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linda_us
linda_us, Master's Degree
Category: Multiple Problems
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Experience:  A tutor for Business, Finance, Accounts and other related topics.
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Customer: Hi i have a lot of questions would you able to do them all?
JA: Thanks. Can you give me any more details about your issue?
Customer: i am current studying the ACC 350 which is america taxation 30. Rose Corporation distributes land with a fair market value of $70,000 and an adjusted basis of $80,000. The land is subject to a liability of $40,000. What is the total effect of the distribution on the E&P of Rose?a. Rose’s E&P does not change.b. Rose’s E&P is reduced by $30,000.c. Rose’s E&P is reduced by $40,000.d. Rose’s E&P is reduced by $70,000.e. None of the above statements are correct. the questions like these
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Customer: i have an assignment for american taxation. there are totally 40 questions and they are due this wednesday
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Submitted: 1 year ago.
Category: Multiple Problems
Customer: replied 1 year ago.
1. Which one of the following is not a flow-through entity?
a. Partnership.
b. S corporation.
c. Sole proprietorship.
d. C corporation
e. None of the above2. Which one of the following statements is false?
a. Adjusted gross income is a concept that appears only on the individual tax return.
b. Individuals are permitted to take deductions for personal and dependency exemptions, but C corporations cannot do so.
c. Both individuals and C corporations use the same tax rate tables to calculate their tax liabilities.
d. C-corporations may take advantage of the dividends received deduction, but individual taxpayers are not permitted to take this deduction.
e. Both C-corporations and individuals are permitted to deduct charitable contributions, but they are subject to different limitations as to the amount of the deduction.3. Luis is the sole shareholder of a corporation, and Eduardo owns a sole proprietorship. Both businesses were started in year 2015, and both make a profit of $80,000 in year 2015. Each owner withdraws $50,000 from his business during the year to pay personal expenses. Which one of the following statements is incorrect?
a. Eduardo must report net profit from his business of $80,000 for 2015.
b. Luis must report dividend income of $80,000 for 2015.
c. Eduardo’s proprietorship (as opposed to Eduardo) is not required to pay tax on the $80,000 profit for 2015.
d. Luis’s corporation must pay tax on $80,000 for 2015.
e. None of the above.4. Ted is the sole shareholder of a regular C corporation, and Sue owns a sole proprietorship. Both businesses were started in 2014, and each business sustained a $3,000 capital loss for the year 2015. Which one of the following statements is correct?
a. Ted’s corporation can deduct the $3,000 capital loss in 2015.
b. Ted’s corporation cannot carry the capital loss back but can carry it forward.
c. Sue cannot deduct any of this loss in 2015.
d. Sue can offset the $3,000 capital loss against ordinary income in 2015.
e. None of the above statements are correct.5. Mitchell and Lane form Green Corporation. Mitchell transfers property (basis of $105,000 and fair market value of $90,000) while Lane transfers land (basis of $8,000 and fair market value of $75,000) and $15,000 in cash. Each receives 50% of Green Corporation’s stock, which is worth a total of $180,000. As a result of these transfers,
a. Mitchell has a recognized loss of $15,000, and Lane has a recognized gain of $67,000.
b. Neither Mitchell nor Lane has any recognized gain or loss.
c. Mitchell has no recognized loss, but Lane has a recognized gain of $15,000.
d. Green Corporation will have a basis in the land of $23,000.
e. None of the above statements are correct.6. Eve transfers property worth $400,000, basis of $120,000, to Green Corporation for 85% of its stock, worth $350,000, and a long-term note, executed by Green and made payable to Eve, worth $50,000.
a. Eve recognizes no gain on the transfer.
b. Eve recognizes a gain of $230,000 on the transfer.
c. Eve recognizes a gain of $280,000 on the transfer.
d. Eve recognizes a gain of $50,000 of the transfer.
e. None of the above.7. Tara incorporates her sole proprietorship, transferring it to newly formed Black Corporation. The assets transferred have an adjusted basis of $240,000 and a fair market value of $300,000. Also transferred was $10,000 in liabilities, $1,000 of which was personal and the balance of $9,000 being business related. In return for these transfers, Tara receives all of the stock in Black Corporation.
a. Tara’s recognized gain is $70,000.
b. Tara’s recognized gain is $10,000.
c. Tara’s recognized gain is $1,000.
d. Tara’s recognized gain is zero.
e. None of the above statements are correct.
8. Tim, a cash basis taxpayer, incorporates his sole proprietorship. He transfers the following items to newly created Wren Corporation.
Adjusted Basis Fair Market Value
Cash $ 10,000 $ 10,000
Building 100,000 160,000
Mortgage payable (secured by the
Building & held for 5 years) 120,000 120,000With respect to this transaction,
a. Tim has a recognized gain because Section 357(b) applies.
b. Tim has no recognized gain because this is a Section 351 transaction.
c. Tim has a recognized gain because Section 357(c) applies
d. Tim has a recognized gain because both Section 357(b) and (c) apply and (b) takes priority.
e. None of the above.9. Which one of the following statements is false? Similar to the like-kind exchange provisions,
a. Section 351 can be partly justified by the wherewithal to pay concept.
b. The receipt of boot under Section 351 can cause gain to be recognized.
c. Section 351 is mandatory.
d. Section 351 does not defer loss recognition.
e. None of the above.
Customer: replied 1 year ago.
10. Kim owns 100% of the stock of Cardinal Corporation. In the current year Kim transfers an installment obligation, tax basis of $30,000 and fair market value of $200,000, for additional stock in Cardinal worth $200,000.
a. Kim recognizes no taxable gain on the transfer.
b. Kim has a taxable gain of $170,000.
c. Kim has a basis of $200,000 in the additional stock she received in Cardinal Corporation.
d. Kim has a taxable gain of $200,000.
e. None of the above statements are correct.11. Wade and Paul form Swan Corporation with the following investments. Wade transfers machinery worth $100,000, with a basis of $40,000, while Paul transfers land worth $90,000, with a basis of $20,000, and services rendered in organizing the corporation worth $10,000. Each is issued 25 shares in Swan Corporation. With respect to the transfers,
a. Wade has no recognized gain; Paul recognizes gain of $80,000.
b. Neither Wade nor Paul has recognized gain on the transfers.
c. Swan Corporation has a basis of $30,000 in the land transferred by Paul.
d. Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation.
e. None of the above statements are correct.12. Sarah and Tony (mother and son) form Dove Corporation with the following investment: cash by Sarah of $55,000; land by Tony (basis of $55,000, and fair market value of $45,000). Dove Corporation issues 200 shares of stock, 100 each to Sarah and Tony. Thus, each receives stock in Dove worth $50,000.
a. Section 351 cannot apply since Sarah should have received 110 shares instead of only 100 shares.
b. Section 351 only applies to Sarah.
c. Section 351 only applies to Tony.
d. Section 351 applies to both Tony and Sarah because stock need not be issued to Sarah and Tony in proportion to the value of the property transferred.
e. None of the above.13. Which one of the following statements is true? For Section 351,
a. Stock rights and warrants are included in the definition of stock.
b. An installment obligation is considered to be property.
c. Nonqualified preferred stock is included in the definition of stock.
d. Property includes services provided to help organize the corporation.
e. None of the above statements are true.14. Leah transfers equipment (basis of $400,000 and fair market value of $500,000) for additional stock in Crow Corporation. After the transfer, Leah owns 80% of Crow’s stock. Associated with the equipment is Section 1245 recapture potential of $70,000. As a result of the transfer,
a. Leah recognizes ordinary income of $70,000.
b. Leah recognizes no gain and the recapture potential under Section 1245 carries over to Crow Corporation.
c. Leah recognizes no gain and the recapture potential under Section 1245 disappears.
d. Leah recognizes a capital gain of $100,000.
e. None of the above.15. In order to induce Parakeet Corporation to build a new manufacturing facility in Huntsville, Alabama, the city donates land (fair market value of $250,000) and cash of $50,000 to the corporation. Within several months of the donation, Parakeet Corporation spends $350,000 (which includes the $50,000 received from Huntsville) on the construction of a new plant located on the donated land.
a. Parakeet must recognize income of $50,000 as to the donation.
b. Parakeet will have a zero basis in the land and a basis of $350,000 in the plant.
c. Parakeet must recognize income of $300,000 as to the donation.
