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Question: Two years ago, Lodi Inc.’s shareholders


Two years ago, Lodi Inc.’s shareholders voted to dissolve the corporation. Pursuant to the dissolution, Lodi sold all its assets, paid off its outstanding debts, and distributed $789,000 remaining cash to its shareholders in complete liquidation of their equity. This year, the IRS determined that Lodi underpaid its corporate income tax for its last three years. The tax deficiency totaled $1.4 million.
a. To what extent can the IRS collect the deficiency from the former Lodi shareholders?
b. MN Partnership was a 5 percent shareholder that received a $39,450 liquidating distribution from Lodi. How much tax can the IRS collect from MN partnership?



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> Mr. Monk is a self-employed computer consultant who earns more than $100,000 each year. He also is an enthusiastic artist. This year, he spent $4,900 on oil paints, canvasses, supplies, and lessons at a local studio. Mr. Monk made several trips to the Na

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