Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 10, Problem 32AP
For each of the following situations, indicate whether the corporation is eligible to elect S corporation status.
- a. Carman Corporation has two shareholders, Carla and Manuel. Carla is a United States citizen permanently residing in Mexico. Manuel is a Mexican citizen permanently residing in the United States.
- b. Same given info as in part (a), except that Manuel resides in Mexico.
- c. Devin Corporation has 110 individual shareholders, of which 12 are members of the same family.
- d. Evans Corporation has two shareholders, Mark and Joan, who are both United States citizens and residents. Mark owns all of the 100 shares of Evans common stock outstanding, and Joan owns all of the 100 shares of Evans
preferred stock outstanding. - e. Grant Corporation has two shareholders: William, a United States citizen and resident, and ABC
Partnership . ABC is a domestic partnership with six individual partners, all of whom are United States citizens and residents.
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Three owners join together to form ABC, INC., which properly elects to be taxed as a C corporation. Shareholder A contributes cash of $10,000 and a collection of jewelry display cases to be placed in the jewelry store operated by the C corporation. The jewelry display cases have a basis in A’s hands of $112,000, and a fair market value of $81,000. B contributes $10,000 in cash and jewelry inventory having a basis in B’s hands of $35,000 and a fair market value of $81,000. C contributes inventory having a basis in C’s hands of $120,000 and a fair market value of $96,000. Since each of the three of them have agreed to be equal shareholders, it was determined that it was fair to distributed $5,000 in cash to Shareholder C because her initial contribution had a fair market value of $5,000 more than the contribution of either A or B.
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Three owners join together to form ABC, INC., which properly elects to be taxed as a C corporation. Shareholder A contributes cash of $10,000 and a collection of jewelry display cases to be placed in the jewelry store operated by the C corporation. The jewelry display cases have a basis in A’s hands of $112,000, and a fair market value of $81,000. B contributes $10,000 in cash and jewelry inventory having a basis in B’s hands of $35,000 and a fair market value of $81,000. C contributes inventory having a basis in C’s hands of $120,000 and a fair market value of $96,000. Since each of the three of them have agreed to be equal shareholders, it was determined that it was fair to distributed $5,000 in cash to Shareholder C because her initial contribution had a fair market value of $5,000 more than the contribution of either A or B.
 What is the balance in B’s capital account immediately following his contribution?
Chapter 10 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 10 - Can a sole proprietorship be described as a...Ch. 10 - Mrs. Liu owns a business as a sole proprietor....Ch. 10 - This year, Mr. Pitts sole proprietorship generated...Ch. 10 - This year, Firm Q, a cash basis taxpayer, remitted...Ch. 10 - Prob. 5QPDCh. 10 - Define the tax base for the self-employment tax....Ch. 10 - Prob. 7QPDCh. 10 - Prob. 8QPDCh. 10 - Prob. 9QPDCh. 10 - Prob. 10QPD
Ch. 10 - Prob. 11QPDCh. 10 - Prob. 12QPDCh. 10 - Prob. 13QPDCh. 10 - Prob. 14QPDCh. 10 - Prob. 2APCh. 10 - Prob. 3APCh. 10 - Prob. 4APCh. 10 - Colin, a self-employed consultant, uses a room of...Ch. 10 - Prob. 6APCh. 10 - Prob. 7APCh. 10 - For 2019, Ms. Deming earned wages totaling...Ch. 10 - Calculate the total Social Security and Medicare...Ch. 10 - Prob. 11APCh. 10 - Prob. 12APCh. 10 - Jane is a self-employed attorney. This year, her...Ch. 10 - Prob. 14APCh. 10 - Prob. 15APCh. 10 - Amit is a limited partner in Reynolds Partnership....Ch. 10 - Kari is a limited partner in Lizard Partnership....Ch. 10 - Rochelle is a limited partner in Megawatt...Ch. 10 - Prob. 19APCh. 10 - Prob. 20APCh. 10 - Prob. 21APCh. 10 - Prob. 23APCh. 10 - AV Inc. is a member of an LLC. This year, AV...Ch. 10 - Prob. 25APCh. 10 - Prob. 26APCh. 10 - Prob. 27APCh. 10 - Prob. 28APCh. 10 - Prob. 29APCh. 10 - Refer to the facts in the preceding problem. BLS...Ch. 10 - Refer to the facts in part (c) of the preceding...Ch. 10 - For each of the following situations, indicate...Ch. 10 - a. If Video Associates is a partnership, and her...Ch. 10 - Prob. 34APCh. 10 - Prob. 1IRPCh. 10 - Javier is a full-time employee of B Inc. and...Ch. 10 - Mr. and Mrs. Chou file a joint income tax return....Ch. 10 - Travis is a professional writer who maintains his...Ch. 10 - Prob. 5IRPCh. 10 - Prob. 6IRPCh. 10 - Prob. 7IRPCh. 10 - Prob. 8IRPCh. 10 - Prob. 9IRPCh. 10 - Paulas Schedule K-1 from an LLC reported a 12,000...Ch. 10 - Marcus, a cash basis individual, is a general...Ch. 10 - Prob. 12IRPCh. 10 - Mr. and Mrs. West are the only shareholders in WW,...Ch. 10 - Prob. 14IRPCh. 10 - Prob. 15IRPCh. 10 - Prob. 16IRPCh. 10 - Prob. 17IRPCh. 10 - Prob. 1RPCh. 10 - Prob. 2RPCh. 10 - Herold had been a calendar year S corporation...Ch. 10 - Prob. 4RPCh. 10 - Mr. and Mrs. Janus operate a restaurant business...Ch. 10 - Prob. 2TPCCh. 10 - Prob. 3TPCCh. 10 - Marla recently inherited 50,000 and is considering...
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- Which of the following scenarios will qualify under Section 351 as a nontaxable corporate formation? For those that do not qualify, what requirements of Section 351 do they violate? Ginger, Mary Ann, and Mrs. Howell form GMH Corp. Ginger contributes tax memorabilia in exchange for 40% of GMH’s stock. Mary Ann contributes farmland in exchange for 30% of GMH, and Mrs. Howell contributes cash in exchange for the remaining 30%.  Clyde founded ABC Corp. in 2009 and owns all of ABC’s 1,000 shares of outstanding stock. In 2013, ABC issues 300 shares of new stock to Bonnie in exchange for land that Bonnie owned. Will Bonnie’s contribution qualify under Section 351?   With the same facts as in scenario b, now ABC issues 4,500 shares of new stock to Bonnie in exchange for Bonnie’s land.  Bert and Ernie form Duckie Corp. in late 2013. Bert contributes $10,000 cash in exchange for 60% of Duckie’s stock; Ernie contributes services in exchange for the remaining 40% of Duckie.arrow_forwardLucas Chang and Kaia Nash are a married couple and they equally own and operate ABC Inc. Lucas's sibling, Teagan, is starting a new company, XYZ Co., and has asked Lucas to be a 35% common shareholder. Teagan will own 45% of the shares, and the remainder of the shares will be owned equally by the siblings’ two parents. Determine if the two corporations are associated. If they are, identify the section of the Income Tax Act that applies.arrow_forward
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