d. Parakeet will have a zero basis in the land and a basis of $300,000 in the plant.
e. None of the above statements are correct.16. Which one of the following statements is false?
a. If a debt instrument has too many features of stock, the IRS may treat it as a form of stock.
b. If the IRS reclassifies debt as a form of stock, principal and interest payments will be considered dividends.
c. The IRS has the authority to characterize corporate debt as wholly equity or as part debt and part equity.
d. With the current 20% ceiling on taxing dividend income, the IRS is more inclined to convert interest income to dividend income than when dividend income was taxed at the taxpayer’s marginal tax rate.
e. None of the above.17. Which one of the following factors supports classifying an instrument as equity rather than debt?
a. Payment on the instrument is contingent upon earnings.
b. The instrument is not subordinated to any liabilities.
c. Each shareholder does not own the same percentage of stock and debt.
d. The corporation is not thinly capitalized.
e. None of the above.18. Black Corporation owns stock in White Corporation. Black Corporation had net operating income of $500,000 for the year. White pays Black a dividend of $50,000. Black takes a dividends received deduction of $40,000. Which one of the following statements is correct?
a. Black owns less than 20% of White Corporation.
b. Black owns 20% or more, but less than 80% of White Corporation.
c. Black owns 80% of White Corporation.
d. Black owns 80% or more of White Corporation.
e. None of
Customer: replied 1 year ago.
19. Ruby Corporation, an accrual basis taxpayer, was formed and began operations on July 1, 2015. The following expenses were incurred during the first year (July 1 to December 31, 2015) of operations.Expenses of temporary directors and of organizational meetings $ 4,000
Fee paid to the state of incorporation 500
Accounting services incident to organization 1,000
Legal services for drafting the corporate charter and bylaws 2,800
Expenses incident to the printing and sale of stock certificates 1,000
Assume Ruby Corporation makes an appropriate and timely election under Section 248(c) and the
related Regulations. What is the maximum organizational expense Ruby may write off for 2015?
a. $5,310
b. $5,143.33
c. $5,110
d. $5,000
e. None of the above.20. Which one of the following statements is true?
a. A transferor who receives stock for both property and services may never be included in the control group in determining whether an exchange meets the requirement of Section 351.
b. In order to retain the services of Eve, a key employee in Ted’s sole proprietorship, Ted contracts with Eve to make her a 30% owner. Ted incorporates the business receiving in return 100% of the stock. Three days later, Ted transfers 30% of the stock to Eve for her services. Under these circumstances, Section 351 will not apply to the incorporation of Ted’s business.
c. One month after Hortense incorporates her sole proprietorship and with no pre-arranged plan, she gives 25% of the stock to her children. Section 351 cannot apply to Hortense’s incorporation because she has not satisfied the 80% control requirement.
d. All of the above statements are true.
e. None of the above are true statements.21. The tax treatment of corporate distributions at the shareholder level does not depend on
a. The basis of stock in the hands of the shareholder.
b. The earnings and profits of the corporation.
c. The character of the property being distributed.
d. Whether the distributed property is subject to a liability.
e. Any of the above.22. A corporation sells property (basis $50,000) to its sole shareholder for $35,000, the fair market value of the property. With respect to the sale,
a. The corporation has a tax loss of $15,000.
b. The shareholder has a constructive dividend of $15,000.
c. The shareholder has a basis of $50,000 in the property.
d. The corporation does not recognize a tax loss but reduces its E&P account by $15,000.
e. None of the above statements are correct.23. Marigold Corporation, a calendar year taxpayer, has taxable income of $225,000 for the year. In reviewing Marigold’s financial records you discover the following occurred this year.Federal income taxes paid $ 35,000
Capital loss carryforward deducted currently 25,000
Gain from property sold this year using the installment method ($7,000 of the
gain was recognized currently) 34,000
Depreciation deducted on tax return (ADS depreciation would have been
$12,000) 8,000
70% dividends received deduction 42,000Marigold Corporation’s current E&P is
a. $232,000
b. $253,000
c. $280,000
d. $300,000
e. None of the above.24. Warbler Corporation, a calendar year taxpayer, has taxable income of $145,000 for the current year. Among its transactions for the year are the followingFederal income tax refund $20,000
Section 179 expense deducted 19,000
Related party loss 11,000
Realized gain from qualified like-kind exchange but gain
not recognized 7,000
Warbler Corporation’s current E&P is
a. $161,000
b. $176,200
c. $154,000
d. $169,200
e. None of the above25. Bluebird Corporation has a deficit in accumulated E&P of $180,000. For 2014, it has current E&P of $120,000. On December 31, 2015, Bluebird distributes $135,000 to its sole shareholder, Cameron. Cameron has a basis of $60,000 in his stock in Bluebird Corporation. As a result of the distribution,
a. Cameron has dividend income of $135,000.
