a. Azure is a C corporation and pays no dividends or salary to Sasha. b. Azure is a C corporation and distributes $75,000 of dividends to Sasha. C. Azure is a C corporation and pays $75,000 of salary to Sasha.
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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?Mary is the sole shareholder of corporation ABCD. She would like to use some of the profit of the business for personal use. Each of the following describes a legal way for Mary to withdraw funds from ABCD except: (a) Mary pays her personal use from the corporation's funds, (b) Mary receives taxable wages from ABCD, (c) ABCD lends fund to Mary with reasonable interest rate and repayment schedule, (d) ABCD pays Mary a taxable dividend.Discuss planning opportunities with organizing a corporation. Instructions Original Post Prompt: Sarah incorporates her small business but does not transfer the machinery and equipment the business uses to the corporation. Subsequently, the machinery and equipment are leased to the corporation for an annual rent. What tax reasons might Sarah have for not transferring the machinery and equipment to the corporation when the business was incorporated?
- 2. Rye Corporation is owned 55% (55 shares) by Roger, 30% (30 shares) by Yolanda and 15% (15 shares) by Eric. Rye has E&P of $400,000. Roger's stock basis is $200,000, Yolanda's stock basis is $130,000 and Eric's stock basis is $80,000. a. What is the tax result to Roger if Rye redeems 30 shares for $350,000? Yolanda is Roger's wife. b. What is the tax result to Roger if Rye redeems 45 shares for $500,000? Yolanda is Roger's wife. c. What is the tax result to Roger if Rye redeems 55 shares for $600,000? Yolanda is Roger's wife.What are the tax consequences to Paul?1.
- Sam owns 50 Class A non-voting shares of ABC Co. Leslie owns 50 Class B voting shares of ABC Co. Who has control of ABC Co? A) Sam B) Both Sam and Leslie C) Leslie D) Neither Sam nor Leslie Odinie has been an employee of ABC Co for the last 5 years. Recently, the CFO has asked all employees to incorporate and advised that their pay will now be received through their corporation instead. Odinie is a Canadian resident individual and is interested in what type of corporation his new company will be. It is established in Canada. A) Specified investment business B) Public corporation C) Personal services business D) Other corporationProblem 2. Scott Taxpayer is an Attorney who operates his own law firm. As a single-member LLC, Scott reports his firm operations as a sole proprietor. Scott has QBI from his law firm of $450,000, he reports paying W–2 wages of $140,000, and the unadjusted basis of property used in the LLC is $350,000. Scott is married and will file a joint tax return with his spouse. Their taxable income before the QBI deduction is $425,000, including $20,000 of capital gains. Determine the taxpayer’s QBI deduction for 2020In the following case, identify all the violations of the rules of conduct of the Code of Professional Ethics, indicate the rule and explain why it was violated. Carmen and Carlos formed a corporation called CPA al servicio. 50% of all issued shares are divided between the two owner shareholders. Carmen in CPA and member of the AICPA Carlos is an appraiser. They announce themselves as members of the AICPA. They were hired to do an audit, the payment of which will be based on the findings of the CPA. Carmen commented with another CPA colleague on important aspects of the case to be audited. During the audit Carmen found deviations from the Generally Accepted Accounting Principles. Carmen gave an opinion in the report of her "unqualified without qualification."102 Integrity and objectivity } 201 General standards } 202 Compliance with standards } 203 Accounting Principles } 301 Confidential customer information } 302 Contingency expenses } 501 Acts of discredit } 502 Promotion or…
- Alan and Melissa are equal partners in a non-corporate business. The business has a gross income of $320,000 and has operating expenses of $210,000. They are both single. Alan also has long-term capital gains of 25,000. Assume that Alan and Melissa have no other income and no itemized deductions. What is the amount of the qualified business deduction for both of them?Enter all amounts as positive numbers, except for a "loss". If required, enter a "loss" as a negative number on the tax form. If an amount box does not require an entry or the answer is zero, enter "0". On Form SE, use rounded amounts in subsequent computations. Information regarding (1) the business which Gregory operates and (2) Lulu's stock transactions are presented below. 1. The Rock Glen House B&B is operated as a sole proprietorship and had the following income and expenses for the year: Room rental income $137,896 Vending machine income 2,100 Advertising expense 4,810 Depreciation for book and tax purposes 18,100 Mortgage interest on the B&B 22,987 Wages of cleaning people 17,540 Taxes and licenses 6,420 Supplies consumed 18,870 Business insurance 6,300 Laundry expenses 4,289 Accounting fees 1,850 Office expenses 2,400 Utilities 6,350 All of the above amounts relate to the business portion of the Bed & Breakfast; the…Lenny is the sole shareholder of an S corporation. Each year, he draws a salary and receives a distribution of profits from the corporation. Which of the following statements is TRUE? Lenny's share of the profits will not be subject to social security or medicare taxes. Lenny's salary will be treated as self-employment income and must be reported on Schedule C. Lenny will pay income taxes only on the portion of the profits that he actually distributes to himself. Lenny may determine his salary by selecting the amount that provides him the greatest tax benefit, regardless of the market rate for the services he provides.