Questions from General Taxation

Q: Delphinium Company owns two parcels of land (§ 1231 assets). One

Delphinium Company owns two parcels of land (§ 1231 assets). One parcel can be sold at a loss of $60,000, and the other parcel can be sold at a gain of $70,000. The company has no nonrecaptured § 1231...

Q: Larry, the sole shareholder of Brown Corporation, sold his stock

Larry, the sole shareholder of Brown Corporation, sold his stock to Ed on July 30 for $270,000. Larry’s basis in the stock was $200,000 at the beginning of the year. Brown had accumulated E & P of $12...

Q: In each of the following independent situations, indicate the effect on

In each of the following independent situations, indicate the effect on tax- able income and E & P, stating the amount of any increase (or decrease) in each as a result of the transaction. Assume...

Q: Penguin Corporation (a cash basis, calendar year taxpayer) recorded

Penguin Corporation (a cash basis, calendar year taxpayer) recorded the following income and expenses in the current year. Income from services …………………………………………………………………………..$400,000 Salaries paid to...

Q: At the beginning of the year, Teal Corporation held accumulated E

At the beginning of the year, Teal Corporation held accumulated E & P of $225,000. On March 30, Teal sold an asset at a loss of $225,000. For the calendar year, Teal incurred a deficit in current E &...

Q: Green Corporation (a calendar year taxpayer) had a deficit in

Green Corporation (a calendar year taxpayer) had a deficit in accumulated E & P of $250,000 at the beginning of the current year. Its net profit for the period January 1 through July 30 was $300,000,...

Q: Black Corporation and Tom each own 50% of Tan Corporation’s common

Black Corporation and Tom each own 50% of Tan Corporation’s common stock. On January 1, Tan holds a deficit in accumulated E & P of $200,000. Its current E & P is $90,000. During the year, Tan makes c...

Q: Heather, an individual, owns all of the outstanding stock in

Heather, an individual, owns all of the outstanding stock in Silver Corporation. Heather purchased her stock in Silver nine years ago, and her basis is $56,000. At the beginning of this year, the corp...

Q: Lime Corporation, with E & P of $500,000

Lime Corporation, with E & P of $500,000, distributes land (worth $300,000, adjusted basis of $350,000) to Harry, its sole shareholder. The land is subject to a liability of $120,000, which Harry assu...

Q: Raven Corporation owns three machines that it uses in its business.

Raven Corporation owns three machines that it uses in its business. It no longer needs two of these machines and is considering distributing them to its two shareholders as a property dividend. The ma...