income tax unit10

Using your text, complete the following. In these problems, apply your knowledge of tax code treatment for corporate earnings and shareholder transactions.

· Problem 47, on page 15-36.

· Problem 50, on page 15-37.

· Problem 52, on page 15-37.

· Problem 53, on page 15-38.

· Problem 56, on page 15-39.

47. Determine the basis of stock in the hands of the shareholder in each of the following instances. Assume that the 80% rule is met in all cases. a. Contribution of property with a basis of $1,000 and an FMV of $1,400. b. Contribution of property with a basis of $3,000 and an FMV of $3,800. The stockholder also received $500 cash from the corporation as part of the stock transaction. c. Contribution of property with a basis of $8,200 and an FMV of $12,500. The stockholder also received property with an FMV of $1,700 from the corporation as part of the stock transaction. d. Contribution of a building with an FMV of $200,000, a mortgage (assumed by the corporation) of $100,000, and a basis of $125,000. e. Contribution of a building with an FMV of $1,700,000, a mortgage (assumed by the corporation) of $1,000,000, and a basis of $635,000.

50. Determine the amount of the dividends received deduction in each of the following instances. In all cases, the net income figure includes the full dividend.

a. Dividend of $10,000 from a 45% owned corporation; taxable income before DRD of $50,000.

b. Dividend of $19,000 from a 15% owned corporation; taxable income before DRD of $75,000.

c. Dividend of $22,000 from a 60% owned corporation; taxable income before DRD of $11,000.

d. Dividend of $8,000 from a 10% owned corporation; taxable income before DRD of $7,000.

52. Determine the deductible charitable contribution in each of the following instances:

a. Charitable contribution of $4,000 and taxable income before charitable contribution of $50,000.

b. Charitable contribution of $8,000 and taxable income before charitable contribution of $50,000.

c. Charitable contribution of $4,800 and taxable income before charitable contribution of $50,000. Taxable income includes a net operating loss carryforward of $5,000.

d. Charitable contribution of $4,800 and taxable income before charitable contribution of $40,000. Taxable income includes a capital loss carryback of $5,000.

53. Determine taxable income in each of the following independent cases. In all cases, the company was very profitable in all years prior to 2017 and it had retained earnings of $1,000,000 at the end of 2017.

a. In 2018, Company A has taxable income of $60,000 prior to consideration of any net operating loss. In 2017, the company incurred a net operating loss of $10,000. It did not elect to waive the carryback period. Determine 2018 taxable income.

b. In 2018, Company B has taxable income of $50,000 prior to consideration of any net operating loss. In 2017, the company incurred a net operating loss of $20,000. It elected to waive the carryback period. Determine 2018 taxable income.

c. In 2019, Company C has taxable income of $35,000 prior to consideration of any net operating loss. In 2018, the company incurred a net operating loss of $30,000. Determine 2019 taxable income.

d. In 2019, Company D has taxable income of $35,000 prior to consideration of any net operating loss. In 2017, the company incurred a net operating loss of $5,000. It elected to waive the carryback period. In 2018, the company incurred a net operating loss of $40,000. Determine 2019 taxable income.

54. Determine the amount of taxable dividend, nontaxable distribution, and capital gain for the distributions made in each of the following cases:

a. Corporate E&P of $10,000, shareholder stock basis of $12,000, distribution of $6,000.

b. Corporate E&P of $7,500, shareholder stock basis of $7,000, distribution of $6,500.

c. Corporate E&P of $16,000, shareholder stock basis of $5,000, distribution of $17,000.

d. Corporate E&P of $14,000, shareholder stock basis of $11,000, distribution of $26,000.