Question 1

Identify which of the following statements is false.

Accepted Answer

A)  Nonresident aliens may use either the standard deduction or claim itemized deductions. 
B)  Nonresident aliens are generally allowed to claim only a single personal exemption. 
C)  A nonresident alien can elect to have income earned on a passive real estate investment treated as trade or business income. 
D)  All of the above are false. 
A)  Nonresident aliens may use either the standard deduction or claim itemized deductions. 
B)  Nonresident aliens are generally allowed to claim only a single personal exemption. 
C)  A nonresident alien can elect to have income earned on a passive real estate investment treated as trade or business income. 
D)  All of the above are false.

Question 2

This year, John, Meg, and Karen form Frost Corporation. John contributes land purchased as an investment four years ago for $25,000 that has a $30,000 FMV in exchange for 30 shares of Frost stock. Meg contributes machinery (Sec. 1251 property) purchased four years ago and used in her business having a $50,000 adjusted basis and a $30,000 FMV in exchange for 30 shares of Frost stock. Karen contributes services worth $15,000 and
$5,000 cash in exchange for 20 shares of Frost stock.
a) What is the amount of John's recognized gain or loss?
b) What is John's basis in his Frost shares? When does his holding period begin?
c) What is the amount of Meg's recognized gain or loss?
d) What is Meg's basis in her Frost shares? When does her holding period begin?
e) How much income, if any, must Karen recognize?
f) What is Karen's basis in her Frost shares? When does her holding period begin?
g) What is Frost Corporation's basis in the land and the machinery? When does its holding period begin? How Frost Corporation treat the amount paid to Karen for services?

Accepted Answer

a) Since Sec. 351 would apply to the exc

Question 3

Perry, a U.S. citizen, is transferred by his employer to Japan for a three- year assignment. Which one of the following items is not excluded under Sec. 911?

Accepted Answer

A)  base salary 
B)  premiums paid on first $50,000 of group term life insurance 
C)  cost- of- living allowance 
D)  housing costs 
A)  base salary 
B)  premiums paid on first $50,000 of group term life insurance 
C)  cost- of- living allowance 
D)  housing costs

Question 4

What is the branch profits tax? Explain the Congressional intent behind its enactment.

Accepted Answer

The branch profits tax is imposed on the

Question 5

A medical doctor incorporates her medical practice, which is operated as a sole proprietorship. The proprietorship uses the cash method of accounting. Among the assets contributed to the new corporation are unrealized receivables worth $40,000. The receivables are collected by the corporation. Which of the following statements is correct?

Accepted Answer

A)  The $40,000 of receivables is included as ordinary income in the corporation's income tax return when collected. 
B)  The $40,000 of receivables is included as ordinary income on the doctor's personal income tax return when collected by the corporation. 
C)  The $40,000 of receivables is included as ordinary income in the corporation's income tax return at the time of incorporation. 
D)  The doctor must include the $40,000 as ordinary income in her personal income tax return at the time of incorporation. 
A)  The $40,000 of receivables is included as ordinary income in the corporation's income tax return when collected. 
B)  The $40,000 of receivables is included as ordinary income on the doctor's personal income tax return when collected by the corporation. 
C)  The $40,000 of receivables is included as ordinary income in the corporation's income tax return at the time of incorporation. 
D)  The doctor must include the $40,000 as ordinary income in her personal income tax return at the time of incorporation.

Question 6

Tanicia owns all 100 shares of Midwest Corporation's stock, valued at $100,000. Gwen owns property that has a
$15,000 adjusted basis and a $100,000 FMV. Gwen contributes the property to Midwest Corporation in exchange for 100 shares of newly issued Midwest stock. Does Sec. 351 apply to Gwen's exchange? What is the amount of her realized gain or loss? How much is recognized?

Accepted Answer

Section 351 does not apply because Gwen

Question 7

A foreign corporation with a single class of stock is owned 8% by Bert, 49% by Xi Yong, 30% by Ernie, and 13% by Mark. Bert, Ernie, and Mark are U.S. citizens, and Xi Yong is a nonresident alien. The shareholders are not related. Is the foreign corporation a controlled foreign corporation (CFC)?

Accepted Answer

It is not a CFC (only 43% owne

Identify which of the following statements is false.

Perry, a U.S. citizen, is transferred by his employer to Japan for a three- year assignment. Which one of the following items is not excluded under Sec. 911?

What is the branch profits tax? Explain the Congressional intent behind its enactment.

A foreign corporation with a single class of stock is owned 8% by Bert, 49% by Xi Yong, 30% by Ernie, and 13% by Mark. Bert, Ernie, and Mark are U.S. citizens, and Xi Yong is a nonresident alien. The shareholders are not related. Is the foreign corporation a controlled foreign corporation (CFC)?

Tax Research

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters

Exam 2: Corporate Formations and Capital Structure

Identify which of the following statements is false.

Perry, a U.S. citizen, is transferred by his employer to Japan for a three- year assignment. Which one of the following items is not excluded under Sec. 911?

What is the branch profits tax? Explain the Congressional intent behind its enactment.

A foreign corporation with a single class of stock is owned 8% by Bert, 49% by Xi Yong, 30% by Ernie, and 13% by Mark. Bert, Ernie, and Mark are U.S. citizens, and Xi Yong is a nonresident alien. The shareholders are not related. Is the foreign corporation a controlled foreign corporation (CFC)?

Tax Research

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters