Question: Cougar, Jaguar, and Ocelot corporations have filed

> TriStateCo, an Idaho corporation, has operated landfills in Washington (WA), Idaho (JD), and Oregon (OR) for the past 20 years. The states are changing their environmental Laws governing landfills, and it is cumbersome for each landfill to meet the req

> Ten years ago, Xio and Xandra each invested $300,000 to create Xava Corporation. Xava develops and manufactures rock climbing and bungee jumping equipment. The business has become very profitable (it now is valued at $3 million), and Xandra would like to

> Calabra, S.A., a Peruvian corporation, manufactures inventory in Peru. The inventory is sold to independent distributors in the United States, with title passing to the purchaser in the United States. Calabra has no employees or operations within the Uni

> CL LLC is a manufacturing business and reported taxable income of $40 million before interest expense, taxes, depreciation, and amortization ("tax EBITDA"), plus $1.5 million of separately stated investment income. CL incurred interest expense of $1 mill

> You are the head tax accountant for Venture Company, a U.S. corporation. The board of directors is considering expansion overseas and asks you to present a summary of the U.S. tax consequences of investing overseas through a foreign subsidiary. Prepare a

> The Giant consolidated group includes SubTwo, which was acquired as part of a § 382 ownership change. SubTwo brought with it to the group a large NOL carryforward, $3 million of which is available this year under the SRLY rules due to SubTwo's positive c

> Browne and Red, both C corporations, formed the BR Partnership on January 1, 2018. Neither Browne nor Red is a personal service corporation, and BR is not a tax shelter. BR's gross receipts were $22 million, $25 million, $31 n1illion, and S32 million, re

> Determine consolidated taxable income for the calendar year Yeti Group, which elected consolidated status immediately upon the creation of the two member corporations on January 1 of year 1. All recognized income is ordinary in nature, and no intercomp

> Compute consolidated taxable income for the calendar year Blue Group, which elected consolidated status immediately upon creation of the two member corporations in January of year 1. All recognized income relates to the consulting services of the firms.

> Continue with the facts of Problem 36. WhaleCo has determined that it will sell all of its MinnowCo stock at the end of year 3 for $250,000. Taking into account the rules regarding excess loss accounts, determine WhaleCo's gain/ loss from its sale of the

> Write an e-mail to a client describing situations in which the partnership entity form might be more advantageous (or disadvantageous) than operating as a C corporation. Use subheadings and bullet points to highlight your major thought5

> Continue with the facts presented in Problem 34. At the end of the first year, the LLC distributes $100,000 cash to Sam. No distribution is made to Drew. Assume there were no other income or loss transactions for the year that would affect San1's basis i

> Continue with the facts presented in Problem 34. a. Use Microsoft Excel to construct a balance sheet for SD LLC assuming that Drew's services are completed immediately after forming SD. The balance sheet should show two numeric columns, including the LLC

> Sam and Drew are equal partners in SD LLC formed on June 1 of the current year. Sam contributed land that he inherited from his uncle in 2012. Sam's uncle purchased the land in 1985 for $30,000. The land was worth $100,000 when Sam's uncle died. The fair

> Continue with the facts presented in Problem 32. Mike purchased the land (value of $100,000; adjusted basis of $136,000) several years ago as an investment (capital) asset. Mike and MM LLC are trying to decide between two alternatives. • In Alternative 1

> The Chief consolidated group reports the following result5 for the tax year. Dollar amounts are listed in millions. Determine each member's share of the consolidated tax liability. All of the members have consented to use the relative taxable income me

> Brutus Corporation transferred inventory (basis of $10, fair market value of $30) and machinery used in a U.S. factory (adjusted basis of S50, fair market value of $75) to MapleLeaf, a newly formed corporation in Canada, in exchange for all of MapleLeaf'

> USCo incorporated it5 foreign branch operations in Italy by transferring the branch's assets to a foreign corporation in return solely for stock in the new corporation. All of the branch's assets are located outside the United States and are used in the

> Locket, a U.S. C corporation, makes a sale to a customer in Sustainia, a country that applies a 25% income tax to business profits. The customer found out about Locket through an internet search. Locket has no facilities or employees outside the United S

> Eta Corporation approaches Lily White, the CEO and sole shareholder of MuCo, regarding the acquisition of MuCo's cat toy division assets (worth $1.3 million). As selling the assets would create a $600,000 gain, ($1.3 million value - $700,000 basis), Lily

> Butler Manufacturing, Inc., a calendar year domestic corporation, operates Communications a branch in Ireland. In the current year, the branch generated 750,000 euros in net profit. On December 31 of the current year, one euro equaled $1.15. The average

> Your firm has assigned you to work with Jeri Byers, the tax director of a small group of corporations. The group qualifies to file on a consolidated basis and plans to make its first election to file in that manner. In a memo for Jeri's tax file, describ

> Mila purchased a Zaffre Corporation $100,000 bond 10 years ago for its face value. The bond pays 5% interest annually. In a ''Type E" reorganization, Zaffre exchanges Mila's bond with 10 years ren1aining for a 15-year bond also having a face value of $10

> Through a "Type C" reorganization, Springer Corporation was merged into Spaniel Corporation last year. Springer shareholders received 40% of the Spaniel stock in exchange for all of their Springer shares. Springer liquidated immediately after the exchang

> PorCo, a foreign corporation not engaged in a U.S. trade or business, received a $600,000 dividend from USCo, a domestic corporation. ForCo incurred $45,000 in expenses related to earning the di vidend. All of USCo's income is from U.S. sources. Porco is

> B.I.G. Corporation sold a plot of undeveloped land to SubCo this year for Critical Thinking $100,000. B.I.G. had acquired the land several years ago for $40,000. T he consolidated return also reflects the operating resu lts of the parties: B.I.G. generat

> Indeco, a U.S. C corporation, operates Grange, a sales branch in Staccato. Indeco's U.S. corporate n1arginal tax rate is 21%; it is 15% for Staccato. Grange's pretax profit for the year is SI million. There is no income tax treaty between the United Stat

> WhaleCo acquired all of the common stock of MinnowCo early in year 1 for $900,000, and MinnowCo immediately elected to join WhaleCo's consolidated Federal income tax return. As part of the takeover, WhaleCo also acquired $300,000 of MinnowCo bonds. The r

> Continue with the facts of Problem 34. a. Assume instead that JuniorCo's tax year 2 produced a $6 million NOL. b. Same a5 part (a), except that JuniorCo's tax year 2 produced a $40 million NOL. c. Continue with the facts of part (b). Express as a Microso

> Senior, Ltd., acquires all of the stock of JuniorCo for $30 million at the beginning of year 1. The group immediately elects to file income tax returns on a consolidated basis. Senior's operations generate a $50 million profit every year. In year 2, Juni

> Assume the same facts as in Problem 32, except that the group members have adopted the relative tax liability tax-sharing method.

> Ramon and Sophie are the sole shareholders of Gull Corporation. Ramon and Sophie each have a basis of $100,000 in their 2,000 shares of Gull common stock. When its E & P was $700,000, Gull Corporation issued a preferred stock dividend on the common share

> The consolidated tax liability for most affiliated groups is assigned among die parent and its subsidiaries-each entity is responsible for "its share" of the tax. The Regulations allow several methods to be used to compute these allocations. In this cont

> Aqua Corporation is a retail operation specializing in pool equipment and outdoor furniture. It is very interested in merging with Icterine Corporation, a lamp manufacturer; Aqua is very profitable, and Icterine has large business credits that it has not

> Rufous Corporation just lost a $1.5 million product liability lawsuit. Its assets currently are worth $2 million, and its outstanding liabilities amount to $800,000 without considering the lawsuit loss. As a result of the lawsuit, Rufous's futu re revenu

> Puce has two individual shareholders, Abram and Carmella. The shareholders purchased their stock in Puce four years ago at a cost of $500,000 each. For the past nine years, Puce has been engaged in two lines of business, manufacturing and wholesale distr

> Shepherd Corporation i5 considering acquiring RentCo by exchanging its stock (value of $10 per share) for RentCo's only asset, a tract of land (adjusted basis of $150,000 and no liability). The yearly net rent that RentCo receives on the land is $50,000.

