Questions from Federal Taxation

Q: How is the four-column template in Concept Summary 20.

How is the four-column template in Concept Summary 20.3 used to determine a shareholder’s basis in the stock received in a corporate restructuring?

Q: Dion, a shareholder, owned 20% of MeadowBrook’s stock for

Dion, a shareholder, owned 20% of MeadowBrook’s stock for 292 days and 25% for the remaining 73 days in the year. Using the per-day allocation method, compute Dion’...

Q: Holbrook, a calendar year S corporation, distributes $15,

Holbrook, a calendar year S corporation, distributes $15,000 cash to its only shareholder, Cody, on December 31. Cody’s basis in his stock is $20,000, Holbrook’s AA...

Q: Vogel, Inc., an S corporation for five years, distributes

Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land was purchased for $45,000 ten years ago and is currently w...

Q: Jonas is a 60% owner of Ard, an S corporation

Jonas is a 60% owner of Ard, an S corporation. At the beginning of the year, his stock basis is zero. Jonas’s basis in a $20,000 loan made to Ard and evidenced by Ard’s note has been reduced to $0 by...

Q: Kaiwan, Inc., a calendar year S corporation, is partly

Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is $32,000. During the year, Sharrod’s share of a Kaiwan long-term capital gain (LTCG) is $5,000, a...

Q: Matulis, Inc., a calendar year C corporation, owns a

Matulis, Inc., a calendar year C corporation, owns a single asset with a basis of $325,000 and a fair market value of $800,000. Matulis holds a positive E & P balance. It elects S corporation status f...

Q: Noelle, the owner of all of the shares of ClockCo,

Noelle, the owner of all of the shares of ClockCo, an S corporation, transfers her stock to Grayson on April 1. ClockCo reports a $70,000 NOL for the entire tax year, but $10,000 of the loss occurs du...

Q: Greiner, Inc., a calendar year S corporation, holds no

Greiner, Inc., a calendar year S corporation, holds no AEP. During the year, Chad, an individual Greiner shareholder, receives a cash distribution of $30,000 from the entity. Chad’s basis in his stock...

Q: Collette’s S corporation holds a small amount of accumulated earnings and profits

Collette’s S corporation holds a small amount of accumulated earnings and profits (AEP), requiring the use of a more complex set of distribution rules. Collette’s accountant tells her that this AEP fo...