Principles of Taxation for Business and Investment Planning 2020 Edition
23rd Edition
ISBN: 9781260433210
Author: Jones, Sally
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 15, Problem 6QPD
Mr. Burnett owns 10 percent of the stock of ABC Inc. and is the corporation’s director of marketing. ABC has a medical insurance plan for its employees. This year, it paid $1,400 of premiums to the insurance carrier for Mr. Burnett’s coverage. Contrast the treatment of this payment to Mr. Burnett if ABC is a C corporation or an S corporation.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current year, ABC has net income of $325,000 after deducting Robert's $100,000 salary. In addition to his compensation, ABC pays Robert dividends of $250,000.
a. What is Robert's qualified business income?$
b. What is Robert's qualified business income if you determined that reasonable compensation for someone with Robert's experience and responsibilities is $200,000?$
Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $100,000 in return for 75 percent of the stock in the corporation. Sam’s tax basis in the inventory is $60,000. Devon will receive 25 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $25,000.
Assume Devon received 25 percent of the stock in the corporation in return for his services.
What is Devon’s tax basis in the stock he receives in return for his contribution of services to the corporation?
Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam
will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the
inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the
corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative
amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
d. What is Devon's tax basis in the stock he receives in return for his contribution of services to the corporation?
Tax basis
Chapter 15 Solutions
Principles of Taxation for Business and Investment Planning 2020 Edition
Ch. 15 - Prob. 1QPDCh. 15 - Prob. 2QPDCh. 15 - Prob. 3QPDCh. 15 - Discuss the practical reasons why the tax law...Ch. 15 - Prob. 5QPDCh. 15 - Mr. Burnett owns 10 percent of the stock of ABC...Ch. 15 - This year, publicly held Corporation DF paid its...Ch. 15 - Mr. Zelig was recently promoted to an executive...Ch. 15 - Prob. 9QPDCh. 15 - Prob. 10QPD
Ch. 15 - Prob. 11QPDCh. 15 - Prob. 12QPDCh. 15 - Prob. 13QPDCh. 15 - Prob. 14QPDCh. 15 - Greg Company agreed to pay Ms. Bilko 45,000...Ch. 15 - Trent Inc. needs an additional worker on a...Ch. 15 - Prob. 3APCh. 15 - Mr. and Mrs. Brock own a bakery. Their marginal...Ch. 15 - Mr. and Mrs. Soon are the sole shareholders of SW...Ch. 15 - Prob. 6APCh. 15 - Mrs. Flay, age 57, participates in the group term...Ch. 15 - Mrs. Ellers corporate employer has a cafeteria...Ch. 15 - Mr. Nixon and Mr. Ryan are employed by HD Inc.,...Ch. 15 - Peet Company provides free on-site day care for...Ch. 15 - This year, Faro Inc., a calendar year taxpayer,...Ch. 15 - Prob. 12APCh. 15 - Prob. 13APCh. 15 - Prob. 14APCh. 15 - Refer to the facts in the preceding problem. Five...Ch. 15 - Prob. 16APCh. 15 - Prob. 17APCh. 15 - Prob. 18APCh. 15 - Prob. 19APCh. 15 - Prob. 20APCh. 15 - Prob. 21APCh. 15 - Prob. 22APCh. 15 - Prob. 23APCh. 15 - Prob. 24APCh. 15 - Prob. 25APCh. 15 - Prob. 26APCh. 15 - Prob. 27APCh. 15 - Refer to the facts in the preceding problem Assume...Ch. 15 - Prob. 29APCh. 15 - Prob. 30APCh. 15 - What is the maximum IRA contribution that Mr....Ch. 15 - Prob. 32APCh. 15 - Ms. Ray is age 46 and single. Her employer made a...Ch. 15 - Mr. and Mrs. Davos file a joint tax return. Each...Ch. 15 - Mr. and Mrs. Mario, ages 39 and 35, file a joint...Ch. 15 - Prob. 36APCh. 15 - Prob. 37APCh. 15 - Prob. 38APCh. 15 - Prob. 39APCh. 15 - Prob. 40APCh. 15 - Prob. 41APCh. 15 - Prob. 1IRPCh. 15 - Prob. 2IRPCh. 15 - Prob. 3IRPCh. 15 - Prob. 4IRPCh. 15 - Prob. 5IRPCh. 15 - Prob. 6IRPCh. 15 - Prob. 7IRPCh. 15 - Prob. 8IRPCh. 15 - Prob. 9IRPCh. 15 - Prob. 10IRPCh. 15 - Prob. 11IRPCh. 15 - Prob. 12IRPCh. 15 - Prob. 13IRPCh. 15 - Prob. 14IRPCh. 15 - Prob. 15IRPCh. 15 - Prob. 1RPCh. 15 - Prob. 2RPCh. 15 - Prob. 3RPCh. 15 - Prob. 4RPCh. 15 - This year, Mr. Joss accepted a job with BL Inc. He...Ch. 15 - Mr. Remling is entitled to a 5,200 bonus this year...Ch. 15 - Prob. 3TPCCh. 15 - Prob. 4TPC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume Devon received 25 percent of the stock in the corporation in return for his services. h. What is Devon's tax basis in the stock he receives in return for his contribution of services to the corporation? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) Tax basisarrow_forwardSam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) c. What amount of income, gain, or loss does Devon realize on the formation of the corporation? What amount, if any, does he recognize? Income, gain, or loss realized Income, gain, or loss recognizedarrow_forwardSam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume Devon received 25 percent of the stock in the corporation in return for his services. e. What amount of gain or loss does Sam recognize on the formation of the corporation? Gain or loss recognizedarrow_forward
- Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume Devon received 25 percent of the stock in the corporation in return for his services. f. What is Sam's tax basis in the stock he receives in return for his contribution of property to the corporation? Tax basisarrow_forwardSam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) b. What is Sam's tax basis in the stock he receives in return for his contribution of property to the corporation? Tax basisarrow_forwardSam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume Devon received 25 percent of the stock in the corporation in return for his services. g. What amount of income, gain, or loss does Devon recognize on the formation of the corporation? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) Income, gain, or loss recognizedarrow_forward
- Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What amount of income gain or loss does Sam realize on the formation of the corporation? What amount, if any, does he recognize? Income, gain, or loss realized Income, gain, or loss recognizedarrow_forwardDevi is the chief executive officer of Nishida Limited. Devi owns 20 percent of the common stock of Nishida. During the current year, Devis salary is 60,000 and he receives a 30,000 bonus. Nishida has taxable income of 200,000 and pays 80,000 in cash dividends. How much gross income does Devi have if a. Nishida is a corporation? b. Nishida is an S corporation?arrow_forwardLinda is an employee of JRH Corporation. Which of the following would be included in Lindas gross income? a. Premiums paid by JRH Corporation for a group term life insurance policy for 50,000 of coverage for Linda. b. 1,000 of tuition paid by JRH Corporation to State University for Lindas masters degree program. c. A 2,000 trip given to Linda by JRH Corporation for meeting sales goals. d. 1,200 paid by JRH Corporation for an annual parking pass for Linda.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Understanding U.S. Taxes; Author: Bechtel International Center/Stanford University;https://www.youtube.com/watch?v=QFrw0y08Oto;License: Standard Youtube License