Questions from General Taxation

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: Larry is the sole proprietor of a trampoline shop. During 2015

Larry is the sole proprietor of a trampoline shop. During 2015, the following transactions occurred. • Unimproved land adjacent to the store was condemned by the city on February 1. The condemnation...

Q: Ten years ago, Vogel Inc., an S corporation, purchased

Ten years ago, Vogel Inc., an S corporation, purchased a plot of investment land for $45,000. This year, Vogel distributed the land, now worth $120,000, to Jamari, its majority shareholder. a. Determ...

Q: Enerico contributes $100,000 cash in exchange for a 40

Enerico contributes $100,000 cash in exchange for a 40% interest in the cal- endar year ABC LLC. This year, ABC generates $80,000 of ordinary taxable income. Enerico withdraws $10,000 cash from the pa...

Q: Franco owns a 60% interest in the Dulera LLC. On

Franco owns a 60% interest in the Dulera LLC. On December 31 of the current tax year, his basis in the LLC interest is $128,000. The fair market value of the interest is $140,000. Dulera then distribu...

Q: When Bruno’s basis in his interest in the MNO LLC is $

When Bruno’s basis in his interest in the MNO LLC is $150,000, he receives cash of $55,000, a proportionate share of inventory, and land in a distribution that liquidates MNO and his interest in the L...

Q: Julio is in the 33% tax bracket. He acquired 2

Julio is in the 33% tax bracket. He acquired 2,000 shares of stock in Gray Corporation seven years ago at a cost of $50 per share. In the current year, Julio received a payment of $150,000 from Gray C...

Q: Roscoe contributes a personal-use asset, adjusted basis $15

Roscoe contributes a personal-use asset, adjusted basis $15,000 and fair market value $28,000, to a new business in which he is an owner. Determine Roscoe’s recognized gain on the transfer, and the ba...

Q: Mira and Lemma are equal owners of a business entity. Each

Mira and Lemma are equal owners of a business entity. Each contributed $25,000 cash to the business. Then the entity acquired a $100,000 loan from a bank. This year, operating profits totaled $30,000....