Exercise 6-25 (LO. 1) During the current year, Gnatcatcher, Inc., (E & P of $1,000,000) distributed $200,000 each to Brandi and Yuen in redemption of some of their Gnatcatcher stock. The two shareholders acquired their shares five years ago. Each shareholder is in the 32% tax bracket, and each had a $45,000 basis in the redeemed stock. Assume taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%. a. Assume that the distribution to Brandi is a qualifying stock redemption. and Brandi's tax liability on the distribution is $ The distribution is taxed as a b. Assume that the distribution to Yuen is a nonqualified stock redemption. The distribution is taxed as a and Yuen's tax liability on the distribution is $

Exercise 6-25 (LO. 1) During the current year, Gnatcatcher, Inc., (E & P of $1,000,000) distributed $200,000 each to Brandi and Yuen in redemption of some of their Gnatcatcher stock. The two shareholders acquired their shares five years ago. Each shareholder is in the 32% tax bracket, and each had a $45,000 basis in the redeemed stock. Assume taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%. a. Assume that the distribution to Brandi is a qualifying stock redemption. and Brandi's tax liability on the distribution is $ The distribution is taxed as a b. Assume that the distribution to Yuen is a nonqualified stock redemption. The distribution is taxed as a and Yuen's tax liability on the distribution is $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2. T corporation (e & p $800,000) has 1,000 shares of stock outstanding. The shares are owned as followed: james 600 shares; stephanie (james sister) 300 shares; luke (james son) 100 shares. T corporation owns land (basis of $300,000, fmv of $260,000) that it purchased as an investment 10 years ago. James had a basis of $275,000 in his shares. What are the tax consequences for both t cororation and james if the distribution is: a qualified stock redemption? b. liquidating distribution?
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Subject: accounting
22. At the beginning of the tax year, Tim had a $2,000 stock basis in the S corporation, World, Inc. Tim owns 25% of the outstanding World, Inc. stock. At the end of the tax year, World, Inc. reported on its Schedule K, a $16,000 ordinary loss, $4,000 of interest income, and $2,000 in nondeductible expense. Tim also has $10,000 in flow-through reportable income from other S corporations. How much of the World, Inc. ordinary loss can Tim deduct on his personal return? . $0 • $2,500 . $3,000 $4,000
Gene Grams is a 40% owner of a calendar year S corporation during the tax year. His beginning stock basis is $150,000, and the S corporation reports the following items. Ordinary income $72,000 Short-term capital gain 16,000 § 1231 loss 6,000 Tax-exempt interest income 5,000 Distributions 40,000 Gene sells all of his stock in the S corporation for $310,000. What is the amount and character of the gain or loss to Gene?
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subject:accounting
8. A, an individual, owns all 100 shares of X Co. A's basis in these shares is $1 per share ($100 total). 8a) A transfers 10 shares to X in exchange for cash of 10. How will this transaction be treated for tax purposes?