Exam 32: Corporations

Star Corporation,in complete liquidation,makes distributions to its two shareholders.Tim surrenders his Star stock (adjusted basis of $70,000)to the corporation in exchange for land with a $90,000 adjusted basis and a $100,000 FMV.Lindsey receives $100,000 cash for her shares (adjusted basis $110,000).What is the amount of gains and or losses recognized by Tim and Lindsey as a result of these transactions?

Atomic Corporation is enjoying a very profitable year.The board of directors is considering paying either a bonus to the president of the corporation or an extra dividend to the shareholder.Shinil is both the president and the 100% shareholder.Which of the following statements is generally correct with respect to closely held corporations in Atomic's position?

How does the treatment of a liquidation of a subsidiary into its parent corporation differ from the general rule?

Additional capital may be obtained by a corporation by issuing debt securities or equity securities.What advantages result from issuing debt in the capital structure?

Major Corporation's taxable income for the current year is $335,000.Its tax liability is

Daniel transfers land with a $92,000 adjusted basis and a $100,000 FMV to a corporation in a Sec.351 transfer.Immediately after the transfer,Daniel owns 100% of the corporation-stock with a FMV of $15,000.In addition,$85,000 of business-related liabilities are assumed by the corporation with respect to the transfer.No other property is transferred.Daniel's basis in the stock is

Depreciation recapture does not apply to a transfer coming under Sec.351 unless the transferor recognizes gain on depreciable property that is transferred.

Individuals Opal and Ben form OB Corporation.Opal transfers land and a building with a $550,000 adjusted basis and a $625,000 FMV in exchange for 50% of the stock of the OB Corporation worth $610,000 and a $15,000 note.Ben transfers cash of $625,000 for 50% of the stock worth $610,000 and a note of the OB Corporation valued at $15,000.Opal's basis in the stock received is

Witte Corporation reported the following results for the current year: What is the amount of the charitable contribution carryover to next year?

Chocolat Inc.is a U.S.chocolate manufacturer.Its domestic production income is $4,000,000.Taxable income before the domestic production deduction is $3,000,000.What is the amount of the production activities deduction?

In general,net operating losses of a corporation are carried back 3 years and forward for 20 years.

Discuss the tax consequences of a complete liquidation to the liquidated corporation and to the shareholders.

With respect to charitable contributions by corporations,all of the following rules apply with the exception of

A corporation distributes land worth $200,000 to its sole shareholder.The corporation had purchased the land several years ago for $120,000.The corporation has over $1 million of E&P.How much income will the corporation and the shareholder recognize?

Johnson Corporation has $300,000 of AMTI before the exemption.What is the tax base for AMT?

A publicly held corporation is denied a deduction for compensation paid to its chief executive officer and its four highest compensated officers if the compensation amount for any individual exceeds $1,000,000 per year.

A liquidating corporation

The term "thin capitalization" means that the corporation is financed primarily with capital stock rather than debt.

For purposes of the accumulated earnings tax,reasonable needs of the business include providing working capital for the business.

Corkie Corporation distributes $80,000 cash along with land having a $60,000 adjusted basis and a $40,000 FMV to its shareholder Josh.What are the tax consequences to Corkie Corporation?