Wineseller Corporation is owned by Mortimer Smith, its sole shareholder. Mortimer has a $20,000 basis in his Wineseller Corporation stock. Mortimer is in the 37% tax bracket. Wineseller Corporation is in the 21% tax bracket. Wineseller Corporation has the following balances as of December 31, 2021. Accumulated Earnings and Profits (AEP) ($600,000) Current Earnings and Profits $ 70,000 On December 31, 2021, Wineseller Corporation distributes $160,000 to Mortimer. What are the tax consequences to Mortimer from receiving this distribution from Wineseller Corporation? How would your answer above be different if instead Wineseller Corporation had the following balances: Accumulated Earnings and Profits (AEP) $500,000 Current Earnings and Profits (480,000) Assume that Mortimer still receives a distribution of $160,000 and has stock basis of $20,000 Use the facts in part a, but assume that rather than cash, Mortimer received an asset with a fair market value of $200,000 and a basis to the corporation of $120,000. How much tax would Mortimer owe from this distribution? What are the tax implications to Wineseller Corporation?
Wineseller Corporation is owned by Mortimer Smith, its sole shareholder. Mortimer has a $20,000 basis in his Wineseller Corporation stock. Mortimer is in the 37% tax bracket. Wineseller Corporation is in the 21% tax bracket. Wineseller Corporation has the following balances as of December 31, 2021. Accumulated Earnings and Profits (AEP) ($600,000) Current Earnings and Profits $ 70,000 On December 31, 2021, Wineseller Corporation distributes $160,000 to Mortimer. What are the tax consequences to Mortimer from receiving this distribution from Wineseller Corporation? How would your answer above be different if instead Wineseller Corporation had the following balances: Accumulated Earnings and Profits (AEP) $500,000 Current Earnings and Profits (480,000) Assume that Mortimer still receives a distribution of $160,000 and has stock basis of $20,000 Use the facts in part a, but assume that rather than cash, Mortimer received an asset with a fair market value of $200,000 and a basis to the corporation of $120,000. How much tax would Mortimer owe from this distribution? What are the tax implications to Wineseller Corporation?
Chapter11: The Corporate Income Tax
Section: Chapter Questions
Problem 5P: Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of...
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Problem 3:
Wineseller Corporation is owned by Mortimer Smith, its sole shareholder. Mortimer has a $20,000 basis in his Wineseller Corporation stock. Mortimer is in the 37% tax bracket. Wineseller Corporation is in the 21% tax bracket.
Wineseller Corporation has the following balances as of December 31, 2021.
Accumulated Earnings and Profits (AEP) ($600,000)- Current Earnings and Profits $ 70,000
On December 31, 2021, Wineseller Corporation distributes $160,000 to Mortimer.
- What are the tax consequences to Mortimer from receiving this distribution from Wineseller Corporation?
- How would your answer above be different if instead Wineseller Corporation had the following balances:
- Accumulated Earnings and Profits (AEP) $500,000
- Current Earnings and Profits (480,000)
Assume that Mortimer still receives a distribution of $160,000 and has stock basis of $20,000
- Use the facts in part a, but assume that rather than cash, Mortimer received an asset with a fair market value of $200,000 and a basis to the corporation of $120,000.
- How much tax would Mortimer owe from this distribution?
- What are the tax implications to Wineseller Corporation?
- How much tax would Mortimer owe from this distribution?
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