Chat with AIExam 2: Corporate Formations and Capital Structure
Exam 1: Tax Research115 Questions
Exam 2: Corporate Formations and Capital Structure207 Questions
Exam 3: The Corporate Income Tax114 Questions
Exam 4: Corporate Nonliquidating Distributions113 Questions
Exam 5: Other Corporate Tax Levies56 Questions
Exam 6: Corporate Liquidating Distributions97 Questions
Exam 7: Corporate Acquisitions and Reorganizations102 Questions
Exam 8: Consolidated Tax Returns87 Questions
Exam 9: Partnership Formation and Operation114 Questions
Exam 10: Special Partnership Issues103 Questions
Exam 11: S Corporations103 Questions
Exam 12: The Gift Tax104 Questions
Exam 13: The Estate Tax107 Questions
Exam 14: Income Taxation of Trusts and Estates101 Questions
Exam 15: Administrative Procedures105 Questions
Exam 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals2 k+ Questions
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Matt and Sheila form Krupp Corporation. Matt contributes property with an FMV of $55,000 and a basis of $35,000. Sheila contributes property with an FMV of $75,000 and a basis of $40,000. Matt sells his stock to Paul shortly after the exchange. The transaction will
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Discuss the impact of the contribution of cash as part of a Sec. 351 exchange.
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VerifiedCash is treated as property when it is contributed. No gain or loss is recognized by the transferor when a contribution of cash is made. Stock received by a transferor who contributes cash for the stock has his shares counted for purposes of the 80% control test.
Discuss the advantages of conducting overseas business activities through a foreign corporation.
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Verified1) The foreign corporation's liabilities are separated from those of the parent corporation, thus limiting t domestic corporation's losses to its capital investment.
2) The U.S. income tax levy on the domestic corporation's ratable share of the foreign corporation's earni postponed until the earnings are remitted to the U.S. corporation. The postponement of the U.S. tax liabilit be lost if the foreign corporation is classified as a controlled foreign corporation (CFC), foreign personal h company (FPHC), or passive foreign investment company (PFIC). These special corporations characteristi have majority U.S. ownership and earn in many cases primarily passive or holding company income.
3) A domestic corporation receiving a dividend from a foreign corporation can claim a special deemed p foreign tax credit for a ratable share of the foreign income taxes paid by the foreign corporation. The deemed paid tax credit is available only if the foreign corporation makes dividend payments out of E&P and if the domestic corporation owns at least 10% of the foreign corporation's stock on the distribution date.
Severs Corporation employs Susan as an Advertising Director. Her annual compensation from Severs Corporation is $100,000. Severs Corporation is experiencing financial problems, and Susan lends the corporation
$50,000 in 2008 in an attempt to help it through its financial difficulties. Severs Corporation subsequently declares bankruptcy, and in 2010 Susan and the other creditors receive 10 cents on each dollar they are owed. What is the amount and character of Susan's loss?
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(77) Quality Corporation created a foreign subsidiary in Country C this year. The subsidiary receives components from Quality, assembles the components into a finished product using local labor, and sells them to unrelated wholesalers in Countries A, B, and C using its own sales force. The foreign subsidiary has paid no dividends to the parent this year. What tax issues should Quality's Director of Taxes consider with respect to these activities?
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(86) Julia, an accrual- method taxpayer, is a U.S. citizen and a resident of a foreign country. Her tax year for both countries is a calendar year. Julia accrues 50,000 coras for the foreign country tax liability on December 31 of last year when the exchange rate is one cora = $1. Julia pays the tax to the foreign country on its due date, March 1 of the current year. The exchange rate on that date is one cora = $1.50. Julia files her U.S. tax return for last year on April 15 of the current year when the exchange rate is one cora = $2. Julia's foreign tax credit is
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(89) What are the consequences of classification as a corporate inversion?
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(75) Cherie transfers two assets to a newly- created corporation. The first asset has an adjusted basis of $40,000 and an FMV of $50,000. The second asset has an adjusted basis of $35,000 and an FMV of
$25,000. Cherie receives stock with an FMV of $66,000 and $9,000 cash. Cherie must recognize a gain of
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(74) Which of the following characteristics is not used by the U.S. government to determine the tax treatment accorded foreign- related transactions?
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(76) Jerry transfers two assets to a corporation as part of a Sec. 351 exchange. The first asset has an adjusted basis of $70,000 and an FMV of $50,000. The second asset has an adjusted basis of $70,000 and an FMV of $150,000. The FMV of the stock received is $180,000, and he also receives $20,000 cash. The realized and recognized gain on the second asset is
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(78) Pedro, a nonresident alien, licenses a patent to a U.S. company for an $11 per unit fee for each unit produced. As a result of receiving the fee, Pedro must recognize the fee as
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(67) Sarah transfers property with an $80,000 adjusted basis and a $100,000 FMV to Super Corporation in a Sec. 351 transaction. Sarah receives stock with an $85,000 FMV and a short- term note with a $15,000 FMV. Sarah's basis in the stock is
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(82) The City of Providence owns 100% of Triple A Baseball Corporation, a minor league baseball team in their community. The City donates land worth $125,000 to Triple A Corporation so the major league team will not revoke the City's minor league franchise. How much gross income must Triple A Corporation recognize because of the land contribution, and what is the land's basis to Triple A Corporation?
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(78) Colleen operates a business as a sole proprietorship. She purchased a computer for $10,000 last year. The computer is five- year recovery property for MACRS purposes and is depreciated under the regular MACRS rules. This year, Colleen incorporates the business and transfers the computer to the new corporation on July 20. The depreciation on the computer for this year allocable to the sole proprietorship is
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(80) Under Sec. 351, corporate stock may include all of the following except
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(81) Maria has been operating a business as a sole proprietorship for several years. She needs additional capital and wants to incorporate her business. The assets of her business (building, land, inventory, and so on) have a
$400,000 adjusted basis and a $1.5 million FMV. Maria is willing to exchange the assets for 1,500 shares of Metro Corporation stock, each having a $1,000 FMV. Bill and John are each willing to invest $500,000 in Maria's business and will each receive 500 shares of stock. Why is Sec. 351 important to Maria? Does it matter to Bill and John?
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(80) Discuss the tax planning opportunities that are available in forming a corporation when one of the parties owns property that has a high basis and a low FMV.
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