Questions from Taxation

Q: When the IRS classifies a portion of a salary payment to a

When the IRS classifies a portion of a salary payment to a shareholder/employee as a constructive dividend, which party (corporation or shareholder) bears the economic burden of the tax consequences?...

Q: Ms. Knox recently loaned $20,000 to her closely

Ms. Knox recently loaned $20,000 to her closely held corporation, which needed the money for working capital. She sees no reason to document the loan other than as a “loan payable—shareholder” on the...

Q: Explain the logic of the tax rate for both the accumulated earnings

Explain the logic of the tax rate for both the accumulated earnings tax and the personal holding company tax.

Q: In what way does a corporate balance sheet provide information concerning the

In what way does a corporate balance sheet provide information concerning the corporation’s exposure to the accumulated earnings tax?

Q: How would the tax shelter potential of closely held corporations be affected

How would the tax shelter potential of closely held corporations be affected by: a. An increase in the highest individual tax rate to 43 percent? b. A decrease in the preferential tax rate on individu...

Q: Discuss the tax and nontax reasons why the stock in an S

Discuss the tax and nontax reasons why the stock in an S corporation is typically subject to a buy-sell agreement.

Q: Mr. Eros operates an antique store located on the first floor

Mr. Eros operates an antique store located on the first floor of a four story office building owned by Mr. Eros. The top three stories are leased to business tenants. Mr. Eros is considering giving a...

Q: Dr. Quinn, Dr. Rose, and Dr. Tanner

Dr. Quinn, Dr. Rose, and Dr. Tanner are dentists who practice as equal owners of QRT Dental Services. A patient of Dr. Rose’s recently sued him for medical malpractice and was awarded a $500,000 judgm...

Q: Refer to the facts in the previous problem. QRT purchased $

Refer to the facts in the previous problem. QRT purchased $30,000 of dental equipment on credit. When QRT failed to pay its bill, the seller took it to court and won a judgment for $30,000. Discuss ea...

Q: Mrs. Tran and Mrs. Nutter each own a small business

Mrs. Tran and Mrs. Nutter each own a small business that averages $80,000 annual income. Each woman is in the 35 percent marginal tax bracket. Mrs. Tran has decided to incorporate her business as a ta...