b. Cameron has dividend income of $60,000 and reduces his stock basis to zero, and has a capital gain of $15,000.
c. Cameron has dividend income of $120,000 and reduces his stock basis to $45,000.
d. Cameron has no dividend income [because netting AEP and CEP yields negative amount], reduces his stock basis to zero, and has a capital gain of $75,000.
e. None of the above statements are correct.26. On January 1, Iris Corporation (a calendar year taxpayer) has AEP of $95,000. During the year, Iris incurs a net loss of $120,000 from operations that accrues ratably. On June 30, Iris distributes $50,000 to Jodi (an individual), its sole shareholder. Jodi’s basis in her Iris stock is $20,000. How much of the $50,000 is dividend income for Jodi?
a. $0.
b. $35,000.
c. $50,000.
d. $30,000.
e. None of the above.
Customer: replied 1 year ago.
27. Which one of the following statements is true?
a. A corporation that distributes a property dividend must reduce its E&P by the adjusted basis of the property.
b. A constructive dividend must satisfy the legal requirements of a dividend as set forth by applicable state law.
c. Constructive dividends have no effect of a distributing corporation’s E&P.
d. The amount of dividend income recognized by a shareholder from a property distribution is always reduced by the amount of liabilities assumed by that shareholder.
e. None of the above statements are true.28. In the current year, Blue Corporation (With E&P of $100,000) made the following property distributions to its shareholders (all corporations)Adjusted Basis Fair Market Value Gain(Loss)
Texaco stock investment $20,000 $15,000 $(5,000)
Non-LIFO inventory 10,000 12,000 2,000
Blue Corporation is not a member of a controlled group. [I include this statement for the sake of accuracy, only. For solution purposes you may ignore it.] As a result of the distribution,
a. Blue Corporation recognizes a gain of $2,000 but does not recognize any loss.
b. Blue Corporation recognizes a gain of $2,000 and a loss of $5,000.
c. Blue Corporation recognizes a loss of $3,000.
d. Blue Corporation has no recognized gain or loss.
e. None of the above.29. Kiwi Corporation has E&P of $150,000. It distributes land with a fair market value of $50,000 (adjusted basis of $60,000) to its sole shareholder, Connor. The land is subject to a liability of $45,000 that Connor assumes.
a. Connor has a taxable dividend of $60,000.
b. Connor has a taxable dividend of $15,000.
c. Connor has a taxable dividend of $50,000.
d. Connor has a taxable dividend of $5,000.
e. None of the above statements are correct.30. Rose Corporation distributes land with a fair market value of $70,000 and an adjusted basis of $80,000. The land is subject to a liability of $40,000. What is the total effect of the distribution on the E&P of Rose?
a. Rose’s E&P does not change.
b. Rose’s E&P is reduced by $30,000.
c. Rose’s E&P is reduced by $40,000.
d. Rose’s E&P is reduced by $70,000.
e. None of the above statements are correct.31. Roadrunner Corporation distributes property to its sole shareholder, Linda. The property has a fair market value of $250,000 and an adjusted basis of $175,000. In addition, the property is subject to a liability of $200,000. Current E&P is $450,000. With respect to the distribution, which one of the following statements is correct?
a. Roadrunner has a gain of $75,000 and Linda has dividend income of $50,000.
b. Roadrunner has a gain of $50,000 and Linda’s basis in the distributed property is $50,000.
c. Roadrunner has a gain of $25,000 and Linda’s basis in the distributed property is $250,000.
d. Roadrunner has a gain of $75,000 and Linda has dividend income of $250,000.
