King is a stockholder of Ara Corporation, In 2018, he received as dividendfrom the latter 150 common shares of Ara Corporațion and another 150common shares of Mina Company with a market value of P100 and P120per share, respectively. The dividend income subject to tax of King isStock dividendProperty dividendP33,000b.33,000C.d.18,00018,00015,000

Stock Dividend describes the dividend payment made to shareholders in form of own company's shares…

Answered: , King is a stockholder of Ara…

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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Accounting On March 19, 2022, Rick and Michelle form Road Runner Corporation as equal 50/50 shareholders with the following investment, for which each received 10,000 shares of Road Runner stock: Rick Cash From Michelle Equipment (basis $100,000; fair market value $50,000) $ 50,000 Land (basis $600,000; fair market value $850,000) From $900,000 $850,000 a. Tax consequences of this formation? b. Would your answer change if Rick contributed just $850,000 because Michelle's equipment was subject to a liability of $50,000, which Road Runner assumed? c. Would your answer change if Rick contributed $900,000 in return for 10,000 shares but Michelle instead received $9,000 in cash and 9,900 shares (worth $891,000) of stock of Road Runner in return for her contribution of land & equipment, and the equipment was not subject to a liability?
Hawkeye Company reports current E&P of $300,000 this year and accumulated E&P at the beginning of the year of $200,000. Hawkeye distributed $400,000 to its sole shareholder, Ray Kinsella, on December 31 of this year. Ray's tax basis in his Hawkeye stock before the distribution is $75,000. b. What is Ray's tax basis in his Hawkeye stock after the distribution? Tax basis
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?
X Corp, a personal holding company, is owned by two individuals and has gross income as follows: $30,000 gross profits from sales, tax-exempt interest of $3,000, dividends of $5,000 from a 10% owned corporation, and taxable interest of $40,000. What is the amount of X Corp's personal holding company income?
Sharon Slotten purchased shares in ATCO Ltd. during the current year as follows: Jan. 1: 200 shares for $25 per share April 2: 300 shares for $30 per share July 1: 100 shares sold for $45 per share Sept. 8: 500 shares for $24 per share On December 22, of the current year Sharon sells 200 ATCO Ltd. shares for $35 per share and pays $100 in sales commission. Required: Calculate the taxable capital gain or loss included in Sharon's NET INCOME under paragraph 3(b) of the Income Tax Act. Solution: Date No. of shares Cost per share Cost in Pool Jan.1 200 $ 25.00 $ 5,000 Apr.2 300 $ 30.00 $ 9,000 Subtotal 01-Jul 100 $ 45.00 $ 4,500 Sept.8 Total Calculation of Capital Gain: Proceeds of disposition Selling costs Adjusted cost base Capital Gain (loss) Capital Gains reserve Capital Gain Inclusion rate Taxable capital gain Total 01-Jul Dec.22 $ 200 $
Ht.15.
am.105.
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?
In 2020, ABC Inc., a domestic corporation sold shares of stocks for P250,000. The shares was acquired in 2015 at a cost of P100,000, were held as a capital asset and were sold directly to a buyer. How much was the capital gains tax due? A.P 10,000B.P 15,000C.P 22,500D.P 45,000
J1
T corporation (E & P $800,000) has 1,000 shares of stock outstanding. The shares are owned as followed: James 600 shares; Stephanie (James's 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 years ago. James had a basis of $275,000 in his shares. What are the tax consequences for both T corporation and James if the distribution is: A. A qualified stock redemption B. A liquidating distribution

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