5. (a) A transfers a contract to perform services to Newco in exchange for 50% of Newco's stock B transfers a tract of land with a basis of 50 and FMV of 100 in exchange for 50% of Newco's stock. What are the tax consequences to all of the parties?
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- When incorporating Spotfree, a cleaning company, Jayne transferred accounts receivable (fair market value $20,000 and $0 tax basis) and $12,000 of accounts payable from her cash-method sole proprietorship to Spotfree in exchange for Spotfree stock valued at $8,000. Assume the transfer qualifies under §351. Note: Leave no answer blank. Enter zero if applicable. Required: What is the amount of the gain Jayne must recognize on the exchange and its character? What is Jayne's basis in the Spotfree stock received in the exchange?1 An S corporation distributes land with a basis of $60,000 and a FMV of $90,000 to its sole shareholder. The tax results of the distribution will be Group of answer choices no gain recognized by the corporation but $30,000 of gain recognized by the shareholder. no gain to the corporation or to the shareholder. $30,000 of gain recognized by the S corporation and no pass-through to the shareholder. $30,000 of gain recognized by the S corporation which is passed through to the shareholder.Q.98. Smith and Jones create SJ Corporation. Smith contributes property with a fair market value of $80,000, and Jones contributes cash of $70,000. Each receives a 50% share in the corporation, and the corporation is valued at $140,000 immediately after the formation. Smith's property has an adjusted basis of $25,000, and is subject to a $10,000 mortgage, which is assumed by the company. What gain will Smith recognize in this situation? A. $0 B. $10,000 C. $15,000 D. $25,000
- A) Suppose that Charles holds the land for appreciation. deductible taxes from AGI ( ) B) Suppose that Charles holds the land for rent. Suppose that Charles holds the land for rent.A capital gains tax is levied on the sale of which of the following items? Choose all that apply. A. real estate B. income C. stocks D. gasolineMark received 10 ISOs (each option gives him the right to purchase 16 shares of Hendricks Corporation stock for $9 per share) at the time he started working for Hendricks Corporation five years ago, when Hendricks's stock price was $5 per share. Now that Hendricks's share price is $35 per share, Mark intends to exercise all of his options and hold all of his shares for more than one year. Assume that more than a year after exercise, Mark sells the stock for $35 a share. Note: Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable. a. What are Mark's taxes due on the grant date, the exercise date, and the date he sells the shares, assuming his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent? Grant date Exercise date Sale date Taxes Due
- ! Required information Problem 12-45 (LO 12-3) (Algo) [The following information applies to the questions displayed below.] Mason (single) is a 50 percent shareholder in Angels Corporation (an S Corporation). Mason receives a $191,000 salary working full time for Angels Corporation. Angels Corporation reported $444,000 of taxable business income for the year (2021). Before considering his business income allocation from Angels and the self-employment tax deduction (if any), Mason's adjusted gross income is $191,000 (all salary from Angels Corporation). Answer the following questions for Mason. (Leave no answer blank. Enter zero if applicable.) Problem 12-45 Part a (Algo) a. Assuming the income allocated to Mason is qualified business income, what is Mason's deduction for qualified business income?A Corporation owns 20% of C Corporation. C has current earnings and profits of $40,000. C distributed property with a basis of $65,000 and a Fair Market Value of $35,000 to A Corporation. The property is subject to a liability of $70,000. Question What are the tax consequences to A and to the C Corporation?Which of the following is true with respect to the related party rules? a.A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party. b.Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return. c.A taxpayer's uncle is a related party for purposes of Section 267. d.Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder. e.None of these choices are correct.
- A corporation sells property (basis of $750,000) to its sole shareholder for $450,000, the fair market value of the property. With respect to the sale: MPC Corporation makes a property distribution on 12/31/16 to its sole shareholder, Jon. The property distributed is a house (fair market value of $400,000; basis of $300,000) that is subject to a $150,000 mortgage that Jon assumes. Before considering the consequences of the distribution, MPC’s current E & P before the distribution is $175,000 and its accumulated E & P is $100,000. MPC makes no other distributions during the current year. What is MPCs taxable gain on the distribution of the house? What is MPC’s current E&P after the distribution on 12/31/16? What is Jon’s taxable gain (if any) and what type of gain is it? What is Jon’s basis in the house?Assume the following exchange meets the necessary requirements and thus qualifies for tax purposes as a “like-kind exchange.” Captain Kirk exchanges land that is used in his business and has a FMV of $610,000 for Spock’s building, which has a FMV of $325,000. Captain Kirk’s basis in the land is $305,000 and Captain Kirk’s land is subject to a liability of $31,000 which Spock assumes. (a) What is Captain Kirk’s recognized gain or loss on this transaction? (b) What is Captain Kirk’s basis in the building? Do NOT GIVE SOLUTION IN IMAGE FORMATECasey transfers property with a tax basis of $2,840 and a fair market value of $6,600 to a corporation in exchange for stock with a fair market value of $4,800 and $450 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $1,350 on the property transferred. Casey also incurred selling expenses of $372. What is the amount realized by Casey in the exchange? Multiple Choice $6,600 $6,228 $6,128 $5,678