None Problem 15-60 (LO 15-3) (Static)[The following information applies to the questions displayed below.]Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing$200,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $200,000 and a tax basisof $150,000 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownershipinterest. What amount of gain or income is each owner required to recognize under each of the following alternativesituations? [Hint Look at IRC §351 and $721.) (Leave no answer blank. Enter zero if applicable.)Problem 15-60 Part a (Static)a. MMT is formed as a C corporation.Gain or income to be recognizedMickeyMickaylaTaylor

Under IRC §351, the transfer of property to a corporation in exchange for stock generally allows for…

Answered: Problem 15-60 (LO 15-3) (Static) [The…

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 1RP

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H1. profile-image Carlos owns a property which he has rented. During 2021, the property generated $24,000 in rental income. Carlos incurred the following expenses related to rental operations: • Depreciation $5,000 • Real estate tax 2,000 Utilities (water and electricity) Maintenance 3,000 • Boat expenses which Carlos uses to 1,500 meet clients and sign contracts 5,500 Determine the net income from rental operations that Carlos will include in his individual income tax return. Submit your computations.
Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $215,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $215,000 and a tax basis of $153,750 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain is each owner required to recognize under each of the following alternative situations? [Hint: Look at IRC §351 and §721.] A. MMT is formed as a C corporation. B. MMT is formed as an S corporation. C. MMT is formed as an LLC.
Colin owns and operates Colin's Creative Coaching (3C), a sole proprietorship. 3C sponsors a 401(k)/ profit-sharing plan. Colin had net income of $200,000 and paid self-employment taxes of $20,000 (assumed) during the year. Assuming Colin is over the age of 50, what is the maximum amount that Colin and his company can contribute on his behalf to the plan for 2020? a. $25,000. b. $57,000. C. $63,500. d. $64,000.
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9. Angela and Thomas are planning to start a new business. Thomas will invest cash in the business but not be involved in day-to-day operations. Angela plans to work full-time overseeing business operations. The two currently project that the business will generate $200,000 of annual taxable income before consideration of any payments to Angela for her services. Both agree that Angela's services are worth $100,000 Angela and Thomas plan to form a passthrough entity but are unsure whether to choose a partnership or an S corporation. In either case, they will be equal owners of the entity. Given their other sources of income, both Thomas and Angela have a 37 percent marginal tax rate on ordinary income. (Ignore any payroll or self employment tax consequences.) a. If the business is operated as a partnership, calculate ordinary income allocated to each owner, and explain the treatment by the partnership and by Angela of her $100,000 payment for services. b. If the business is operated as…
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Question: TaraTara owns a house that she has been living in for eight years. She purchased the house for $260,000 and the FMV today is $230,000. She is moving into her friend's house and has decided to convert her residence to rental property. Assume 10% of the property's value is allocated to land. Read the requirements: If she claims depreciation of $20,700 and sells the property, six years later for $275,000 (10% allocated to land), determine the gain on the sale of the building and gain on the sale of the land.
10
Question 1 Sharon runs a lawn mowing business (which is GST registered) and she decides to employ her son Keith in the business. Sharon pays Keith wages of $100,000 per annum – whereas if she had hired someone else to do the work she would have paid the person only $55,000. Sharon thinks this ‘extra’ amount to Keith is okay because it is paid due to ‘natural love and affection’ and it helps Keith with paying his expenses (such as attending university). Keith is 17 years of age. Discuss the tax treatment of these payments to Keith when the business is conducted as: sole trader (with Sharon the sole trader) general partnership (with Sharon and Keith partners) general partnership (with Sharon and another person Melanie as partners) corporation (with Sharon as sole shareholder) trust (with a corporation set up to act as Trustee. Sharon is the sole shareholder of the corporate trustee, and both Sharon and Keith are potential beneficiaries).…

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