Smith and Jones create SJ Corporation. Smith contributes property with a fair market value of $80,000, and Jones contributes cash of $70,000. Each receives a 50% share in the corporation, and the corporation is valued at $140,000 immediately after the formation. Smith's property has an adjusted basis of $25,000, and is subject to a $10,000 mortgage, which is assumed by the company. What gain will Smith recognize in this situation? A. $0 B. $10,000 C. $15,000 D. $25,000
Smith and Jones create SJ Corporation. Smith contributes property with a fair market value of $80,000, and Jones contributes cash of $70,000. Each receives a 50% share in the corporation, and the corporation is valued at $140,000 immediately after the formation. Smith's property has an adjusted basis of $25,000, and is subject to a $10,000 mortgage, which is assumed by the company. What gain will Smith recognize in this situation?
Kookaburra Corp. reports net income per books of $575,000 for the current tax year. Included in this amount are the following items:
| Accrued vacation expense paid 4 months after year end | $50,000 |
| Estimated warranty expense (actual claims paid were $8,000) | 10,000 |
| 35,000 | |
| Meals purchased at restaurants | 30,000 |
Kookaburra's depreciation expense for tax purposes is $40,000. What is the company's taxable income for the current tax year?
The tax on built-in gains is a corporate-level tax on S corporations that dispose of assets that
A.Appreciated while the company was an S corporation.
B.Appreciated while the company was a C corporation.
C.Appreciated during a 10-year period from when an S election is effective.
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