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Question;386. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que86;Linda formed Pink Corporation with an investment of $200,000 cash, for which;she received $20,000 in stock and $180,000 in 5% interest-bearing bonds;maturing in ten years. A few years later Linda loaned Pink an additional;$40,000 on open account. Pink becomes insolvent in the current year and is;adjudged bankrupt. Linda was the president of Pink Corporation and was paid an;annual salary of $35,000 for the past three years. Linda has no other;employment. How will Linda treat her losses for tax purposes?;387. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que87;Five years ago, Joe, a single taxpayer, acquired stock in a corporation that;qualified as a small business corporation under ? 1244, at a cost of $55,000.;Joe wants to give his son, Jake, $15,000 to help finance Jake?s college;education. The stock is currently worth $15,000. Joe is considering selling the;stock in the current year for $15,000 and giving the cash to Jake. As an;alternative, Joe could give the stock to Jake and let Jake sell it for $15,000.;Which alternative should Joe choose?;388. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que88;In 2004, Donna transferred assets (basis of $300,000 and fair market value of;$250,000) to Egret Corporation in return for 200 shares of ? 1244 stock. Due to;? 351, the transfer was nontaxable, therefore, Donna?s basis in the Egret stock;is $300,000. In 2005, Donna sells 100 of these shares to Walter (a family;friend) for $100,000. In 2011, Egret Corporation files for bankruptcy, and its;stock becomes worthless.;a.;How much;loss may Donna recognize in 2005 and 2011? What is the nature of this loss?;[Note: Donna is married and always files a joint return.];b.;How much;loss may Walter (a single taxpayer) recognize in 2011, and what is the nature;of such loss?;389. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que89;What is the rationale underlying the tax deferral treatment available under;351?;390. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que90;Issues relating to basis arise when a taxpayer is involved in a ? 351;transaction. Describe the underlying rules, and the purpose they serve.;391. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que91;How is the transfer of liabilities in a property transaction generally treated;for tax purposes? How is a transfer of liabilities generally treated in a ? 351;transaction? What exceptions could arise to this usual treatment in a ? 351;setting?;392. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que92;When forming a corporation, a transferor-shareholder may choose to receive some;corporate debt along with stock. Identify some of the issues the transferor;must consider when deciding whether debt should be a part of the transaction.;393. CHAPTER;4?CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que93;What are the tax consequences if an individual investor incurs a loss on the;following;a.;Stock that;is not ? 1244 stock.;b.;Stock that;is ? 1244 stock.;c.;Corporate;bond.;d.;An;uncollectible loan made to a corporation.

 

Paper#59217 | Written in 18-Jul-2015

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