. Harry and Warren form Brown Corporation. Harry transfers equipment (basis of $210,000 and fair market value of $180,000), and Warren transfers land (basis of $15,000 and fair market value of $150,000) and $30,000 of cash. Each receives 50% of Brown's stock. Which occurs as a result of these transfers?2. Kirk and Madison form May Corporation. Kirk transfers property (basis of $20,000 and value of $300,000) for 100 shares in May Corporation. Madison transfers property (basis of $40,000 and value of $280,000) and provides legal services in organizing the corporation. The value of her services is $20,000. In return, Madison receives 100 shares in May Corporation. With respect to the transfers, _____. 3. Balsa Corporation distributes land (fair market value of $75,000 and an adjusted basis of $25,000). The land is subject to a liability of $30,000. Which is the total effect of the distribution on the E & P of Balsa? 4. Berry Corporation has accumulated E & P of $30,000 on January 1. During the year, the corporation distributes $120,000 to its sole shareholder, Jackson (an individual). Berry Corporation's E & P as of January 1 of the following year is _____. 5. Five years ago, Eleanor transferred property she had used in her sole proprietorship to Blue Corporation for 1,000 shares of Blue Corporation in a transaction that qualified under ? 351. The assets had a tax basis to her of $100,000, and a fair market value of $270,000, on the date of the transfer. In the current year, Blue Corporation (E & P of $800,000) redeems 250 shares from Eleanor for $220,000 in a transaction that does not qualify for sale or exchange treatment. With respect to the redemption, Eleanor will have a _____.6. Kite Corporation has 1,000 shares of stock outstanding. Kent owns 250 shares, Kent's father owns 150 shares, Kent's brother owns 250 shares, and Kent's son owns 50 shares. Plover Corporation owns the other 300 shares in Kite Corporation. Kent owns 60% of the stock in Plover Corporation. Applying the ? 318 stock attribution rules, how many shares does Kent own in Kite Corporation? 7. All of the following statements are true about gains recognized in a corporate reorganization except _____. a. taxable amounts in reorganization are classified as a dividend or capital gainb. corporate shareholders would prefer taxable amounts in a reorganization be classified as a capital gainc. individuals are taxed at the same rate for dividends and capital gainsd. capital gains and dividend income can be totally eliminated in a corporate reorganization with careful tax planninge. All of the above 8. Garnet Corporation has assets worth $700,000 (adjusted basis of $315,000). Pearl Corporation would like to acquire all of Garnet's assets in a Type C reorganization in exchange for $450,000 of voting stock, $125,000 cash, and assumption of Garnet's liabilities of $125,000. All stock received by Garnet will be distributed to its shareholders, and Garnet will then liquidate. Which, if any, statement regarding this transaction is correct?9. Deer Corporation was acquired last year by Lobo Corporation in a transaction causing an ownership change. At the time of the acquisition, the fair market value of Deer was $1.5 million, and the federal long-term tax-exempt rate was 5%. In the current year, Lobo has $600,000 of taxable income and excess credits carryovers from Deer amounting to $40,000. Which is Lobo's federal income tax for the year if Lobo is in the 34% tax bracket? 10. Orange's separate taxable income was $175,000, and Apple's was $125,000. Consolidated taxable income before contributions was $350,000. Charitable contributions made by the affiliated group included $30,000 by Orange, and $15,000 by Apple. Compute the group's charitable contribution deduction.11. Members of a controlled group share all but which tax attribute?a. The lower tax rates on the first $75,000 of taxable incomeb. The $40,000 AMT exemptionc. The ?179 depreciation amount allowedd. All of the above 12. Brown Company has approximately $250,000 in net income before deducting any compensation or other payment to its sole owner, Maddie (who is single). Assume that Maddie is in the 35% marginal tax bracket. Discuss the tax aspects of each of the following arrangements. (Ignore any employment tax considerations.)(I) Maddie operates Brown Company as a proprietorship.(II) Maddie incorporates Brown Company and pays herself a salary of $150,000 and no dividend.(III) Maddie incorporates the company and pays herself a $150,000 salary and a dividend of $77,750 ($100,000 - $22,250 corporate income tax).(IV) Maddie incorporates the company and pays herself a salary of $250,000. 