Questions from Taxation

Q: On October 18 of last year, a flood washed away heavy

On October 18 of last year, a flood washed away heavy construction equipment owned by Company K. The adjusted tax basis in the equipment was $416,000. On December 8 of last year, Company K received a...

Q: Calvin Corporation’s office was burglarized. The thieves stole 10 laptop computers

Calvin Corporation’s office was burglarized. The thieves stole 10 laptop computers and other electronic equipment. The lost assets had an original cost of $35,000 and accumulated tax depreciation of $...

Q: Mr. Boyd and Ms. Tuck decide to form a new

Mr. Boyd and Ms. Tuck decide to form a new corporation named BT Inc. Mr. Boyd transfers $10,000 cash and business inventory ($20,000 FMV; adjusted tax basis $3,200), and Ms. Tuck transfers business eq...

Q: PV Inc. transferred the operating assets of one of its business

PV Inc. transferred the operating assets of one of its business divisions into newly incorporated SV Inc. in exchange for 100 percent of SV’s stock. PV’s adjusted basis in the operating assets was $4...

Q: Mr. ZJ owns a sole proprietorship. The business assets have

Mr. ZJ owns a sole proprietorship. The business assets have a $246,000 aggregate adjusted basis. According to an independent appraisal, the business is worth $400,000. Mr. ZJ transfers his business to...

Q: Refer to the facts in the preceding problem. Assume that Mrs

Refer to the facts in the preceding problem. Assume that Mrs. L, who is Mr. ZJ’s business colleague, transfers $200,000 cash to ZJL Corporation in exchange for 500 shares of ZJL stock. Mr. ZJ and Mrs....

Q: Lydia and Oliver want to form a partnership to conduct a new

Lydia and Oliver want to form a partnership to conduct a new business. They each contribute the following assets in exchange for equal interests in LO Partnership. Lydia’s tax basis...

Q: Firm W has the opportunity to invest $150,000 in

Firm W has the opportunity to invest $150,000 in a new venture. The projected cash flows from the venture are as follows: Determine if Firm W should make the investment, assuming that: a. It uses a...

Q: Corporation A and Corporation Z go into partnership to develop, produce

Corporation A and Corporation Z go into partnership to develop, produce, and market a new product. The two corporations contribute the following properties in exchange for equal interests in AZ Partne...

Q: Ten years ago, Ms. Dee purchased 1,000 shares

Ten years ago, Ms. Dee purchased 1,000 shares of Fox common stock for $124 per share. On June 2 of the current year she sold 500 shares for $92 per share. Compute Ms. Dee’s recognized loss on sale ass...