e. None of the above statements are correct.32. Peregrine Corporation has accumulated E&P [AEP] of $30,000 on 1/1/15. In 2015, Peregrine has current E&P of $50,000 (before any distribution). On 12/31/15, the corporation distributes $100,000 to its sole shareholder, Mia (an individual). Peregrine Corporation’s AEP as of 1/1/16 is
a. $0
b. $20,000 deficit
c. $30,000
d. $80,000
e. None of the above33. Rust Corporation has accumulated E&P of $30,000 on January 1, 2015. In 2015, Rust Corporation had an operating loss of $40,000. It distributed cash of $20,000 to Andre, its sole shareholder, on December 31, 2015. Rust Corporation’s balance in its accumulated E&P account as of January 1, 2016, is
a. $30,000 deficit
b. $10,000 deficit
c. $0
d. $30,000 positive amount
e. None of the above34. Sparrow Corporation distributes land (basis of $80,000 and fair market value of $320,000) as a property dividend to its shareholders. The land is subject to a liability of $360,000. Sparrow Corporation recognizes a gain of
a. $280,000
b. $40,000
c. $240,000
d. $0
e. None of the above35. Ten years ago, Carrie purchased 2,000 shares in Osprey Corporation for $20,000. In the current year, Carrie receives a nontaxable stock dividend of 20 shares of Osprey preferred. Values at the time of the dividend are: $8,000 for the preferred stock and $72,000 for the common. Based on this information, Carrie’s basis in the preferred stock is.
a. $0.
b. $8,000.
c. $2,000.
d. $2,222.
e. None of the above.
Customer: replied 1 year ago.
36. Dove Corporation declares a nontaxable dividend payable in rights to subscribe to common stock. Each right entitles the holder to purchase one share of stock for $45. One right is issued for every two shares of stock owned. Ann owns 200 shares of stock in Dove that she purchased three years ago for $7,500. At the time of the distribution of the rights, the market value of the common stock is $50 per share, and the market value of the rights is $5 per right. Ann receives 100 rights. She exercises 50 rights and sells the remaining 50 rights three months later for $5.50 per right.
a. Ann must allocate a part of the basis of her original stock in Dove to the rights.
b. If Ann does not allocate a part of the basis of her original stock to the rights, her basis in the new stock is zero.
c. Sale of the rights produces ordinary income to Ann.
d. Ann is not permitted to allocate a part of the basis of her original stock in Dove to the rights.
e. None of the above is correct.37. The accumulated earnings penalty tax
a. Does not apply to corporations that have more than 75 shareholders.
b. Does not apply to corporations with more than one class of stock.
c. Does not apply to personal holding companies.
d. Applies to all of the above.
e. Applies to none of the above.38. The purpose of the federal income tax is to
a. Raise revenue
b. Control taxpayer behavior
c. Both of the above
d. None of the above
e. Make taxpayers miserable (just kidding so don’t select E)39. Which one of the following is correct with respect to limited liability companies?
a. An advantage of an LLC when compared to a C corporation is the ability to pass tax attributes through to the owners.
b. A disadvantage of a general partnership when compared with an LLC is the inability of the owners to have limited liability.
c. An LLC has greater flexibility than does an S corporation in number of owners, types of owners, and capital structure.
d. All of the above are correct.
e. None of the above.40. Which one of the following statements is true?
a. The IRS can impose both the accumulated earnings tax and the personal holding company tax in the same year on the same entity.
b. The personal holding company tax rate for 2015 is 15%.
c. If twelve unrelated individuals own an equal portion of the value of the outstanding stock, the personal holding company stock ownership requirement is satisfied.
d. All of the above are true.
e. None of the above.
Expert:  Mr. Gregory White replied 1 year ago.

Hello, my name is Greg.

I see this might be time sensitive.

Do you still need this answered?

Customer: replied 1 year ago.
i need them all answered!!!
Customer: replied 1 year ago.
they are due tomorrow night at 12.. please help me!! i was waiting for a long time..
Customer: replied 1 year ago.
those are accounting taxation problems..
Expert:  Mr. Gregory White replied 1 year ago.

Sorry about that delay. I will not be able to complete in that timeframe. Opening up for all experts.

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