Exam 20: Corporations and Partnerships

Both individuals and corporations can carry over excess charitable contributions indefinitely.

Camilla and Dean form Grouse Corporation with the following investment: From Camilla From Dean Cash $300,000 Property (basis of $320,000;fair market value of $330,000) $330,000 ​ Camilla and Dean each receive 300 shares of stock in Grouse Corporation and,in addition,Dean receives $30,000 in cash.As a result of the transfer,Dean's basis in the stock and Grouse's basis in the property will be:

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 -Concept of itemized deductions is not relevant.

Jean is a shareholder in Parrot Corporation,a calendar year S corporation.During the year,Jean's share of the pass-through from Parrot is: ∙ Dividend distribution by Parrot $30,000 ∙ Long-term capital gain 5,000 ∙ Operating loss 20,000 ∙ Tax-exempt interest income 10,000 ​ If Jean's basis in the Parrot stock was $100,000 at the beginning of the year,her basis at the end of the year is:

If a corporation has no E & P,its shareholders will not have constructive dividends.

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 -Excess capital losses can be carried over indefinitely.

John owns stock in Green Corporation,which,in turn,owns stock in IBM.When IBM earns income,it is subject to the corporate income tax (i.e. ,the first tax).When IBM pays a dividend,Green Corporation must pay a corporate income tax on its share (i.e. ,the second tax).When Green Corporation pays a dividend,John must pay an individual income tax on what he receives (i.e. ,the third tax).Thus,the same income is subject to triple taxation. a.How does the tax law mitigate the tax on Green Corporation? b.How does the tax law mitigate the tax imposed on John?

The domestic production activities deduction of an S corporation can be passed through to its shareholders.

The domestic production activities deduction (DPAD)is determined at the partnership level and then passed through to each individual partner based on his or her partnership interest.

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. -Cannot be a shareholder in another corporation.

When forming a corporation under § 351,recognized gain is the lesser of realized gain or the amount of boot received.

For income tax purposes,excess capital losses of individuals and corporations are treated in the same manner.

If the shareholders of a calendar year C corporation elect S status on Friday,March 11,2016,the election is effective for all of 2016.

In December 2016,Swallow Company's board authorizes a cash donation of $60,000 to the Hamilton County School District.The amount authorized is paid to the county in two $30,000 amounts in January and May 2017.Presuming a calendar year and accrual method taxpayer,when is the charitable contribution deduction available if Swallow Company is a: a.Partnership? b.C (regular)corporation?

Isabella contributes land to the White Partnership for a 20% interest in capital and profits.The land (adjusted basis of $900,000 and fair market value of $1.4 million)is subject to a mortgage of $600,000 which the partnership assumes.What is Isabella's basis in the White Partnership?

Darlene,a 30% shareholder in a calendar year S corporation,sells her stock on June 6,2016.If the corporation has an operating loss for 2016,none of this loss can be claimed by Darlene because she was not a shareholder as of December 31,2016.

Jacob is a shareholder in Robin Corporation,an S corporation.Jacob's share of Robin's activities for the current year is a short-term capital gain of $80,000 and an operating loss of $50,000.As a result of these transactions,Jacob should increase his basis in the Robin stock by $30,000.

Ruby Company,a clothing retailer,donates children's clothing to Salvation Army (a qualified charity).The clothing is part of Ruby's inventory and has an adjusted basis of $100,000 and a fair market value of $180,000.What is the amount of Ruby's charitable donation if it is a: a.Partnership? b.Corporation?

In determining a partner's basis in the partnership interest,which of the following reflects a correct adjustment?

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 -A domestic production activities deduction is available.