Questions from Taxation

Q: Barry and Lynette Majors own 36 percent of the outstanding stock of

Barry and Lynette Majors own 36 percent of the outstanding stock of Echo Valley, which has approximately $5 million earnings and profits. Echo Valley owns 38 tracts of undeveloped land in central Colo...

Q: This year, Prewer Inc. received a $160,000

This year, Prewer Inc. received a $160,000 dividend on its investment consisting of 16 percent of the outstanding stock of TKS Inc., a taxable domestic corporation. Before considering this dividend, P...

Q: Fifteen years ago, Mr. and Mrs. Boyer created Brovo

Fifteen years ago, Mr. and Mrs. Boyer created Brovo, a regular corporation, through which to operate a service business. The Boyers own all of Brovo’s 1,000 shares of stock with a $1.6 million aggrega...

Q: On March 1, Mr. and Mrs. Trent formed Trent

On March 1, Mr. and Mrs. Trent formed Trent Properties Inc. through which to operate a real estate management business. Both Mr. and Mrs. Trent worked full-time for modest, but reasonable, salaries. I...

Q: Fair View Inc. owns and operates a golf club, which

Fair View Inc. owns and operates a golf club, which includes two 18hole courses, a driving range, a restaurant, and a pro shop. The club’s facilities can be used only by its membership, which includes...

Q: Four years ago, Amy Huang contributed four acres of undeveloped land

Four years ago, Amy Huang contributed four acres of undeveloped land to Richter Company in exchange for a 12 percent equity interest in Richter. Amy’s tax basis in the land was $275,000, and the land’...

Q: Visit the website for Federation of Tax Administrators (www.taxadmin

Visit the website for Federation of Tax Administrators (www.taxadmin.org) under the Taxpayers & Tax Preparers menu, and use the State Tax Agencies link to go to the Illinois Department of Revenue webs...

Q: Endless Summer is a Florida corporation that operates a fleet of cruise

Endless Summer is a Florida corporation that operates a fleet of cruise ships. It offers two categories of cruises. The first category includes round-trip cruises on ships that depart from Miami, visi...

Q: In 1995, Jenson Investments, a Delaware corporation with a 35

In 1995, Jenson Investments, a Delaware corporation with a 35 percent federal tax rate, formed Bestmark, a wholly owned German subsidiary. Bestmark conducts several profitable businesses in Europe and...

Q: Home Safe, an accrual basis, calendar year corporation, sells

Home Safe, an accrual basis, calendar year corporation, sells and installs home alarm systems. The contract price of a system includes four free service calls. Home Safe’s cost of each call is $75. At...