> Child Corporation joined the Thrust consolidated group in year 1. At the time it joined the group, Child held a $2 million NOL carryforward. On a consolidated basis, the members of Thrust generated significant profits for many years. Child's operating r

> Grand Corporation owns all of the stock of Junior, Ltd., a corporation that has been declared bankrupt and holds no net assets. Junior still owes $1 million to wholesale, Inc., one of its suppliers, and $2.5 million to the IRS for unpaid Federal income t

> Boulder Corporation owns all of the stock of PebbleCo, so they constitute a Federal affiliated group and a parent-subsidiary controlled group. By completing the following chart, delineate for Boulder's tax department some of the effects of an election to

> Your client, Big Corporation, and its wholly owned subsidiary, LittleCo, file a consolidated return for Federal income tax purposes. Indicate both the financial accounting and the tax treatment of the following transactions. a. LittleCo pays a SI million

> Big Corporation currently owns 25% of Small, Inc. Big acquired this stock two years ago by exchanging $375,000 of its preferred stock with Allie, one of the original owners of Small. Big had tried to acquire the assets of Small, but management was not in

> For each of the following independent statements, indicate whether the transaction will increase ( + ), decrease ( - ), or have no effect (NE) on the basis of a shareholder's stock in an S corporation. a. Expenses related to tax-exempt income. b. Short-t

> On April 27, 2018, Auk Corporation acquires l00% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1.2 million. Amazon Corporation has assets with a fair market value of $1.4 million (basis of $800,000), no liabilities, and no loss

> On July 20, 2017, Lilac Corporation purchased 25% of the Coffee Corporation stock outstanding. Lilac Corporation purchased an additional 40% of the stock in Coffee on March 22, 2018, and an additional 20% on May 2, 2018. On September 25, 2018, Lilac Corp

> Brown Corporation was organized seven years ago by Red Corporation (55%), Blue Corporation (35%), and Yellow Corporation (10%). Brown has been quite successful and now owns assets worth $12 million (basis of $4.4 million) with liabilities of $2 million.

> Through a ''Type A" reorganization, VizslaCo acquires 100% of Puli Corporation by exchanging 30% of its stock for all of Puli 's assets and liabilities. The VizslaCo stock was exchanged for all of the stock of the Puli shareholders. Then Puli liquidated.

> On December 31, 2017, Alpha Corporation, valued at $10 million, acquired BetaCo when BetaCo was valued at $5 n1illion. BetaCo holds a capital loss carryforward of $220,000 and excess business credits of $435,000. At the end of 2018, Alpha reports taxable

> Zeta Corporation is interested in acquiring Tau Corporation through a "Type A" reorganization on January 2 of the current year. Zeta is valued at $50 million and generates taxable incon1e of $5 million per year, whereas Tau is valued at $7 million and ho

> Sinopia completed a corporate restructuring transaction with Cyan on May 31 of the current year. Cyan distributed 30% of Sinopia's stock to its shareholders in exchange for all of their stock in Cyan. At the completion of the reorganization, Cyan's asset

> Assume the same facts as in Problem 56. Assume that Burgundy, Inc.'s annual guaranteed payment is increased to $120,000 starting on January 1, 2019, and the LLC's taxable income for 2018 and 2019 (after deducting Burgundy's guaranteed payment) is the sam

> Burgundy, Inc., and Violet are equal partners in the calendar year BV LLC. Burgundy uses a fiscal year ending April 30, and Violet uses a calendar year. Burgundy receives an annual guaranteed payment of $100,000 for use of capital contributed by Burgundy

> Graeter Corporation acquired all of the stock of Lesser Corporation in 2014, and the entities have filed a state and Federal consolidated income tax return ever since. Now an audit notice from the state unemployment tax administration makes it clear that

> Through an acquisitive "Type D" reorganization, Border, Inc., is merged into Collie Corporation on September 2 of the current calendar tax year. The Federal long-term tax-exempt rate for September is 3%. Border shareholders receive 70% of the Collie stoc

> Through a ''Type B" reorganization, Golden Corporation acquired 90% of RetrieverCo stock by October 2 of the current tax year ending December 31. At the time the 90%. was acquired, RetrieverCo was worth $800,000 and the Federal long-term tax-exempt rate

> Midori Corporation is a distiller of fine liqueurs. The market for this specialty product is thin but very lucrative. Midori wants to di versify its product line and is interested in acquiring Verdigris, which specializes in exotic teas and spices. Becau

> PorCo, a foreign corporation not engaged in a U.S. trade or business, received an $800,000 dividend fron1 USCo, a domestic corporation. Porco incurred $75,000 in expenses related to earning the di vidend. All of USCo's income is from U.S. sources. PorCo

> PorCo, a foreign corporation not engaged in a U.S. trade or business, received a $250,000 dividend from USCo, a domestic corporation. ForCo incurred $40,000 in expenses related to earning the di vidend. All of USCo's income is from U.S. sources. Porco is

> Bertha, a single individual, reports taxable income of $177,500, of which Communications $130,000 is attributable to an S corporation that provides consulting services, after paying wages of $72,000 to en1ployees (but not to Bertha). The entity made no a

> At the end of last year, June, a 30% partner in the four-person BJJM Partnership, had an outside basis of $75,000 in the partnership, including a $60,000 share of partnership debt. June's share of the partnership's§ 1245 recapture potential was $40,000.

