Volunteer Corporation reported taxable income of $450,000 from operations this year. The company paid federal income taxes of $94,500 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land's fair market value was $81,000 and its tax and E&P basis to Volunteer was $65,500. Rocky assumed a mortgage attached to the land of $16,200. The company had accumulated E&P of $864,000 at the beginning of the year. e. What is Rocky's income tax basis in the land received from Volunteer? Income tax basis

Volunteer Corporation reported taxable income of $450,000 from operations this year. The company paid federal income taxes of $94,500 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land's fair market value was $81,000 and its tax and E&P basis to Volunteer was $65,500. Rocky assumed a mortgage attached to the land of $16,200. The company had accumulated E&P of $864,000 at the beginning of the year. e. What is Rocky's income tax basis in the land received from Volunteer? Income tax basis

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

uong Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s books and records reveal the following information: Luong’s federal income tax expense per books was $200,000. Luong’s book income included $10,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $10,000 of capital losses this year and no capital gains. Luong recorded $8,000 of book expense for meals not provided by a restaurant and $10,000 of book expense for entertainment costs. Luong's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. Required: Compute Luong's federal taxable income and regular tax liability.
Lake Life, Inc., a C corporation, owns a single asset with a basis of $250,000 and a fair market value of $500,000. Lake Life elects S corporation status. Lake Life holds a positive E & P balance. The entity elects S corporation status for 2019 and then sells the asset. What are the corporate-level built-in gains taxes that must be paid by Lake Life? Answer: $____________
Luong Corporation, a calendar year, accrual basis corporation, reported $1.15 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Luong's federal income tax expense per books was $203,000. • Luong's book income included $13,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $5,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $13,000 of capital losses this year and no capital gains. • Luong recorded $9,600 of book expense for meals not provided by a restaurant and $11,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $403,000. MACRS depreciation was $475,000. Required: a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book…
Yager Corporation purchased residential real estate several years ago for $225,000, of which $50,000 was allocated to the land and $175,000 was allocated to the building. Yager took straight-line MACRS deductions of $40,000 during the years it held the property. In the current year, Yager sells the property for $275,000, of which $55,000 is allocated to the land and $220,000 is allocated to the building. Requirement What are the amount and character of Yager's recognized gain or loss on the sale? Begin by computing the gain or loss on sale. Select the formula and then enter the amounts and compute the gain or loss on the sale for the land, building and for the total Land Building Total Recognized gain Next, determine the character of the gain or loss on sale of the land and building. (Complete all input fields. For items with a 0 balance, make sure to enter a 0 in the appropriate cell.) Building Total Land Recognized gain or loss
On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,800,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $390,000 of the goodwill had been impaired and wrote down the goodwill by $390,000 for book purposes. Required 1. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? Book-tax difference Is it favorable or unfavorable? Is it permanent or temporary? Show Transcribed Text 2. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Book-tax difference Is it favorable or unfavorable? Is it permanent or…
Carolina Corporation, an S corporation, has no corporate Earnings and profit from its years as a C corporation. At the end of the year, it distributes a small parcel of land to its sole shareholder, Shadiya. The fair market value of the parcel is $96,600, and its tax basis is $59,000. Shadiya's basis in her stock is $23,500. Assume Carolina Corporation reported $0 taxable income before considering the tax consequences of the distribution. Note: Leave no answer blank. Enter zero if applicable. d. Assume the fair market value of the land is $40,200 rather than $96,600. How much gain must Shadiya recognize (if any) as a result of the distribution, what is her basis in her Carolina Corporation stock after the distribution, and what is her basis in the land? Gain Recognized Stock Basis Land Basis
d
Rock Corporation distributed property with a fair market value of $100,000 and an adjusted basis of $70,000 to Ann, a shareholder of Rock Corporation. Prior to the distribution, Rock Corporation had a deficit in accumulated earnings and profits of $200,000 and current earnings and profits of $20,000. Ann has stock basis in Rock Corporations of $90,000. Assume that Ann is an individual in the 37% tax bracket. Determine Ann’s tax liability for this distribution.
Tracy and Jerome, equal shareholders in Macaw Corporation, receive $600,000 each in distributions on December 31 of the current year. Macaw's current-year taxable income is $1,000,000 and it has no accumulated E & P. Last year, Macaw sold an appreciated asset for $1,200,000 (basis of $400,000). Payment for one-half of the sale of the asset was made this year. How much of Tracy's distribution will be taxed as a dividend? Oa, $300,000- Ob. so Oc. $500,000 Od. $600,000
Casey transfers property with a tax basis of $2,180 and a fair market value of $6,100 to a corporation in exchange for stock with a fair market value of $4,500 and $575 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $1,025 on the property transferred. Casey also incurred selling expenses of $391. What is the amount realized by Casey in the exchange?
in the current year, Keyaki Construction Company exchanged a building, which cost $530,000 and had accumulated depreciation of $160,000, for a new building having a fair market value of $650,000 In connection with the exchange, Keyaki paid $280,000 in cash. What is the tax basis of the new building?
Heron Company purchases commercial realty on November 13, 2003, for $650,000. Straight-line depreciation of $287,492 is claimed before the property is sold on February 22, 2021, for $850,000. What are the tax consequences of the sale of realty if Heron is (a) a C corporation and (b) a sole proprietorship? a. If Heron is a C corporation, what is the amount of each type of gain recognized? If an amount is zero, enter "0". Round your answers to the nearest dollar. Character of Gain Ordinary income under § 1245 Ordinary income under § 1250 Ordinary income under § 291. § 1231 gain Total recognized gain 287,492 X § 1231 gain Total recognized gain 0 57,498 429,994 487,492 b. If Heron is a sole proprietorship, what is the amount of each type of gain recognized? Character of Gain Ordinary income under § 1245 Ordinary income under 5 1250 Ordinary income under § 291 0 0 0 487,492 487,492 ✓