Derek is the sole owner of Jeter, Inc., a calendar year S corp. Derek has a $400,000 stock basis as of January 1, 2019. During 2019, Jeter, Inc. had a taxable income of $100,000. At the end of 2019 Jeter distributes equipment FMV $600,000, basis $400,000 to Derek. What is the taxable gain for Derek for 2019? What is his stock basis at the end of 2019? What is his basis in the equipment at the end of 2019?

Derek is the sole owner of Jeter, Inc., a calendar year S corp. Derek has a $400,000 stock basis as of January 1, 2019. During 2019, Jeter, Inc. had a taxable income of $100,000. At the end of 2019 Jeter distributes equipment FMV $600,000, basis $400,000 to Derek. What is the taxable gain for Derek for 2019? What is his stock basis at the end of 2019? What is his basis in the equipment at the end of 2019?

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 32CE

See similar textbooks

Similar questions

During 2019, John was the chief executive officer and a share- holder of Maze, Inc. He owned 60% of the outstanding stock of Maze. In 2016, John and Maze, as co-borrowers, obtained a 100,000 loan from United National Bank. This loan was secured by Johns personal residence. Although Maze was listed as a co-borrower, John repaid the loan in full in 2019. On Mazes Form 1120 tax returns, no loans from shareholders were reported. Discuss whether John is entitled to a bad debt deduction for the amount of the payment on the loan. Partial list of research aids: U S. v. Genere, 405 U.S. 93 (1972). Date H. Sundby, T.C.Memo. 2003-204. Arrigoni v. Comm., 73 T.C. 792 (1980). Estate of Herbert M. Rapoport, T.C.Memo. 1982-584. Clifford L. Brody and Barbara.I DeClerk, T.C. Summary Opinion, 2004-149.
B Corporation, a calendar year-end, accrual basis taxpayer, is owned 75 percent by Bonnie, a cash basis taxpayer. On December 31,2019, the corporation accrues interest of $4,000 on a loan from Bonnie and also accrues a $15,000 bonus to Bonnie. The bonus is paid to Bonnie on February 1,2020; the interest is not paid until 2021 . How much can B Corporation deduct on its 2019 tax return for these two expenses? $0 $4,000 $15,000 $19,000 $12,000
Determine the taxpayers adjusted basis in each of the following situations. If any changes are made in the original basis of the asset, explain why they are necessary. a. Simone purchases 300 shares of Wilguess, Inc., stock in 2017 for 6,300. In 2017 and 2018, Wilguess pays cash dividends of 2 per share. In 2019, Wilguess pays a 40 percent stock dividend (nontaxable), and Simone receives an additional 120 shares of stock. b. Symbol Corporation purchases a building in 2016 at a cost of 240,000. Annual maintenance costs on the building are 80,000. In 2018, Symbol adds a wing to the building at a cost of 60,000. In 2019, the building is painted at a cost of 25,000. Symbol deducts 4,800 in depreciation in 2016, 7,300 in 2017, and 8,100 in 2018 and 2019. c. Lorissa purchases land as an investment in 2017 for 33,000. Property taxes on the property are 400 per year. In 2018, Lorissa is assessed 2,000 by the county assessor for her share of a sidewalk that the county builds adjacent to the land. Lorissa pays the assessment in 2019. d. The Barton Brothers Partnership purchases a computer in 2017 for 8,000. The partnership elects to deduct the entire cost of the computer in 2017. In 2019, Barton Brothers spends 300 to repair the computer.
In 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $ 400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Calculate the following amounts for Lou: Adjusted gross income $ ____________________ Standard deduction $ ____________________ Taxable income $ ____________________
On May 9, 2019, Glenna purchases 500 shares of Ignaz Company stock for 7,500. On June 30, 2019, she writes a call option on the stock, giving the grantee the right to buy the stock for 9,000 during the following 12-month period. Glenna receives a call premium of 750 for writing the call. The call is exercised by the grantee on December 15, 2019. a. What is the amount and character of Glennas gain or loss? b. Assume that the original option expired unexercised. What is the amount and character of Glennas gain or loss?
Lori, who is single, purchased 5-year class property for 200,000 and 7-year class property for 420,000 on May 20, 2019. Lori expects the taxable income derived from her business (without regard to the amount expensed under 179) to be about 550,000. Lori has determined that she should elect immediate 179 expensing in the amount of 520,000, but she doesnt know which asset she should completely expense under 179. She does not claim any available additional first-year depreciation. a. Determine Loris total cost recovery deduction if the 179 expense is first taken with respect to the 5-year class asset. b. Determine Loris total cost recovery deduction if the 179 expense is first taken with respect to the 7-year class asset. c. What is your advice to Lori? d. Assume that Lori is in the 24% marginal tax state and Federal income bracket and that she elects 179 for the 7-year asset. Determine the present value of the tax savings from the cost recovery deductions for both assets. See Appendix H for present value factors, and assume a 6% discount rate. e. Assume the same facts as in part (d), except that Lori decides not to use 179 on either asset. Determine the present value of the tax savings under this choice. In addition, determine which option Lori should choose. f. Present your solution to parts (d) and (e) of the problem in a spreadsheet using appropriate Microsoft Excel formulas. E-mail your spreadsheet to your instructor with a two-paragraph summary of your findings.
In March 2019, Serengeti exercised an ISO that had been granted by his employer, Thunder Corporation, in December 2016. Serengeti acquired 5,000 shares of Thunder stock for the exercise price of 65 per share. The fair market value of the stock at the date of exercise was 90 per share. What is Serengetis 2016 AMT adjustment related to the ISO? What is the 2019 adjustment?
Shelly has 200,000 of QBI from her local jewelry store (a sole proprietorship). Shellys proprietorship paid 30,000 in W-2 wages and has 20,000 of qualified property. Shellys spouse earned 74,400 of wages as an employee, they earned 20,000 of interest income during the year, and they will be filing jointly and using the standard deduction. What is their QBI deduction for 2019?