Exam 20: Corporations and Partnerships

In determining the taxable income (or loss) of a partnership, which, if any, of the following items must be considered?

In comparing C corporations with individuals, which of the following, if any, relates only to individuals?

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

On January 1, 2020, Copper Corporation (a calendar year S corporation for many years) became a C corporation.A possible reason for this change in status is that:

A shareholder's basis in property received as a dividend is its fair market value on the date of the distribution.

The S corporation qualifying rules no longer are relevant once the S election is initially made.

Tammy operates a small manufacturing business that is organized as an S corporation.The business has gross receipts of $8 million.Tammy may use the cash method of accounting for her business inventory.

For corporations and individuals, net long-term capital gains are taxed at ordinary income rates.

In its current taxable year, Auburn Corporation (a calendar year taxpayer), incurs the following income and expenses. Gross income from operations \ 1,000,000 Expenses from operations 1,100,000 Dividends from Blond Corporation 200,000 Auburn Corporation owns 20% of the stock in Blond Corporation.The dividends received deduction for 2019 is:

Taxpayers who want both limited liability and the pass-through of losses should choose either an S corporation or the LLC entity form of doing business.

If the shareholders of a calendar year C corporation elect S status on Friday, March 11, 2020, the election is effective for all of 2020.

Bilbeaux Corporation is a calendar year corporation that starts business on January 1, 2019.Bibeaux files an election to be treated as a S corporation on April 2, 2020, when it files its tax return for 2019.Bilbeaux will be treated as an S corporation for 2019.

Using the legend provided, classify each statement accordingly. -The tax return is due on or before the fifteenth day of the fourth month following the end of the tax year.

Citron Company is a wholesale distributor of children's clothing.During the year, it donates clothes (cost of $60,000; retail value of $100,000) to Clothes for Needy (a qualified charitable organization).Disregarding percentage limitations, Citron's charitable contribution deduction is:

Matching Using the legend provided, classify each statement accordingly. -Excess capital losses cannot be offset against ordinary income.

If a partnership interest is received in exchange for services rendered, ordinary income must be recognized by the recipient of the capital interest.

In return for a 10% interest in Sapphire Partnership, Lily transfers cash of $50,000 and land (basis of $200,000; fair market value of $300,000).Lily's basis in her Sapphire interest is $250,000.

Under the check-the-box Regulations, a multiowner entity that makes no election is taxed as a partnership.

As of January 1, 2020, Donald, the sole shareholder of Sandpiper (a calendar year C corporation), had a basis of $50,000 in his stock.During 2020, Sandpiper incurred an operating loss of $100,000 and distributed a $70,000 dividend to Donald.As of January 1, 2020, Sandpiper held accumulated E & P of $200,000.What is Donald's basis in his Sandpiper stock as of January 1, 2021?

Jenny contributes land (adjusted basis of $300,000; fair market value of $280,000) and cash of $40,000 to the newly formed Green Partnership.Green will have a basis of $280,000 in the land.