Questions from Federal Taxation

Q: Robert and Lori (Robert’s sister) own all of the stock

Robert and Lori (Robert’s sister) own all of the stock in Swan Corporation (E & P of $1 million). Each owns 500 shares and has a basis of $85,000 in the shares. Robert wants to sell his stock for $600...

Q: Wanda is considering selling two personal use assets that she owns.

Wanda is considering selling two personal use assets that she owns. One has appreciated in value by $20,000, and the other has declined in value by $17,000. Wanda believes that she should sell both as...

Q: Tyneka inherited 1,000 shares of Aqua, Inc. stock

Tyneka inherited 1,000 shares of Aqua, Inc. stock from Joe. Joe’s basis was $35,000, and the fair market value on July 1, 2017 (the date of death) was $45,000. The shares were distributed to Tyneka on...

Q: Ashby and Curtis, married professionals, have a 2-year

Ashby and Curtis, married professionals, have a 2-year-old son, Jason. Curtis works full-time as an electrical engineer, but Ashby has not worked outside the home since Jason was born. As Jason is get...

Q: The gross estate of Raul, decedent, includes stock in Iris

The gross estate of Raul, decedent, includes stock in Iris Corporation (E & P of $3 million) valued at $2.5 million. At the time of his death, Raul owned 60% of the Iris stock outstanding, and he had...

Q: Broadbill Corporation (E & P of $650,000)

Broadbill Corporation (E & P of $650,000) has 1,000 shares of common stock outstanding. The shares are owned by the following individuals: Tammy, 300 shares; Yvette, 400 shares; and Jeremy, 300 shares...

Q: Crane Corporation has 2,000 shares of stock outstanding. It

Crane Corporation has 2,000 shares of stock outstanding. It redeems 500 shares for $370,000 when it has paid-in capital of $300,000 and E & P of $1.2 million. The redemption qualifies for sale or exch...

Q: Mitchell, a calendar year taxpayer, is the sole proprietor of

Mitchell, a calendar year taxpayer, is the sole proprietor of a fast-food restaurant. His adjusted basis for the building and the related land is $450,000. On March 12, 2017, state authorities notify...

Q: At the start of the current year, Blue Corporation (a

At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $100,000. Blue’s current E & P is $60,000, and at the end of the year, it distributes $200,000 ($...

Q: Cardinal Corporation, a calendar year taxpayer, receives dividend income of

Cardinal Corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. Cardinal also receives interest income of $35,000 from municip...