Questions from Federal Taxation

Q: Forrester owns a nonrental business with two separate departments. Department A

Forrester owns a nonrental business with two separate departments. Department A generates net income of $70,000, and Department B generates a net loss of $58,000. Forrester participates 800 hours in t...

Q: A new client, John Dobson, recently formed John’s Premium Steakhouse

A new client, John Dobson, recently formed John’s Premium Steakhouse, Inc., to operate a new restaurant. The restaurant will be a first-time business venture for John, who recently retired after 30 ye...

Q: A personal service corporation (PSC) generally is limited to the

A personal service corporation (PSC) generally is limited to the calendar year for reporting purposes. One exception to this rule is when the PSC can demonstrate a business purpose for a fiscal year-e...

Q: Jingie owns two parcels of business land (§ 1231 assets). One

Jingie owns two parcels of business land (§ 1231 assets). One parcel can be sold at a loss of $60,000, and the other parcel can be sold at a gain of $70,000. Jingie has no nonrecaptured § 1231 losses...

Q: Jocelyn contributes land with a basis of $60,000 and

Jocelyn contributes land with a basis of $60,000 and fair market value of $90,000 and inventory with a basis of $5,000 and fair market value of $8,000 in exchange for 100% of Zion Corporation stock. T...

Q: Oak Corporation holds the following general business credit carryovers.

Oak Corporation holds the following general business credit carryovers. 2013…………………………$ 5,000 2014…………………………..15,000 2015…………………………….6,000 2016…………………………...19,000 Total carryovers………..$45,000 If Oak...

Q: Nicky receives a car from Sam as a gift. Sam paid

Nicky receives a car from Sam as a gift. Sam paid $48,000 for the car. He had used it for business purposes and had deducted $10,000 for depreciation up to the time he gave the car to Nicky. The fair...

Q: Martin transfers real estate with an adjusted basis of $260,

Martin transfers real estate with an adjusted basis of $260,000 and fair market value of $350,000 to a newly formed corporation in exchange for 100% of the stock. The corporation assumes the liability...

Q: Yvonne and Simon form Ion Corporation. Yvonne transfers equipment (basis

Yvonne and Simon form Ion Corporation. Yvonne transfers equipment (basis of $110,000 and fair market value of $165,000). Simon invests $130,000 of cash. They each receive 100 shares in Ion Corporation...

Q: Chaz transfers cash of $60,000 to a newly formed

Chaz transfers cash of $60,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $15,000. The income is credited to its earnings and profits a...