Chapter 1 Problems
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University of Miami *
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MISC
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Law
Date
Feb 20, 2024
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docx
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Kareem Gay
Chapter 1 Problems
1.
a.
In this situation, there is no separate entity for federal tax purposes since they are all connected individuals who agree to lease the property, which is not considered a separate entity because of the co-ownership format of the property.
b.
Since there is a profit motive to agree, this situation may warrant the creation of a separate entity for federal tax purposes. They have entered a joint venture to sell the property in order to share the income from the sale.
c.
For tax purposes, this situation will not be treated as a separate entity. Even though they share the same office, the money received is individually and not on behalf of the company. They all received their profits, and each is responsible for their own expenses.
d.
This circumstance will be recognized as an independent business entity due to the shared profit arrangement and joint decision-making authority in property sales. Furthermore, it is deemed a separate entity as the parties engage in a business agreement, ensuring financial benefits for both.
e.
This scenario may not be regarded as a distinct entity for tax purposes, as both the
doctor and the architect possess individual units, and the income earned is attributed to them individually. Nevertheless, should they establish a partnership agreement, it has the potential to be treated as a separate entity, as both parties would collectively own the building and share associated expenses.
f.
This does not qualify as a distinct entity; it is a lender-borrower relationship. The extra 15% appears to function as compensation to the lender.
2.
The check-the-box regulations allow an entity to avoid the association statutes despite having all the characteristics of a corporation. The regulations do not comply with Morrissey v. Commissioner. Given that the Supreme Court has ruled the underlying definition of 'association,' Treasury should not pass the regulation unless the court overturns its ruling. Considering the inconsistency between the check-the-box regulation
and the Supreme Court decision, any entity has the opportunity to challenge it. Congress, however, may codify the regulations into law in order to avoid any conflict with the Supreme Court's decision.
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