Questions from General Taxation


Q: Mr. Granger was employed by a closely held corporation that issued

Mr. Granger was employed by a closely held corporation that issued him a year-end bonus of 50 shares of stock worth $200 per share. Mr. Granger’s ownership of the stock was nontransferable and restric...

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Q: GHK recently granted a stock option to an employee to purchase 20

GHK recently granted a stock option to an employee to purchase 20,000 shares of stock for $11 per share. On the date of grant, GHK stock was selling for $12 on the NYSE.

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Q: Six years ago, Ms. Prevost paid $20 per share

Six years ago, Ms. Prevost paid $20 per share for 1,000 shares of her employer’s stock. This stock is now worth $58 per share. Ms. Prevost wants to exercise a stock option to buy 1,000 more shares at...

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Q: Mr. and Mrs. Schill are CPAs. Mr. Schill

Mr. and Mrs. Schill are CPAs. Mr. Schill is an employee of a national accounting firm, while Mrs. Schill operates her own professional practice. Each year, the couple pays approximately $1,300 to subs...

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Q: Mr. Clem invests in Series EE savings bonds. He projects

Mr. Clem invests in Series EE savings bonds. He projects that his sole proprietorship will generate a sizeable loss, and he wants to accelerate income from other sources to offset it. He could elect t...

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Q: Mr. Pugh has a $7,900 adjusted basis in

Mr. Pugh has a $7,900 adjusted basis in his limited interest in PKO Partnership. He also has $22,000 suspended passive activity losses from PKO. Mr. Pugh recently sent a letter to PKO’s corporate gene...

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Q: Mr. Oakem, a 66-year-old divorced individual

Mr. Oakem, a 66-year-old divorced individual, has two children with his former wife. He recently married a 45-year-old woman with no property of her own. Therefore, Mr. Oakem plans to change his will...

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Q: Cramer Corporation, a calendar year, accrual basis corporation, reported

Cramer Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its 2019 financial statements prepared in accordance with GAAP. The corporation’s books a...

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Q: Mr. Durst died on March 8. His taxable estate includes

Mr. Durst died on March 8. His taxable estate includes a traditional IRA with a $140,000 balance. Mr. Durst’s contributions to this IRA were fully deductible. His son is the beneficiary of the IRA.

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Q: Mrs. Allen died on June 1. She and her surviving

Mrs. Allen died on June 1. She and her surviving husband were co-owners of real property with a $200,000 adjusted basis and a $1.6 million FMV. Mr. Allen inherited his wife’s half of the property.

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