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 $65,50O. 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. a. Compute Volunteer's taxable income and federal income tax. Taxable income $ 465,500 Federal income tax

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 $65,50O. 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. a. Compute Volunteer's taxable income and federal income tax. Taxable income $ 465,500 Federal income tax

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

Petrilli Ltd. had a taxable loss of $3,600,000 in 20X8 and a further loss of $140,000 in 20X9. The tax rate in 20X8 was 32% and in 20X9, 33%. All rates are enacted in the year to which they pertain. In the three years before the losses, the company had the following taxable income and tax rates: 20X5 20X6 20X7 Taxable income $ 1,267,200 $ 1,368,000 $ 488,400 Tax rate 36 % 38 % 40 % There are no temporary differences other than those created by income tax losses. The company was struggling due to a competitor entering the market. Required:1. What is the amount of refund that will be claimed in 20X8? 2. What is the amount of the loss carryforward in 20X8? 3. Assuming that loss carryforward usage is probable in each year, prepare a journal entry for income tax in 20X8 and 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 4. Assuming that loss carryforward usage is not probable in…
Grand River Corporation reported taxable income of $900,000 in 20X3 and paid federal income taxes of $315,000. Not included in the computation was a disallowed meals and entertainment expense of $3,700, tax-exempt income of $2,700, and deferred gain on a current year transaction treated as an installment sale of $33,500. The corporation's current earnings and profits for 20X3 would be: Multiple Choice $930,800. $900,000 $617,500. $587,700.
ss.
C Corporation converts to S Corporation when the fair market value of its assets was $100,000 and its basis of those assets was $60,000. Three years later, S Corporation sells those assets for $120,000. What amount of built in gain is subject to S corporation tax at the date of sale?
Lento Incorporated owned machinery with a $30,000 initial cost basis. Accumulatedbook depreciation with respect to the machinery was $12,000, and accumulated taxdepreciation was $19,100. Lento sold the machinery for $13,000 cash. Lento’s marginaltax rate is 21 percent.Required:b. Compute Lento’s tax gain or loss on the sale.c. Compute Lento’s after-tax cash flow from the sale.
Hah
Heliot Company operates its business in State H, which levies a 6 percent sales and use tax. This year, Heliot purchased a $600,000 item of tangible property in State K and paid $18,000 sales tax to the state. It also purchased a $750,000 item of tangible property in State L and paid $48,750 sales tax to the state. Firm H transported both items of property into State H for use in its business. Required: a. Compute the use tax that Heliot owes to State H for the property purchased in State K. b. Compute the use tax that Heliot owes to State H for the property purchased in State L. Complete this question by entering your answers in the tabs below. Required A Required B Compute the use tax that Heliot owes to State H for the property purchased in State K. Amount Pre credit use tax Sales tax paid to State K S Use tax owed to State H Required A Required B >
Maatex Inc., an accrual-basis taxpayer, transferred an operating division to a newly incorporated subsidiary, Taylor Inc., in exchange for 100% of Taylor’s newly issued common stock. The division’s business assets were worth $900,000 and had a tax basis of $440,000. The division also had $82,000 of accounts payable which were assumed by Taylor Inc. as part of the incorporation transaction. Required Should Maatex Inc. recognize any of its $460,000 realized gain on the exchange of property for stock and debt relief? How would your answers to these questions change if the accounts payable assumed by Taylor totaled $500,000 rather than only $82,000?
On September 30, Silver Corporation, a calendar year taxpayer, sold a parcel of land (basis of $400,000) for a $1,000,000 note. The note is payable in five installments, with the first payment due next year. Because Silver did not elect out of the installment method, none of the $600,000 gain is taxed this year. Silver Corporation had a $300,000 deficit in accumulated E & P at the beginning of the year. Before considering the effect of the land sale, Silver had a deficit in current E & P of $50,000. Javiera, the sole shareholder of Silver, has a basis of $200,000 in her stock. Javiera holds the Silver Corporation stock as an investment. If Silver distributes $900,000 to Javiera on December 31, how much income must she report for tax purposes? If an amount is zero, enter "0". Javiera reports a $ basis is $ taxable dividend and of $ After the distribution, Javiera's stock
At the beginning of the tax year, Melodie's basis in the MIP LLC was $64,000, including her $41,600 share of the LLC's liabilities. At the end of the year, MIP distributed to Melodie cash of $9,600 and inventory (basis of $7,680, fair market value of $9,600). In addition, MIP repaid all of its liabilities by the end of the year. a. If this is a proportionate current distribution, what is the tax effect of the distribution to Melodie and MIP? After the distribution, what is Melodie's basis in the inventory and in her MIP interest? If this is a proportionate current distribution, the cash distribution plus relief of liabilities Melodie's basis to After the distribution of inventory, what is Melodie's basis in the inventory and in her MIP interest? Basis in inventory Basis in MIP b. Would your answers to part (a) change if this had been a proportionate liquidating distribution? If this had been a proportionate liquidating distribution, then Melodie would have recognized a of $ and her…
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
Forward Corporation is owned by a group of 15 shareholders. During the current year, Forward pays $550,000 in salary and bonuses to Alvin, its president and controlling shareholder. The corporation's tax rate is 21%, and Alvin's marginal tax rate is 37% for ordinary income and 23.8% (20% + 3.8% on net investment income) for long-term capital gains. The IRS audits Forward's tax return and determines that reasonable compensation for Alvin is $350,000. Forward agrees to the adjustment. Read the requirement. Requirement What effect does the disallowance of part of the salary and bonus deduction have on Forward's and Alvin's respective tax positions? Ignore payroll taxes, such as FICA. Print Done X