Questions from General Taxation

Q: Oscar created Lavender Corporation four years ago. The C corporation has

Oscar created Lavender Corporation four years ago. The C corporation has paid Oscar as president a salary of $200,000 each year. Annual earnings after taxes approximate $700,000 each year. Lavender ha...

Q: Tammy and Willy own 40% of the stock of Roadrunner,

Tammy and Willy own 40% of the stock of Roadrunner, an S corporation. The other 60% is owned by 99 other shareholders, all of whom are single and unrelated. Tammy and Willy have agreed to a divorce an...

Q: Clay Corporation has been an S corporation since its incorporation 10 years

Clay Corporation has been an S corporation since its incorporation 10 years ago. During the first three years of operations, it incurred total losses of $250,000. Since then, Clay has generated earnin...

Q: Phillip and Evans form a business entity. Each contributes the following

Phillip and Evans form a business entity. Each contributes the following property. Three months later, the entity sells the land for $652,000 because of unexpected zoning problems. The proceeds are to...

Q: Agnes, Becky, and Carol form a business entity with each

Agnes, Becky, and Carol form a business entity with each contributing the following. Their ownership percentages will be as follows. Agnes……â€&brvba...

Q: Eloise contributes $40,000 to MeldCo in exchange for a

Eloise contributes $40,000 to MeldCo in exchange for a 30% ownership interest. During the first year of operations, MeldCo earns a profit of $200,000. At the end of that year, MeldCo holds liabilities...

Q: ListCo reports the following income for the current tax year.

ListCo reports the following income for the current tax year. Operations……………………………………………… $92,000 Tax-exempt interest income ………………………. 19,000 Long-term capital gain………………………………. 60,000 ListCo hold...

Q: For many years, Sophie has owned and operated several apartment buildings

For many years, Sophie has owned and operated several apartment buildings. In 2011 and upon the advice of her attorney, Sophie transferred the apartment buildings to a newly created corporation. Her m...

Q: John organized Toucan Corporation 10 years ago. He contributed property worth

John organized Toucan Corporation 10 years ago. He contributed property worth $1 million (basis of $200,000) for 2,000 shares of stock in Toucan (rep- resenting 100% ownership). John later gave each o...

Q: The Coffee Company engages in the following transactions during the taxable year

The Coffee Company engages in the following transactions during the taxable year. • Sells stock held for three years as an investment for $30,000 (adjusted basis of $20,000). • Sells land used in th...