[The following information applies to the questions displayed below. Maple Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, Jian, who immediately elected S corporation status. On December 31 of the current year, Maple distributed $40,500 cash to Jian. What are the amount and character of gain Jian must recognize on the distribution in each of the following alternative scenarios? Note: Leave no answer blank. Enter zero if applicable. If the answer is "0", select "None". Problem 22-66 Part a (Algo) a. At the time of the distribution, Jian's basis in his Maple Corporation stock was $47,600. Amount Gain b. At the time of the distribution, Jian's basis in his Maple Corporation stock was $13,250. Character Amount Character

[The following information applies to the questions displayed below. Maple Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, Jian, who immediately elected S corporation status. On December 31 of the current year, Maple distributed $40,500 cash to Jian. What are the amount and character of gain Jian must recognize on the distribution in each of the following alternative scenarios? Note: Leave no answer blank. Enter zero if applicable. If the answer is "0", select "None". Problem 22-66 Part a (Algo) a. At the time of the distribution, Jian's basis in his Maple Corporation stock was $47,600. Amount Gain b. At the time of the distribution, Jian's basis in his Maple Corporation stock was $13,250. Character Amount Character

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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Tennis, Corporation, a calendar-year corporation, had a deficit in accumulated earnings and profits of $(800,000) and a positive balance in current earnings and profits of $100,000. On December 31, 2021, Tennis, Corporation distributed a building to Darrel, its sole shareholder. The building had a fair market value of $500,000 and an adjusted basis to the corporation of $150,000. Darrel also assumed the $300,000 mortgage on the building. Darrel is in the 37% tax bracket . Determine the tax consequences to Darrel from this distribution of building and mortgage. Be specific—and show your calculations. What are the tax consequences to Tennis, Corporation from this distribution? After this distribution, what are the earnings and profits of Tennis, Corporation?
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Adjusted Tax FMV Basis $ 114,375 266,875 $ 381,250 Building $30,500 122,000 $ 152,500 Land Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock. d. What is Hermione's tax basis in the stock she receives in return for her contribution of property to the corporation? Tax basis
Presley Corp., a calendar-year corporation, was formed four years ago by its sole shareholder, Smith, who has always operated it as a C corporation. However, at the beginning of 2020, Smith made a qualifying S election for Presley Corp., effective January 1. Presley Corp. reported $140,000 of C corporation earnings and profits on the effective date of the S election. In 2020 (its first S corporation year), Presley Corp. reported business income of $100,000. Smith’s basis in his Presley Corp. stock at the beginning of 2020 was $30,000. What are the amount and character of gain Smith must recognize on the following distributions scenarios, and what is his basis in his Presley Corp. stock at the end of the year? Smith received a $80,000 distribution from Presley Corp. at the end of the year. Smith received a $260,000 distribution from Presley Corp. at the end of the year. Smith received a $300,000 distribution from Presley Corp. at the end of the year.
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Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Adjusted Tax FMV Basis $ 114,375 266,875 $ 381,250 $ 30,500 122,000 $ 152,500 Building Land Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock. Assume Hermione's adjusted tax basis in the land was $381,250. h. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Gain or loss realized Gain or loss recognized
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Adjusted Tax Basis FMV $ 114,375 266,875 $ 30,500 122,000 Building Land $ 381,250 $ 152,500 Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock. a. What amount of gain or loss does Ron realize on the formation of the corporation? What amount, if any, does he recognize? Gain or loss realized Gain or loss recognized