Questions from Taxation

Q: Four years ago, Company PJ acquired 1,000 acres of

Four years ago, Company PJ acquired 1,000 acres of undeveloped land. On the date of the exchange, the land’s FMV was $700,000. During the past four years, the land appreciated in value by $600,000; a...

Q: Explain the difference between a substituted basis in an asset and a

Explain the difference between a substituted basis in an asset and a carryover basis in an asset.

Q: If a corporation engages in a nontaxable exchange of assets, could

If a corporation engages in a nontaxable exchange of assets, could the transaction result in a book/tax difference? Is this difference a permanent or a temporary difference?

Q: When a taxpayer transfers appreciated property to a corporation in exchange for

When a taxpayer transfers appreciated property to a corporation in exchange for newly issued stock and the exchange is nontaxable, the gain deferred on the exchange actually doubles. Can you explain t...

Q: Determine if each of the following transactions qualifies as a nontaxable exchange

Determine if each of the following transactions qualifies as a nontaxable exchange: a. Firm A exchanges a 2 percent interest in MG Partnership for a 10 percent interest in KLS Partnership. b. Mr. B ex...

Q: In what way is the nontaxable exchange rule for partnership formations more

In what way is the nontaxable exchange rule for partnership formations more flexible than the nontaxable exchange rule for corporate formations?

Q: Can a sole proprietorship be described as a pass through entity?

Can a sole proprietorship be described as a pass through entity?

Q: This year, Soya Partnership disposed of only one operating asset and

This year, Soya Partnership disposed of only one operating asset and recognized a $22,000 loss on the disposition. Why must Soya report this net Section 1231 loss as a separately stated item rather th...

Q: LSG Company is a calendar year, cash basis taxpayer. On

LSG Company is a calendar year, cash basis taxpayer. On November 1, 2018, LSG paid $9,450 cash to the janitorial service firm that cleans LSG’s administrative offices and retail stores. How much of th...

Q: Both Mr. A and Mr. Z are sole proprietors.

Both Mr. A and Mr. Z are sole proprietors. This year, each proprietorship generated $85,000 net cash flow from business operations. Mr. A used the cash to expand his business, while Mr. Z used the cas...