{"id":6620,"date":"2021-10-09T19:52:57","date_gmt":"2021-10-09T19:52:57","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/federal-taxation-ch-19-homework-accounting-homework-help\/"},"modified":"2021-10-09T19:52:57","modified_gmt":"2021-10-09T19:52:57","slug":"federal-taxation-ch-19-homework-accounting-homework-help","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/federal-taxation-ch-19-homework-accounting-homework-help\/","title":{"rendered":"Federal taxation ch.19 homework | Accounting homework help"},"content":{"rendered":"
\n

30. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer)<\/span><\/p>\n

has accumulated E & P of $100,000. Blue\u2019<\/strong>s current E & P is $60,000, and at the end of<\/span><\/p>\n

the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pam and Jon.<\/span><\/p>\n

Pam\u2019<\/strong>s stock basis is $11,000; Jon\u2019<\/strong>s stock basis is $26,000. How is the distribution treated<\/span><\/p>\n

for tax purposes?<\/span><\/p>\n

\u00a0<\/span><\/p>\n

33. LO.2 Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following<\/span><\/p>\n

transactions in 2013, its second year of operation.<\/span><\/p>\n

Taxable income $330,000<\/span><\/p>\n

Federal income tax liability paid 112,000<\/span><\/p>\n

Tax-exempt interest income 5,000<\/span><\/p>\n

Meals and entertainment expenses (total) 3,000<\/span><\/p>\n

Premiums paid on key employee life insurance 3,500<\/span><\/p>\n

Increase in cash surrender value attributable to life insurance premiums 700<\/span><\/p>\n

Proceeds from key employee life insurance policy 130,000<\/span><\/p>\n

Cash surrender value of life insurance policy at distribution 20,000<\/span><\/p>\n

Excess of capital losses over capital gains 13,000<\/span><\/p>\n

MACRS deduction 26,000<\/span><\/p>\n

Straight-line depreciation using ADS lives 16,000<\/span><\/p>\n

Section 179 expense elected during 2012 100,000<\/span><\/p>\n

Dividends received from domestic corporations (less than 20% owned) 25,000<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by<\/span><\/p>\n

$10,000 during 2013. In addition, Sparrow sold property on installment during 2012.<\/span><\/p>\n

The property was sold for $40,000 and had an adjusted basis at sale of $32,000. During<\/span><\/p>\n

2013, Sparrow received a $15,000 payment on the installment sale. Finally, assume that<\/span><\/p>\n

no additional first-year depreciation was claimed. Compute Sparrow\u2019<\/strong>s current E & P.<\/span><\/p>\n

F<\/span><\/p>\n

42. LO.1, 2, 3, 4, 5 Cerulean Corporation has two equal shareholders, Eloise and Olivia.<\/span><\/p>\n

Eloise acquired her Cerulean stock three years ago by transferring property worth<\/span><\/p>\n

$700,000, basis of $300,000, for 70 shares of the stock. Olivia acquired 70 shares in Cerulean<\/span><\/p>\n

Corporation two years ago by transferring property worth $660,000, basis of<\/span><\/p>\n

$110,000. Cerulean Corporation\u2019<\/strong>s accumulated E & P as of January 1 of the current year<\/span><\/p>\n

is $350,000. On March 1 of the current year, the corporation distributed to Eloise property<\/span><\/p>\n

worth $120,000, basis to Cerulean of $50,000. It distributed cash of $220,000 to Olivia.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

On July 1 of the current year, Olivia sold her stock to Magnus for $820,000. On<\/span><\/p>\n

December 1 of the current year, Cerulean distributed cash of $90,000 each to Magnus<\/span><\/p>\n

and Eloise. What are the tax issues?<\/span><\/p>\n

\u00a0<\/span><\/p>\n

44. LO.2, 6 Parrot Corporation is a closely held company with accumulated E & P of<\/span><\/p>\n

$300,000 and current E & P of $350,000. Tom and Jerry are brothers; each owns a 50%<\/span><\/p>\n

share in Parrot, and they share management responsibilities equally. What are the tax<\/span><\/p>\n

consequences of each of the following independent transactions involving Parrot, Tom,<\/span><\/p>\n

and Jerry? How does each transaction affect Parrot\u2019<\/strong>s E & P?<\/span><\/p>\n

a. Parrot sells an office building (adjusted basis of $350,000; fair market value of<\/span><\/p>\n

$300,000) to Tom for $275,000.<\/span><\/p>\n

b. Parrot lends Jerry $250,000 on March 31 of this year. The loan is evidenced by a note<\/span><\/p>\n

and is payable on demand. No interest is charged on the loan (the current applicable<\/span><\/p>\n

Federal interest rate is 7%).<\/span><\/p>\n

c. Parrot owns an airplane that it leases to others for a specified rental rate. Tom and<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Jerry also use the airplane for personal use and pay no rent. During the year, Tom<\/span><\/p>\n

used the airplane for 120 hours, and Jerry used it for 160 hours. The rental value of<\/span><\/p>\n

the airplane is $350 per hour, and its maintenance costs average $80 per hour.<\/span><\/p>\n

d. Tom leases equipment to Parrot for $20,000 per year. The same equipment can be<\/span><\/p>\n

leased from another company for $9,000 per year.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

51. LO.8, 9 Robert and Lori (Robert\u2019<\/strong>s sister) own all of the stock in Swan Corporation<\/span><\/p>\n

(E & P of $1 million). Each owns 500 shares and has a basis of $85,000 in the shares.<\/span><\/p>\n

Robert wants to sell his stock for $600,000, the fair market value, but he will continue to<\/span><\/p>\n

be employed as an officer of Swan Corporation after the sale. Lori would like to purchase<\/span><\/p>\n

Robert\u2019<\/strong>s shares and, thus, become the sole shareholder in Swan, but Lori is short<\/span><\/p>\n

of funds. What are the tax consequences to Robert, Lori, and Swan Corporation under<\/span><\/p>\n

the following circumstances?<\/span><\/p>\n

\u00a0<\/span><\/p>\n

a. Swan Corporation distributes cash of $600,000 to Lori, and she uses the cash to purchase<\/span><\/p>\n

Robert\u2019<\/strong>s shares.<\/span><\/p>\n

b. Swan Corporation redeems all of Robert\u2019<\/strong>s shares for $600,000.of funds. What are the tax consequences to Robert, Lori, and Swan Corporation under<\/span><\/p>\n

the following circumstances?<\/span><\/p>\n

a. Swan Corporation distributes cash of $600,000 to Lori, and she uses the cash to purchase<\/span><\/p>\n

Robert\u2019<\/strong>s shares.<\/span><\/p>\n

b. Swan Corporation redeems all of Robert\u2019<\/strong>s shares for $600,000.<\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

30. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $100,000. Blue\u2019s 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. Pam\u2019s stock basis is $11,000; Jon\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-6620","post","type-post","status-publish","format-standard","hentry","category-homework-help"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/6620","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=6620"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/6620\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=6620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=6620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=6620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}