> Diana, a partner in the cash basis HOA Partnership, has a one-third interest in partnership profits and losses. The partnership's balance sheet at the end of the current year is as follows. Diana sells her interest in the HOA Partnership to Kenneth at

> Assume in Problem 46 that Barry's partnership interest is not sold to another partner. Instead, the partnership makes a liquidating distribution of $90,000 cash to Barry, and the remaining partners assume his share of the liabilities. How much gain or lo

> Carter, Ltd., a Bohen1ia corporation, operates a sales branch in the United States that constitutes a U.S. trade or business. Rather than return the profits fron1 the sales branch to the Bohemia home office, Carter invests the profits in certificates of

> EarthTones, Inc., was a wholly owned subsidiary of Cutlinger Communications Corporation. Several years ago EarthTones acquired numerous oil leases and began exploration activities to determine their suitability for commercial exploitation. The tests were

> Skylar is ready to retire and \Va nts your professional opinion on the most advantageous way to dispose of a 400A. interest in STU LLC. Option # l. Skylar will immediately sell the LLC interest to Partner Tameeka for $300,000 cash. Skylar will then inves

> Continue with the GAB LLP and balance sheet shown in Problem 43, assuming instead that Gina sells her partnership interest to Jess for $140,000 of cash. a. What is the amount and character of Gina's gain? b. What deductions can be claimed by the LLP? c.

> The December 31 balance sheet of the GAB LLP read5 as follows. Capital is not a material income-producing factor for the LLP. Gina is an active (general) partner and owner of a 25% interest in the LLP's profits and capital. On December 31, Gina receive

> Damon owns a 200/o interest as a general partner in the Vermillion Partnership, which provides consulting services. The partnership distributes $60,000 cash to Damon in complete liquidation of his partnership interest. Damon's share of partnership unreal

> In 2015, Adrianna contributed land with a basis of $16,000 and a fair market value of $25,000 to the A&I Partnership in exchange for a 25% interest in capital and profits. In 2018, the partnership distributes this property to Isabel, also a 25% partner,

> Assume the san1e facts as in Problem 39, except that Jamie receives $2,000 cash and a car having a basis of $20,000 to the partnership and a fair market value of $30,000. a. How much loss, if any, may Jamie recognize on the distribution? b. What basis wi

> Jamie's basis in her partnership interest is $52,000. In a proportionate distribution in liquidation of the partnership, Jamie receives $2,000 cash and two parcels of land with bases of $10,000 and $18,000, respectively, to the partnership. The partnersh

> Paula's basis in her partnership interest is $60,000. In liquidation of her Decision Making interest, the partnership makes a proportionate distribution to Paula of $20,000 of cash and inventory (basis of $5,000 and value of $7,000). No •·other property"

> Assume the same fact5 as in Problem 36, except that Jerome's basis in the partnership is $90,000 instead of $50,000. a. How much gain or loss, if any, must Jerome recognize on the distribution? b. What basis will Jerome take in the inventory and land? c.

> Jeron1e's basis in his partnership interest is $50,000. Jerome receives a pro rata liquidating distribution consisting of $10,000 cash, land with a basis of $40,000 and a fair market value of $60,000, and his proportionate share of inventory with a basis

> The Cardinal Group had filed on a consolidated basis for several years which its wholly owned subsidiary, Swallow, Inc. TI1e group used a calendar tax year. On January 25, 2016, Heron acquired all of the stock of Cardinal, including its ownership in Swal

> In each of the following independent liquidating distributions in which the partnership also liquidates, prepare a Microsoft Excel spreadsheet to determine the amount and character of any gain or loss to be recognized by each partner and the basis of eac

> Use the assets and partners' bases from Problem 31. Assume that the partnership distributes all of its assets in a liquidating distribution. In deciding the allocation of assets, what issues should the partnership consider to minimize each partner's taxa

> Lonergan, Inc., a calendar year S corporation in Athens, Georgia, had a balance in AAA of $200,000 and AEP of $1 10,000 on December 31, 2018. During 2019, Lonergan, Inc., distributes $140,000 to its shareholders, while sustaining an ordinary loss of $120

