Carolina Corporation, an S corporation, has nocorporate Earnings and profit from its years as aC corporation. At the end of the year, it distributesa small parcel of land to its sole shareholder,Shadiya. The fair market value of the parcel is$98,000, and its tax basis is $60,000. Shadiya'sbasis in her stock is $24,000. Assume CarolinaCorporation reported $0 taxable income beforeconsidering the tax consequences of thedistribution.b. How much gain must Shadiya recognize (ifany) as a result of the distribution, what is herbasis in her Carolina Corporation stock after thedistribution, and what is her basis in the land?

Answered: Image /qna-images/answer/045fbb45-9b2f-43cf-b3b0-40faa92fed54.jpg

Answered: Carolina Corporation, an S corporation,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

In 2021 Jamil, a single member LLC, and single taxpayer had taxable income of $85,000. this amount included short term capital losses of $6,000 and long term capital losses of $7,000. he had no capital gains in 2021, and he has no other capital transactions in prior years. what is the amount of loss Jamil will carry forward to later tax years? A.$13,000 B $10,000 C $7000 D $6000
Karen Thomas is single and has one dependent. She works as a clerk for the district judge and earns $67,000 a year. She does not itemize deductions. Other than salary, the 3. Karen’s only other source of income is from the disposition of shares of stock. a. What is Karen’s tax liability for the current tax year if she reports the following capital gains and losses for the year? Short-term capital gains $12,000 Short-term capital losses ($2,000) Long-term capital gains $16,500 Long-term capital losses ($3,000) b. What is Karen’s tax liability for the current tax year if she reports the following capital gains and losses for the year? Assume her salary is $47,000. Short-term capital gains $12,000 Short-term capital losses ($2,000) Long-term capital gains…
Determine the taxpayer's current-year (1) economic income and (2) gross income for tax purposes from the following events: (LO.1) a. Ja-ron's employment contract as chief executive of a large corporation was terminated, and he was paid $500,000 not to work for a competitor of the corporation for five years. b. Elliot, a six-year-old child, was paid $5,000 for appearing in a television commercial. His parents put the funds in a savings account for the child's education. c. Valery found a suitcase that contained $100,000. She could not determine who the owner was. d. Winn purchased a lottery ticket for $5 and won $750,000. e. Larry spent $1,000 to raise vegetables that he and his family consumed. The cost of the vegetables in a store would have been $2,400. f. Dawn purchased an automobile for $1,500 that was worth $3,500. The seller was in desperate need of cash.
Boots, Inc. is a "C" corporation engaged in the shoe manufacturing business. Boots is a calendar year, accrual method taxpayer with twong shareholders, Emil and Betty, who are unrelated cash method taxpayeal answering the questions below, assume for convenience that Emil and n each are taxable at a combined federal and state flat rate of 40% on ordinary income and a combined flat rate of 20% on qualified dividends and long capital gains. During the current year, Boots has the following income aa expense items: Income: $2,600,000 Gross profit-sale of inventory. Capital gains. $ 200,000 Expenses and Losses: $ 800,000 $ 800,000 $ 220,000 Operating Expenses. Equipment purchase (100% expensed) under § 168(k) Capital losses (a) Determine Boots, Inc.'s taxable income and its tax liability for the current year. (b) What result in (a), above, if Boots distributes its after-tax profits to Emil and Betty as qualified dividends? (c) What result in (a), above, if instead of paying dividends Boots…
Green Corporation is required to change its method of accounting for federal income tax purposes. The change will require an adjustment to income to be made over three tax periods. Joe, the sole shareholder of Green, wants to better understand the implications of this adjustment for E&P purposes, because he anticipates a distribution from Green in the current year. Explain to Joe the impact of the adjustment on E&P.
Subject: accounting
Gina owns all of Cherry Corporation's stock. Cherry pays her a $74,000 salary, which reduces its before-tax profit to $21,000. Cherry distributes all of its after-tax income to its shareholder, Gina. Gina is married, and her spouse receives $82,000 of salary from an unrelated employer. They file jointly, have $31,500 of itemized deductions, and have no dependents. Compute the total income tax that is paid. Ignore payroll taxes. (The tax year is 2022) View the standard deduction amounts. View the 2022 tax rate schedule for the Married filing jointly filing status. Read the requirement. a. Compute the total income tax that would be paid assuming Cherry is an S corporation. Ignore payroll taxes. Begin by calculating taxable income for Gina under this scenario. S corporation income Salaries Adjusted gross income Minus: 74,000 82,000 156,000 Qualified business income deduction Itemized deductions Taxable income 0 31,500 124,500 Now enter the income tax that would be paid by Gina and the…
Thad, a single taxpayer, has taxable income before the QBI deduction of $189,500. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2021, his proprietorship generates qualified business income of $151,600, W–2 wages of $113,700, and $12,000 of qualified property. Assume the QBI amount is net of the self-employment tax deduction. If required, round any division to two decimal places and use that rounded amount in any future computations. Round your final answer to the nearest dollar. What is Thad's qualified business income deduction?
1. Sheila Jackson is a 50% shareholder in Washington, Inc., an S corporation. This year, Jackson’s share of the Washington loss is $100,000. Jackson reports income from several other sources. Identify at least four tax issues related to the effects of the S corporation loss on Jackson’s tax return.
John is the sole shareholder of Maggy Corporation, a qualified S corporation. At January 1, Year 1, John has a basis in Maggy Corporation of $2000. The corporation’s Year 1 tax return shows the following:Ordinary income $10,000Interest income $1,000Nondeductible expenses $2,000Real estate rental loss $5,000179 deduction $1,500Distribution to John $3,000 What is John’s basis in Maggy Corporation at the end of year 1?
Sandra would like to organize LAB (a legal corporation) as either an Scorporation or a C corporation for tax purposes. In either form, the entity isexpected to generate an 8 percent annual before-tax return on a $500,000investment. Sandra marginal income tax rate is 37 percent and her tax rateon qualified dividends and net capital gains is 20 percent. LAB income is notqualified business income (QBI), so Sandra is not allowed to claim the QBIdeduction. Assume that LAB will distribute all of its earnings after entity-leveltaxes every year. Ignore the additional Medicare tax and the net investmentincome tax when computing your answers. a. How much cash after taxes would Sandra receive from her investment inthe first year if LAB is organized as either an S corporation or a Ccorporation?
This year, Faro, Incorporated, a calendar year taxpayer, issued 500 shares of its publicly traded stock as a bonus to its employee, Darius. On the date of issuance, the stock's fair market value was $17,600. Required: a. What are the tax consequences to Darius and Faro if Darius's ownership of the stock was fully vested on the date of issuance (the stock was transferable and not subject to risk of forfeiture). b. What are the tax consequences to Darius and Faro if the terms of the bonus require that Darius must hold the stock five years from the date of issuance. If employment is terminated before that date, the stock must be forfeited back to Faro. Darius made no election with respect to the restricted stock. Complete this question by entering your answers in the tabs below. Required A Required B ces What are the tax consequences to Darius and Faro if Darius's ownership of the stock was fully vested on the date of issuance (the stock was transferable and not subject to risk of…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS