Questions from Federal Taxation

Q: Lucy sells her partnership interest, a passive activity, with an

Lucy sells her partnership interest, a passive activity, with an adjusted basis of $305,000 for $330,000. In addition, she has current and suspended losses of $28,000 associated with the partnership a...

Q: Review Examples 49 and 51 in the text. In both examples

Review Examples 49 and 51 in the text. In both examples, the taxpayer’s AGI is $129,400 even though in Example 51 there is $700 of nonrecaptured § 1231 loss from 2016. Explain why the two AGI amounts...

Q: Larry is the sole proprietor of a trampoline shop. During 2017

Larry is the sole proprietor of a trampoline shop. During 2017, the following transactions occurred: • Unimproved land adjacent to the store was condemned by the city on February 1. The condemnation p...

Q: Dan bought a hotel for $2,600,000 in

Dan bought a hotel for $2,600,000 in January 2013. In May 2017, he died and left the hotel to Ed. While Dan owned the hotel, he deducted $289,000 of cost recovery. The fair market value in May 2017 wa...

Q: Discuss the rationale for the reduced tax rates on dividends paid to

Discuss the rationale for the reduced tax rates on dividends paid to individuals.

Q: Orange Corporation distributes $200,000 in cash to each of

Orange Corporation distributes $200,000 in cash to each of its three shareholders: Sandy, Byron, and Fuchsia Corporation. What factors must be considered when determining how the distribution is treat...

Q: Assume the same facts as in Question 5, except that noncash

Assume the same facts as in Question 5, except that noncash property is distributed. What factors must be considered when determining how the distribution is treated for tax purposes by Orange Corpora...

Q: Ochre Corporation’s board of directors decides to distribute property to its shareholders

Ochre Corporation’s board of directors decides to distribute property to its shareholders rather than pay a cash dividend. Why might Ochre’s board make this decision?

Q: Raven Corporation owns three machines that it uses in its business.

Raven Corporation owns three machines that it uses in its business. It no longer needs two of these machines and is considering distributing them to its two shareholders as a property dividend. All th...

Q: Tangerine Corporation is considering a property distribution to its shareholders. \

Tangerine Corporation is considering a property distribution to its shareholders. \If appreciated property is to be used, does it matter to Tangerine whether \the property distributed is a long-term c...