Questions from Federal Taxation

Q: Bonnie and Clyde each own one-third of a fast-

Bonnie and Clyde each own one-third of a fast-food restaurant, and their 13-year-old daughter owns all of the other shares. Both parents work full-time in the restaurant, but the daughter works infreq...

Q: Friedman, Inc., an S corporation, holds some highly appreciated

Friedman, Inc., an S corporation, holds some highly appreciated land and inventory and some marketable securities that have declined in value. It anticipates a sale of these assets and a complete liqu...

Q: Based upon the following facts about Aqua, Inc., a calendar

Based upon the following facts about Aqua, Inc., a calendar year S corporation, prepare the entity’s Schedule M-2. AAA, beginning of the year……………………………………………………….$ 9,400 Ordinary income…………………………………...

Q: The profit and loss statement of Kitsch Ltd., an S corporation

The profit and loss statement of Kitsch Ltd., an S corporation, shows $100,000 book income. Kitsch is owned equally by four shareholders. From supplemental data, you obtain the following information a...

Q: On January 4, 2017, Martin Corporation acquires two properties from

On January 4, 2017, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholderâ€...

Q: Maul, Inc., a calendar year S corporation, incurred the

Maul, Inc., a calendar year S corporation, incurred the following items. Tax-exempt interest income…………………………………$ 7,000 Sales…………………………………………………………………..140,000 Depreciation recapture income…………………………...

Q: Zebra, Inc., a calendar year S corporation, incurred the

Zebra, Inc., a calendar year S corporation, incurred the following items this year. Sammy is a 40% Zebra shareholder throughout the year. Operating income………………………………………………………………..$100,000 Cost of go...

Q: Jeff, a 52% owner of an S corporation, has

Jeff, a 52% owner of an S corporation, has a stock basis of zero at the beginning of the year. Jeff’s basis in a $10,000 loan made to the corporation and evidenced by a corporate note has been reduced...

Q: Assume the same facts as in Problem 40, except that there

Assume the same facts as in Problem 40, except that there is no cash distribution, but the corporation repays the loan principal to Jeff. Discuss the tax effects. Facts from Problem 40 At the beginni...

Q: Assume the same facts as in Problem 40, except that Jeff’s

Assume the same facts as in Problem 40, except that Jeff’s share of corporate taxable income is only $8,000 and there is no cash distribution. However, the corporation repays the $10,000 loan principa...