Exam 20: Corporations and Partnerships

Elijah contributes land (basis of $80,000; fair market value of $400,000) for a 20% interest in a partnership.The land is subject to a mortgage of $50,000, which the partnership assumes.As a result of the transfer, Elijah:

Like individuals, corporations can claim both deductions for and deductions from AGI.

Currently all C corporations must file a Schedule M-3 with Form 1120.

Which of the following statements, if any, correctly describe the status or nature of limited liability companies?

Matching Using the legend provided, classify each statement accordingly. -An excess long-term capital loss carryover is first used to offset current short-term capital gains.

A partner's basis in the partnership interest is decreased by his or her share of the capital losses incurred by the partnership.

To obtain limited liability, a sole proprietor incorporates his business.Under the check-the-box Regulations, the entity can elect to be treated as a partnership.

Using the legend provided, classify each statement accordingly. -The corporation may utilize an NOL carryover from a prior year.

To voluntarily revoke an S election, all of the shareholders must consent.

Canary Corporation, a calendar year S corporation, issues some of its stock to a nonresident alien on March 4, 2020. Canary becomes a C corporation as of March 5, 2020.

Tangible Corporation started in business on April 1 of this year.It incurred $20,000 in attorney's fees to draft articles of incorporation and structure the by-laws, $10,000 to set up books and records in accordance with state law, $12,000 to an investment bank to sell the shares to investors, and $13,000 in fees paid to the state to incorporate.Tangible's maximum organizational costs deduction for the year is:

During the 2020, Goose Corporation (a calendar year, cash basis taxpayer) receives cash dividends as follows. Source of Dividends Ownership Percentage Dividends Emu Corporation 90\% \ 90,000 Robin Corporation 21\% 60,000 Crane Corporation 10\% 30,000 If it is presumed that the taxable income limitation does not apply, Goose Corporation's dividends received deduction for 2020 is:

Matching Using the legend provided, classify each statement accordingly. -Interest on municipal bonds is excluded from gross income.

Matching Using the legend provided, classify each statement accordingly. -A cash basis taxpayer cannot deduct a charitable contribution until the year of payment.

Using the legend provided, classify each statement accordingly. -Cannot have a partnership as a shareholder.

Using the legend provided, classify each statement accordingly. -The concept of itemized deductions is not relevant.

The holding period to the partnership of property contributed by a partner includes the period during which the property was held by the contributing partner.

Using the legend provided, classify each statement accordingly. -A dividends received deduction is not allowed.

Under the check-the-box Regulations, an entity is allowed an annual election on how it will be treated (e.g., corporation, partnership) for Federal income tax purposes.

Matching Using the legend provided, classify each statement accordingly. -Like-kind exchange provisions apply.