Questions from General Taxation

Q: Swift Corporation distributes land (basis of $55,000 and

Swift Corporation distributes land (basis of $55,000 and fair market value of $120,000) to Sam and cash ($240,000) to Allison in exchange for part of their stock. Other shareholders do not redeem any...

Q: Indigo, Inc., a personal service corporation, incurs the

Indigo, Inc., a personal service corporation, incurs the following income and losses. Active income …………………$325,000 Portfolio income …………………49,000 Passive activity loss …………. 333,000 a. Calculate Ind...

Q: Rosa contributes $50,000 to FlipCo in exchange for

Rosa contributes $50,000 to FlipCo in exchange for a 10% ownership interest. Rosa materially participates in FlipCo’s business. FlipCo incurs a loss of $900,000 for the curren t tax year. Entity liabi...

Q: Bishop contributes undeveloped land to a business entity in January for a

Bishop contributes undeveloped land to a business entity in January for a 40% ownership interest. Bishop’s basis for the land is $140,000, and the fair market value is $600,000. The business entity wa...

Q: Jo and Velma are equal owners of the JV Partnership. Jo

Jo and Velma are equal owners of the JV Partnership. Jo invests $500,000 cash in the partnership. Velma contributes land and a building (basis to her of $125,000, fair market value of $500,000). The e...

Q: Megan owns 55% and Vern owns 45% of a business

Megan owns 55% and Vern owns 45% of a business entity. The owners would like to use the entity to share profits (55% for Megan and 45% for Vern) and to share losses (80% for Vern and 20% for Megan). D...

Q: Sanjay contributes land to a business entity in January of the current

Sanjay contributes land to a business entity in January of the current year for a 30% ownership interest. Sanjay’s basis for the land is $60,000, and the fair market value is $100,000. The business en...

Q: Emily and Freda are negotiating with George to purchase the business he

Emily and Freda are negotiating with George to purchase the business he operates as Pelican, Inc. The assets of Pelican, Inc., a C corporation, are recorded as follows. George’s bas...

Q: Linda is the owner of a sole proprietorship. The entity has

Linda is the owner of a sole proprietorship. The entity has the following assets. Linda sells the business for $260,000 to Juan a. Determine the tax consequences to Linda, including the classificati...

Q: Rhonda owns 50% of the stock of Peach Corporation. She

Rhonda owns 50% of the stock of Peach Corporation. She and the other 50% shareholder, Rachel, have decided that additional contributions of capital are needed if Peach is to remain successful in its c...