Questions from Taxation

Q: Mr. Bryan Olgivie owned an indoor roller-skating rink as

Mr. Bryan Olgivie owned an indoor roller-skating rink as a sole proprietorship. On April 9, a flood completely destroyed the rink. Mr. Olgivie’s adjusted basis in the rink was $833,400. On May 15, he...

Q: On February 2, Mr. Eugene Pomeroy transferred all the assets

On February 2, Mr. Eugene Pomeroy transferred all the assets of his sole proprietorship (Pomeroy’s Ski Shop) to a newly created corporation, Pomeroy Ski Inc. In exchange for the business assets, Mr. P...

Q: On April 1, 2018, Bullen Company transferred machinery used in

On April 1, 2018, Bullen Company transferred machinery used in its business to Eaton Inc. in exchange for Eaton common stock. Both Bullen and Eaton use the calendar year for tax purposes. Bullen’s exc...

Q: Don Ferris and Lou Lindberg are the two partners in F&

Don Ferris and Lou Lindberg are the two partners in F&L Partnership. The partnership agreement provides that all income is allocated equally between Don and Lou but in no case shall the allocation to...

Q: Max Coen is employed as a full-time police officer by

Max Coen is employed as a full-time police officer by the Memphis Police Department. He is required to abide by the department’s rules of conduct, which apply whether he is on-duty or off-duty. With t...

Q: Herold had been a calendar year S corporation since 1990. On

Herold had been a calendar year S corporation since 1990. On October 10, 2018, Mrs. Hughes sold 18 shares of Herold stock to a foreign partnership, thereby terminating Herold’s S election. Herold’s ta...

Q: At the beginning of the current year, Sandy Brewer had a

At the beginning of the current year, Sandy Brewer had a zero basis in her 38 shares of stock in Lindlee, an S corporation, a zero basis in a $5,000 note from Lindlee, and a $7,400 carryforward of a p...

Q: In early 2018, Connor Inc. announced its intention to construct

In early 2018, Connor Inc. announced its intention to construct a manufacturing facility in the Shenandoah Valley. To persuade Connor to locate the facility in Augusta County, the county government co...

Q: Ernlo is an accrual basis corporation with a June 30 fiscal year

Ernlo is an accrual basis corporation with a June 30 fiscal year-end. On June 2, 2018, Ernlo entered into a binding contract to purchase a six-month supply of heating oil from a local distributor at t...

Q: On December 10, 2017, the representative of a national charitable

On December 10, 2017, the representative of a national charitable organization contacted the CEO of Wilkie Inc., a calendar year accrual basis corporation, to solicit a $100,000 donation. The CEO pres...