Questions from Federal Taxation

Q: Cato Corporation incorporated six years ago in California, with Tim and

Cato Corporation incorporated six years ago in California, with Tim and Elesa, husband and wife, owning all the Cato stock. Immediately thereafter, Cato made an S election effective for that year. Tim...

Q: One of your wealthy clients, Cecile, invests $100,

One of your wealthy clients, Cecile, invests $100,000 for sole ownership of an electing S corporation’s stock. The corporation is in the process of developing a new food product. Cecile anticipates th...

Q: Joe Stephens formed Sigma Corporation on January 4 of Year 1,

Joe Stephens formed Sigma Corporation on January 4 of Year 1, and the corporation immediately made an S election effective for that year. In forming the corporation, Joe contributed $50,000 cash in ex...

Q: Alice, a single taxpayer, will form Morning Corporation in the

Alice, a single taxpayer, will form Morning Corporation in the current year. Alice plans to acquire all of Morning’s common stock for a $100,000 contribution to the corporation. Morning will obtain ad...

Q: One way to compare the accumulation of income by alterative business entity

One way to compare the accumulation of income by alterative business entity forms is to use mathematical models. The following models express the investment after-tax accumulation calculation for a pa...

Q: Problem C:6-56 considered two alternative forms for doing

Problem C:6-56 considered two alternative forms for doing business. Now consider a third alternative. The C corporation could make an S election effective at the beginning of the current year (the 13t...

Q: Assume the corporation in Problem C:11-61 (and

Assume the corporation in Problem C:11-61 (and C:6-56) had been an S corporation for its first 12 years, during which it distributed just enough cash for the shareholder to pay taxes on the pass-throu...

Q: When Kayla’s basis in her interest in the JKL Partnership is $

When Kayla’s basis in her interest in the JKL Partnership is $30,000, she receives a current distribution of office equipment. The equipment has an FMV of $40,000 and basis of $35,000. Kayla will not...

Q: Your client, Karen Kross, recently married Larry Kross. Karen

Your client, Karen Kross, recently married Larry Kross. Karen is age 72, quite wealthy, and in reasonably good health. To date, she has not made any taxable gifts, but Larry made taxable gifts totalin...

Q: Morris Jory, a long-time tax client of the firm

Morris Jory, a long-time tax client of the firm that employs you, has made substantial gifts during his lifetime. Mr. Jory transferred Jory Corporation stock to 14 donees in December 2016. Each donee...