13. Mason Corporation has 1,000 shares of common stock outstanding. Bill owns 200 shares, Bill's mother owns 200 shares, Bill's daughter owns 100 shares, and Bill's sister owns 151. Harry and Warren form Brown Corporation. Harry transfers equipment (basis of $210,000 and fair market value of $180,000), and Warren transfers land (basis of $15,000 and fair market value of $150,000) and $30,000 of cash. Each receives 50% of Brown's stock. Which occurs as a result of these transfers?2. Kirk and Madison form May Corporation. Kirk transfers property (basis of $20,000 and value of $300,000) for 100 shares in May Corporation. Madison transfers property (basis of $40,000 and value of $280,000) and provides legal services in organizing the corporation. The value of her services is $20,000. In return, Madison receives 100 shares in May Corporation. With respect to the transfers, _____. 3. Balsa Corporation distributes land (fair market value of $75,000 and an adjusted basis of $25,000). The land is subject to a liability of $30,000. Which is the total effect of the distribution on the E & P of Balsa? 4. Berry Corporation has accumulated E & P of $30,000 on January 1. During the year, the corporation distributes $120,000 to its sole shareholder, Jackson (an individual). Berry Corporation's E & P as of January 1 of the following year is _____. 5. Five years ago, Eleanor transferred property she had used in her sole proprietorship to Blue Corporation for 1,000 shares of Blue Corporation in a transaction that qualified under ? 351. The assets had a tax basis to her of $100,000, and a fair market value of $270,000, on the date of the transfer. In the current year, Blue Corporation (E & P of $800,000) redeems 250 shares from Eleanor for $220,000 in a transaction that does not qualify for sale or exchange treatment. With respect to the redemption, Eleanor will have a _____.6. Kite Corporation has 1,000 shares of stock outstanding. Kent owns 250 shares, Kent's father owns 150 shares, Kent's brother owns 250 shares, and Kent's son owns 50 shares. Plover Corporation owns the other 300 shares in Kite Corporation. Kent owns 60% of the stock in Plover Corporation. Applying the ? 318 stock attribution rules, how many shares does Kent own in Kite Corporation? 7. All of the following statements are true about gains recognized in a corporate reorganization except _____. a. taxable amounts in reorganization are classified as a dividend or capital gainb. corporate shareholders would prefer taxable amounts in a reorganization be classified as a capital gainc. individuals are taxed at the same rate for dividends and capital gainsd. capital gains and dividend income can be totally eliminated in a corporate reorganization with careful tax planninge. All of the above 8. Garnet Corporation has assets worth $700,000 (adjusted basis of $315,000). Pearl Corporation would like to acquire all of Garnet's assets in a Type C reorganization in exchange for $450,000 of voting stock, $125,000 cash, and assumption of Garnet's liabilities of $125,000. All stock received by Garnet will be distributed to its shareholders, and Garnet will then liquidate. Which, if any, statement regarding this transaction is correct?9. Deer Corporation was acquired last year by Lobo Corporation in a transaction causing an ownership change. At the time of the acquisition, the fair market value of Deer was $1.5 million, and the federal long-term tax-exempt rate was 5%. In the current year, Lobo has $600,000 of taxable income and excess credits carryovers from Deer amounting to $40,000. Which is Lobo's federal income tax for the year if Lobo is in the 34% tax bracket? 10. Orange's separate taxable income was $175,000, and Apple's was $125,000. Consolidated taxable income before contributions was $350,000. Charitable contributions made by the affiliated group included $30,000 by Orange, and $15,000 by Apple. Compute the group's charitable contribution deduction.11. Members of a controlled group share all but which tax attribute?a. The lower tax rates on the first $75,000 of taxable incomeb. The $40,000 AMT exemptionc. The ?179 depreciation amount allowedd. All of the above 12. Brown Company has approximately $250,000 in net income before deducting any compensation or other payment to its sole owner, Maddie (who is single). Assume that Maddie is in the 35% marginal tax bracket. Discuss the tax aspects of each of the following arrangements. (Ignore any employment tax considerations.)(I) Maddie operates Brown Company as a proprietorship.(II) Maddie incorporates Brown Company and pays herself a salary of $150,000 and no dividend.(III) Maddie incorporates the company and pays herself a $150,000 salary and a dividend of $77,750 ($100,000 - $22,250 corporate income tax).(IV) Maddie incorporates the company and pays herself a salary of $250,000. 13. Mason Corporation has 1,000 shares of common stock outstanding. Bill owns 200 shares, Bill's mother owns 200 shares, Bill's daughter owns 100 shares, and Bill's sister owns 15

 

Paper#50602 | Written in 18-Jul-2015

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