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:

In what manner do the tax rules dealing with capital gains differ for corporations and individuals?

Although some differences exist,the tax treatment of S corporations and partnerships are very similar.In this connection,comment on the following. a.Tax at the entity level. b.Conduit approach. c.Treatment by owners (i.e. ,shareholders,partners)of excess entity losses.

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of C corporations. b.Applies only to the income taxation of S corporations. c.Applies to both the income taxation of C corporations and S corporations. d.Applies to neither the income taxation of C corporations nor of S corporations. -The corporation may utilize an NOL carryover from a prior year.

Jacob and Ashley form Junco Corporation with the following investments: From Jacob From Ashley Cash $200,000 Equipment (basis of $400,000;fair market value of $300,000) 300,000 Land (basis of $300,000;fair market value of $600,000) $600,000 ​ Jacob and Ashley each receive one-half of the Junco stock.In addition,Ashley receives cash of $100,000.One of the results of these transfers is:

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of C corporations. b.Applies only to the income taxation of S corporations. c.Applies to both the income taxation of C corporations and S corporations. d.Applies to neither the income taxation of C corporations nor of S corporations. -Amount the corporation borrows from a bank increases the basis its shareholders have in their stock.

Which of the following,if any,incorrectly characterize the check-the-box Regulations?

Four unrelated,calendar year corporations are formed on January 1,2016,and have the following qualified organizational expenditures: $4,000 for Rust Corporation;$15,000 for Orange Corporation;$53,000 for Pearl Corporation;and $56,000 for Chestnut Corporation.What is the maximum deduction each can claim for 2016?

An individual with a fiscal year of July 1-June 30 has a due date for filing its Federal income tax return of October 15.

Using the legend provided, classify each statement accordingly. a.Applies only to the income taxation of individuals b.Applies only to the income taxation of C corporations c.Applies to both the income taxation of individuals and of C corporations d.Applies to neither the income taxation of individuals nor of C corporations -Dividends received deduction is not available.

Snipe Corporation,a calendar year taxpayer,has total E & P of $800,000.During the current year,Snipe makes property distributions to Tracy (the sole shareholder)as follows: Adjusted Basis Fair Market Value Stock investment $100,000 $ 90,000 Land 270,000 300,000 ​ As a result of these distributions:

Silver Corporation has held an S election since its formation five years ago.Which,if any,of the following will cause Silver to lose its election?

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

If a C corporation has taxable income in excess of $18,333,333,the corporate tax rate is 35% on all of its taxable income.

Jerry is the sole shareholder of Bluejay Corporation,a calendar year C corporation.As of January 1,2016,Bluejay has a deficit of $50,000 in accumulated E & P.During 2016,it has current E & P of $300,000 and distributes a cash dividend of $400,000 to its shareholder.As of January 1,2016,Jerry's basis in the Bluejay stock is $75,000.One result of these transactions is:

Although the corporate income tax is progressive,the lower brackets are phased out at higher taxable income levels.

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.

Murrelet Corporation is a calendar year taxpayer that holds S status.For the current year,it had the following transactions: Sales $500,000 Cost of goods sold (400,000) Interest on City of Charlotte bonds 5,000 Capital gains and losses Long-term gain (securities held as investments) 8,000 Long-term gain (antique car collection) 20,000 Short-term loss (2,000) Charitable contributions (4,000) Dividends received from another corporation (1% ownership) 9,000 Amortization of organizational expenditures (1,000) Payroll expenses (80,000) ​ a.What is Murrelet Corporation's taxable income? b.What are the separately stated items?