stores. If Bright Light incorporated is an S corporation how much income wil be allocated to Roberto A. 32,475 B. 64,950 C. 76,400 D. 129,900
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- Roberto and Reagan are both 25 percent owners/managers for Bright Light Inc. Roberto runs the retail store in Sacramento, CA, and Reagan runs the retail store in San Francisco, CA. Bright Lingt Inc. generated a $127,800 profit company wide made up of a $75,800 profit from the Sacramento store, a ($27,000) loss from the San Francisco store, and a combined $79,000 profit from the remaining stores. If Bright Light is taxed as a partnership and decides that Roberto and Reagan will be allocated 70 percent of his own store's profit with the remaining profits allocated pro rata among all the owners, how much income will be allocated to Reagan? Multiple Choice ___ ($25,140.00) ___ ($18, 900.00) ___ $4,510.00 ___ $20,630.00Roberto and Reagan are both 25-percent owner or managers for Bright Light Incorporated. Roberto runs the retail store in Sacramento, California, and Reagan runs the retail store in San Francisco, California. Bright Light generated a $125,000 profit companywide made up of a $75,000 profit from the Sacramento store, a ($25,000) loss from the San Francisco store, and a combined $75,000 profit from the remaining stores. If Bright Light is taxed as a partnership and it is decided that both Roberto and Reagan will be allocated 70 percent of his own store's profit, with the remaining profits allocated pro rata among all the owners, how much income will be allocated to Reagan in total? Multiple Choice ($25,000) ($17,500) $5,000 $20,000Sidney and Gertrude own 40% of Bearcave Bookstore, an S corporation. The remaining 60% is owned by their son Boris. Sidney and Gertrude do not participate in operating or managing the store, and they invested $19,000 in the business when it opened in 2017. The bookstore reported the following net income (loss) for the years 2017 through 2020: 2017 2018 2019 2020 $(24,000) $(14,000) $(12,000) $5,000 a. Complete the table below to determine how much Sidney and Gertrude have at risk in Bearcave at the end of each year (2017–2020)? Note: Enter negative amounts beginning with a minus (-) sign. If a amount is zero, enter "0". 2017 2018 2019 2020 Investment/Beginning Amount at-risk $fill in the blank 683706031051064_1 $fill in the blank 683706031051064_2 $fill in the blank 683706031051064_3 $fill in the blank 683706031051064_4 Share of income (loss) fill in the blank 683706031051064_5 fill in the blank 683706031051064_6 fill…
- Peter, Brian and Marc, three brothers, were co-owners of Bug-Zappers Inc. They each owned 1,000 shares in the business. Their adjusted cost base was $22 per share. After several years of success, their stock had increased in value to $34 per share, and they decided to execute a cross-purchase buy-sell agreement. In that agreement, they specified a fixed purchase price of $30 per share. This year, Marc died. At the time of his death, his shares were worth $40 each. Peter and Brian purchased his shares from his estate in accordance with the buy-sell agreement. What amount of taxable capital gain will be reported on Marc's final tax return?Joe, June, and Jim—coworkers—decide that they want to start their own business. Joe has $200,000 to contribute, June has equipment valued at $100,000 (basis = $90,000), and Jim has real estate suitable for the business valued at $200,000 (basis = $110,000). Joe and Jim are each to receive 40 percent of the corporate stock, and June is to receive 20 percent. Joe and June transfer title to their property to the corporation immediately. When Jim tries to transfer title to the real estate to the corporation, several legal errors in the title are discovered, and he is unable to transfer title until the errors are corrected. Correcting the errors takes more than 14 months. In the meantime, the corporation begins operating, renting the building from Jim. In the 15th month, Jim is able to transfer title and receive his stock. Is Jim eligible to use the nonrecognition provisions of Section 351 on this transfer?Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $215,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $215,000 and a tax basis of $153,750 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain is each owner required to recognize under each of the following alternative situations? [Hint: Look at IRC §351 and §721.] A. MMT is formed as a C corporation. B. MMT is formed as an S corporation. C. MMT is formed as an LLC.
- Bedrock Inc. is owned equally by Barney Rubble and his wife Betty, each of whom hold 500 shares in the company. Betty wants to reduce her ownership in the company, and it was decided that the company will redeem 250 of her shares for $32,600 per share on December 31 of this year. Betty’s income tax basis in each share is $9,750. Bedrock has current E&P of $10,290,000 and accumulated E&P of $50,380,000 a. What is the amount and character (capital gain or dividend) recognized by Betty as a result of the stock redemption, assuming only the “substantially disproportionate with respect to the shareholder” test is applied? b. What is Betty’s income tax basis in the remaining 250 shares she owns in the company? c. Assuming the company did not make any dividend distributions this year, by what amount does Bedrock reduce its E&P as a result of the redemption? d. Can Betty argue that the redemption is “not essentially equivalent to a dividend” and should be treated as an exchange?At her death, Chow owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch has earned average net profits of $1,710,000, and on the date of Chow's death, the book value of its stock is $4,275,000. An appropriate rate of return for Finch’s business is in is 10.55%. If required, round your intermediate computations to the nearest dollar. a. If goodwill exists, the total value of Finch stock isWhat value would the IRS argue that the stock Chow owned should be included in her estate?Don and Joe went into business together as equal co-owners. Joe had a lot of money but no business sense and Don had the “know how”. Don and Joe each invested $10,000 and Joe loaned the business $90,000. Chase loaned the business another $100,000 after Joe and Don agreed to guarantee the loan. In the first year, as is typical, the business struggled and incurred ordinary operating income of $50,000, excluding the payment promised to Don of $65,000 annually for his labor. The business earned interest income of $2,000, a short term capital loss of $4,000, and made qualified charitable contributions of $1,000. In the second year of business ordinary operating income was $32,000. including the promised amount for Don’s labor. The business earned $1,200 in interest income and incurred a $1,500 capital gain and paid $2,500 in qualified charitable contributions. Joe was repaid $10,000 for his loan and Chase received $3,000 in principal payments. An equal distribution of $4,000 was made to…