Questions from Taxation

Q: Since its formation, Roof Corporation has incurred the following net Section

Since its formation, Roof Corporation has incurred the following net Section 1231 gains and losses. a. In year 4, Roof sold only one asset and recognized a $7,500 net Section 1231 gain. How much of...

Q: Corporation Q, a calendar year taxpayer, has incurred the following

Corporation Q, a calendar year taxpayer, has incurred the following Section 1231 net gains and losses since its formation in 2015. a. In 2018, Corporation Q sold only one asset and recognized a $4,0...

Q: Eleven years ago, Lynn Inc. purchased a warehouse for $

Eleven years ago, Lynn Inc. purchased a warehouse for $315,000. This year, the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption of a $225,000 mortgage. Through date of sale...

Q: Firm P, a non corporate taxpayer, purchased residential realty in

Firm P, a non corporate taxpayer, purchased residential realty in 1985 for $1 million. This year it sold the realty for $450,000. Through date of sale, Firm P deducted $814,000 accelerated depreciatio...

Q: Company J must choose between two alternate business expenditures. Expenditure 1

Company J must choose between two alternate business expenditures. Expenditure 1 would require a $80,000 cash outlay, and Expenditure 2 requires a $60,000 cash outlay. Determine the marginal tax rate...

Q: Six years ago, Corporation CN purchased a business and capitalized $

Six years ago, Corporation CN purchased a business and capitalized $200,000 of the purchase price as goodwill. Through this year, CN has deducted $74,000 amortization with respect to this goodwill. At...

Q: A taxpayer owned 1,000 shares of common stock in Barlo

A taxpayer owned 1,000 shares of common stock in Barlo Corporation, which manufactures automobile parts. The taxpayer’s cost basis in the stock was $82,700. Last week, Barlo declared bankruptcy, and i...

Q: Company L sold an inventory item to Firm M for $40

Company L sold an inventory item to Firm M for $40,000. Company L’s marginal tax rate is 21 percent. In each of the following cases, compute Company L’s after-tax cash flow from the sale: a. Firm M’s...

Q: Five years ago, Firm SJ purchased land for $100,

Five years ago, Firm SJ purchased land for $100,000 with $10,000 of its own funds and $90,000 borrowed from a commercial bank. The bank holds a recourse mortgage on the land. For each of the following...

Q: Firm R owned depreciable real property subject to a $300,

Firm R owned depreciable real property subject to a $300,000 nonrecourse mortgage. The property’s FMV is only $250,000. Consequently, the firm surrendered the property to the creditor rather than cont...