Questions from General Taxation

Q: Sea Green Enterprises reports the following assets and liabilities on its balance

Sea Green Enterprises reports the following assets and liabilities on its balance sheet. Sea Green has just lost a product liability suit with damages of $10 million being awarded to the plaintiff. A...

Q: Bryan operates his business as a C corporation. He is the

Bryan operates his business as a C corporation. He is the only shareholder. The accumulated E & P is $800,000. Starting next year, Bryan will distribute $200,000 cash per year, plus all of the annual...

Q: Red, White, Blue, and Orange report taxable income as

Red, White, Blue, and Orange report taxable income as follows. a. Calculate the marginal tax rate and the effective tax rate for each of the C corporations. b. Explain why the marginal tax rate for a...

Q: Amy and Jeff Barnes will operate their florist shop as a partnership

Amy and Jeff Barnes will operate their florist shop as a partnership or as an S corporation. Their mailing address is 5700 Richmond Highway, Alexandria, VA 22301. After paying salaries of $100,000 to...

Q: Gerald is an entrepreneur who likes to be actively involved in his

Gerald is an entrepreneur who likes to be actively involved in his business ventures. He is going to invest $500,000 in a business that he projects will produce a tax loss of approximately $125,000 pe...

Q: Duke and Jacquie Coleman, married filing jointly, will establish a

Duke and Jacquie Coleman, married filing jointly, will establish a manufacturing business. The couple anticipates that the business will be profitable immediately due to a patent that Jacquie holds; p...

Q: Jane, Jon, and Clyde incorporate their respective businesses and form

Jane, Jon, and Clyde incorporate their respective businesses and form Starling Corporation. On March 1 of the current year, Jane exchanges her property (basis of $50,000 and value of $150,000) for 150...

Q: Plum Corporation will begin operations on January 1. Earnings for the

Plum Corporation will begin operations on January 1. Earnings for the next five years are projected to be relatively stable at about $80,000 per year. The shareholders of Plum are in the 33% tax brack...

Q: Mabel and Alan, who are in the 35% tax bracket

Mabel and Alan, who are in the 35% tax bracket, recently acquired a fast-food franchise. Both of them will work in the business and receive a salary of $175,000. They anticipate that the annual profit...

Q: Owl is a closely held corporation owned by eight shareholders (each

Owl is a closely held corporation owned by eight shareholders (each has 12.5% of the stock). Selected financial information provided by Owl follows. Taxable income ……………………………………………………………$6,250,000 P...