PRINCIPLES OF TAXATION F/BUS...(LL)
PRINCIPLES OF TAXATION F/BUS...(LL)
23rd Edition
ISBN: 9781260433197
Author: Jones
Publisher: MCG
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Chapter 9, Problem 2RP
To determine

Explain whether Person P’s exchange of business assets for corporate stock qualify as a non-taxable exchange even though Person P decreased his ownership interest from 100 percent to only 20 percent on the day after Incorporation P was incorporated.

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John owns all the stock of Lucas Corporation, an S corporation. John's basis for the 1,000 shares is $130,000. On June 11 of the current year (assume a non-leap year), John gifts 100 shares of stock to his younger brother Michael, who has been working in the business for one year. Lucas Corporation reports $125,000 of ordinary income for the current year. Requirement What amount of income is allocated to John? To Michael? (Use a 365-day year for computations. Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest dollar.) John Michael Ordinary income allocated
Cameron owns all the stock of Connor ​Corporation, an S corporation. Cameon​'s basis for the​ 1,000 shares is $355,000. On June 25 of the current year​ (assume a​ non-leap year), Cameron gifts 100 shares of stock to his younger brother Chase, who has been working in the business for one year. Conner Corporation reports $350,000 of ordinary income for the current year. Requirement: What amount of income is allocated to Comeron​? To ​Chase? ​(Use a​ 365-day year for computations. Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest​ dollar.) Question content area bottom Part 1 Ordinary income allocated Cameron Chase
Luciana, Jon, and Clyde incorporate their respective businesses and form Starling Corporation. On March 1 of the current year, Luciana exchanges her property (basis of  $50,000 and value of $150,000) for 150 shares in Starling Corporation. On April 15, Jon  exchanges his property (basis of $70,000 and value of $500,000) for 500 shares in  Starling. On May 10, Clyde transfers his property (basis of $90,000 and value of  $350,000) for 350 shares in Starling.  If the three exchanges are part of a prearranged plan, what gain will each of the parties  recognize on the exchanges?  Assume that Luciana and Jon exchanged their property for stock four years ago, while  Clyde transfers his property for 350 shares in the current year. Clyde’s transfer is not  part of a prearranged plan with Luciana and Jon to incorporate their businesses. What  gain will Clyde recognize on the transfer?  Returning to the original facts, if the property that Clyde contributes has a basis of  $490,000 (instead of…

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PRINCIPLES OF TAXATION F/BUS...(LL)

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