> Assume the same facts as in Problem 31 , except that TAV distributes $100,000 of cash to Vincent, $50,000 (FMV) of marketable securities to Tyler, and $50,000 (FMV) of account5 receivable to Anita. In general terms, describe the tax result of the distrib

> Bertha, a single individual, reports taxable income of $177,500, of which $130,000 is attributable to an S corporation that provides consulting services, after paying wages of $72,000 to en1ployees (but not to Bertha). The entity made no acquisitions of

> At the beginning of the tax year, Melodie's basis in the MIP LLC was $60,000, including her $40,000 share of the LLC's liabilities. At the end of the year, MlP distributed to Melodie cash of $10,000 and inventory (basis of $6,000, fair market value of $1

> Cari Hawkins is a 50% partner in the calendar year Hawkins-Henry Partnership. On January 1, 2018, her basis in her partnership interest is $160,000. The partnership has no taxable income or loss for the current year. In a current distribution on December

> Assume the facts of Problem 27. For each of parts (a) through (d) considered Decision Making independently, are additional planning opportunities available to the partnership to maximize its inside basis in its assets' If so, by how much can the basis be

> In each of the following independent cases, indicate: • Whether the partner recognizes gain or loss. • Whether the partnership recognizes gain or loss. • The partner's adjusted basis for the property distributed. • The partner's outside basis in the part

> Honk, Inc., a U.S. corporation, purchases weight-lifting equipment for resale from HiDisu, a Japanese corporation, for 6o million yen. On the date of purchase, 110 yen is equal to SI U.S. (¥110:$1). The purchase is made on December 15, 2018, with payment

> Hatvaii Corporation, which is owned equally by two brothers and their younger sister, has been in the business of growing coffee and onions for the last 10 years. Lately, the brothers have been disagreeing regarding the management, operations, and expans

> LearCo, a non-U.S. conglomerate, generates $4 billion in gross receipts annually. Its U.S. subsidiary, KingCo, accounts for $750 million of the annual gross receipts (and its average annual gross receipts for the last three years is $820 million). KingCo

> Nye Tools, incorporated in 2005, makes tools and devices for the automotive industry. The original shareholders were Andre (700 shares) and his brother Roscoe (300 shares). In 2010, Andre transferred 100 shares to his wife and Roscoe sold 50 shares to a

> Shelly Zumaya (2220 East Hennepin Avenue, Minneapolis, MN Communications 55413) is the president and sole shareholder of Kiwi Corporation (stock basis of Critical Thinking $400,000). Incorporated in 2007, Kiwi Corporation's sole business has consisted of

> Your firm has a new individual client, Carla Navarro, who has been assigned to you for preparation of the current year's tax return. Upon review, of Carla's tax returns from prior years, you notice that she reported a large capital gain from a stock rede

> TAN LP was formed as a limited partnership by a corporate general partner and nine individual limited partners to own and operate rental real estate. The LP originally acquired commercial real estate in six locations. In the early years, property values

> The accrual basis Four Winds Partnership owned and operated three storage facilities in Milwaukee, Wisconsin. The partnership did not have a § 754 election in effect on March 1, 2018, when partner Taylor Barnes sold her 25% interest to Patric

> Your client, Paul, owns a one-third interest as a managing (general) partner in the service-oriented PRE LLP. He would like to retire from the lin1ited liability partnership at the end of 2019 and asks your help in structuring the buyout transaction. He

> Which of the following statements is not true for tax years beginning after 2017? a. Affiliated corporations that file consolidated returns can take a l00% dividends received deduction. b. The dividends received deduction for a small investment in an unr

> The dividends received deduction (ORD) is a tax deduction that may be taken by which of the following? a. An individual b. An S corporation c. A partnership d. A C corporation

> Determine whether the following transactions are taxable. If a transaction is not taxable, indicate what type of reorganization is effected, if any. a. AlphaPsi Corporation owns two lines of business that it has conducted for the last eight years. For li

> Before the provision for Federal income tax, Karas Corporation had book income of $400,000 for the current year. The book income included $100,000 of dividends received from a 15% owned domestic corporation. What was Karas Corporation's taxable income fo

> Parent Corp. owns 40% of Sub Corp. In the current year, Parent has gross income of $43,000 and allowable deductions of $30,000 before considering any dividends received deduction (ORD). Included in the $43,000 gross income is $8,000 of dividends from Sub

> Provide the information required to complete the following chart.

> Indicate whether each of the following would make good consolidated return partners in computing the affiliated group's Federal income tax. Explain why or why not. a. ParentCo would like to file on a consolidated basis with SubOne because the subsidiary