Federal taxation ch.19 homework | Accounting homework help

30. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer)

has accumulated E & P of $100,000. Blues current E & P is $60,000, and at the end of

the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pam and Jon.

Pams stock basis is $11,000; Jons stock basis is $26,000. How is the distribution treated

for tax purposes?

 

33. LO.2 Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following

transactions in 2013, its second year of operation.

Taxable income $330,000

Federal income tax liability paid 112,000

Tax-exempt interest income 5,000

Meals and entertainment expenses (total) 3,000

Premiums paid on key employee life insurance 3,500

Increase in cash surrender value attributable to life insurance premiums 700

Proceeds from key employee life insurance policy 130,000

Cash surrender value of life insurance policy at distribution 20,000

Excess of capital losses over capital gains 13,000

MACRS deduction 26,000

Straight-line depreciation using ADS lives 16,000

Section 179 expense elected during 2012 100,000

Dividends received from domestic corporations (less than 20% owned) 25,000

 

Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by

$10,000 during 2013. In addition, Sparrow sold property on installment during 2012.

The property was sold for $40,000 and had an adjusted basis at sale of $32,000. During

2013, Sparrow received a $15,000 payment on the installment sale. Finally, assume that

no additional first-year depreciation was claimed. Compute Sparrows current E & P.

F

42. LO.1, 2, 3, 4, 5 Cerulean Corporation has two equal shareholders, Eloise and Olivia.

Eloise acquired her Cerulean stock three years ago by transferring property worth

$700,000, basis of $300,000, for 70 shares of the stock. Olivia acquired 70 shares in Cerulean

Corporation two years ago by transferring property worth $660,000, basis of

$110,000. Cerulean Corporations accumulated E & P as of January 1 of the current year

is $350,000. On March 1 of the current year, the corporation distributed to Eloise property

worth $120,000, basis to Cerulean of $50,000. It distributed cash of $220,000 to Olivia.

 

On July 1 of the current year, Olivia sold her stock to Magnus for $820,000. On

December 1 of the current year, Cerulean distributed cash of $90,000 each to Magnus

and Eloise. What are the tax issues?

 

44. LO.2, 6 Parrot Corporation is a closely held company with accumulated E & P of

$300,000 and current E & P of $350,000. Tom and Jerry are brothers; each owns a 50%

share in Parrot, and they share management responsibilities equally. What are the tax

consequences of each of the following independent transactions involving Parrot, Tom,

and Jerry? How does each transaction affect Parrots E & P?

a. Parrot sells an office building (adjusted basis of $350,000; fair market value of

$300,000) to Tom for $275,000.

b. Parrot lends Jerry $250,000 on March 31 of this year. The loan is evidenced by a note

and is payable on demand. No interest is charged on the loan (the current applicable

Federal interest rate is 7%).

c. Parrot owns an airplane that it leases to others for a specified rental rate. Tom and

 

Jerry also use the airplane for personal use and pay no rent. During the year, Tom

used the airplane for 120 hours, and Jerry used it for 160 hours. The rental value of

the airplane is $350 per hour, and its maintenance costs average $80 per hour.

d. Tom leases equipment to Parrot for $20,000 per year. The same equipment can be

leased from another company for $9,000 per year.

 

 

 

51. LO.8, 9 Robert and Lori (Roberts sister) own all of the stock in Swan Corporation

(E & P of $1 million). Each owns 500 shares and has a basis of $85,000 in the shares.

Robert wants to sell his stock for $600,000, the fair market value, but he will continue to

be employed as an officer of Swan Corporation after the sale. Lori would like to purchase

Roberts shares and, thus, become the sole shareholder in Swan, but Lori is short

of funds. What are the tax consequences to Robert, Lori, and Swan Corporation under

the following circumstances?

 

a. Swan Corporation distributes cash of $600,000 to Lori, and she uses the cash to purchase

Roberts shares.

b. Swan Corporation redeems all of Roberts shares for $600,000.of funds. What are the tax consequences to Robert, Lori, and Swan Corporation under

the following circumstances?

a. Swan Corporation distributes cash of $600,000 to Lori, and she uses the cash to purchase

Roberts shares.

b. Swan Corporation redeems all of Roberts shares for $600,000.

Semester Papers
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.