Questions from Federal Taxation

Q: Heather, an individual, owns all of the outstanding stock in

Heather, an individual, owns all of the outstanding stock in Silver Corporation. Heather purchased her stock in Silver nine years ago, and her basis is $56,000. At the beginning of this year, the corp...

Q: Lime Corporation, with E & P of $500,000

Lime Corporation, with E & P of $500,000, distributes land (worth $300,000, adjusted basis of $350,000) to Harry, its sole shareholder. The land is subject to a liability of $120,000, which Harry assu...

Q: In November of the current year, Emerald Corporation declared a dividend

In November of the current year, Emerald Corporation declared a dividend of $2 per share (the shareholder record date is December 15). Assume that Emerald has sufficient current E & P to cover the div...

Q: Your firm has a new individual client, Carla Navarro, who

Your firm has a new individual client, Carla Navarro, who has been assigned to you for preparation of the current year’s tax return. Upon review of Carla’s tax returns from prior years, you notice tha...

Q: Kenny Merinoff and his son, John, own all of the

Kenny Merinoff and his son, John, own all of the outstanding stock of Flamingo Corporation. Both John and Kenny are officers in the corporation and, together with John’s uncle, Ira, comprise the entir...

Q: Emerald Corporation is required to change its method of accounting for Federal

Emerald Corporation is required to change its method of accounting for Federal income tax purposes. The change will require an adjustment to income to be made over three tax periods. Jonas, the sole s...

Q: David, a sole proprietor of a bookstore, pays a $

David, a sole proprietor of a bookstore, pays a $7,500 premium for medical insurance for him and his family. Joan, an employee of a small firm that doesn’t provide her with medical insurance, pays med...

Q: Last year Alan’s accountant informed him that he could not claim any

Last year Alan’s accountant informed him that he could not claim any of his passive activity losses on his income tax return because of his lack of material participation. To circumvent the tax proble...

Q: Explain why some rental activities may not be treated as such under

Explain why some rental activities may not be treated as such under the passive activity loss rules.

Q: David contributes to charity some tangible personal property that he had used

David contributes to charity some tangible personal property that he had used in his business and depreciated. At the date of the donation, the property has a fair market value of $233,000 and an adju...