Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 11, Problem 46P
a.
To determine
Identify the way that the given transactions affect Incorporation W’s taxable income in the given situation.
b.
To determine
Identify the way that the given transactions affect Incorporation W’s taxable income in the given situation.
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2. Grant and Marvin organized a new business as a corporation in which they own equal interests. The new business
generated a $65,000 operating loss for the year.
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[The following information applies to the questions displayed below.]
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting
services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as
compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below:
Fair Market
Value
Basis
Assets:
Cash
Investments
$ 220,000
300,000
100,000
$ 220,000
330,000
260,000
Land
Barca
Totals
$ 620,000
$ 810,000
Liabilities and capital:
DLAD
Nonrecourse liabilities
$ 200,000
$ 200,000
Lance*
210,000
210,000
305,000
305,000
Robert*
Totals
$ 620,000
$ 810,000
*Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their
respective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.)
c. Prepare a balance sheet for Cirque Capital immediately after…
Gamma Corporation distributes land to its sole shareholder, Lisa. The land has a basis to the corporation of $20,000 and a fair market value of $50,000. There is a $35,000 mortgage on the land which the shareholder agrees to assume. Before this distribution, Gamma has current E&P of $5,000 and accumulated E&P of $4,000.
How much gain does Gamma Corporation recognize as a result of this distribution?
How much dividend income does Lisa recognize as a result of this distribution?
What is Lisa’s basis for the land?
What is Gamma Corporation’s E&P after the distribution?
Chapter 11 Solutions
Individual Income Taxes
Ch. 11 - Prob. 1DQCh. 11 - List some events that increase or decrease an...Ch. 11 - Roberto invested 18,000 in a chicken production...Ch. 11 - Prob. 4DQCh. 11 - Carlos owns an interest in an activity that...Ch. 11 - Kim owns an interest in an activity that produces...Ch. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - LO.3 Bronze Corporation has 100,000 of active...Ch. 11 - LO.4 Discuss what constitutes a passive activity.
Ch. 11 - Prob. 11DQCh. 11 - LO.5 How many hours must a participant work in a...Ch. 11 - LO.5 Suzanne owns interests in a bagel shop, a...Ch. 11 - Prob. 14DQCh. 11 - Prob. 15DQCh. 11 - LO.5 Some types of work are counted in applying...Ch. 11 - LO.5 Last year Alans accountant informed him that...Ch. 11 - Prob. 18DQCh. 11 - Prob. 19DQCh. 11 - Prob. 20DQCh. 11 - What is a real estate professional? Why could...Ch. 11 - Prob. 22DQCh. 11 - LO.8 Since his college days, Charles has developed...Ch. 11 - LO.8 Brad owns a small townhouse complex that...Ch. 11 - Prob. 25DQCh. 11 - Prob. 26DQCh. 11 - LO.2 In the current year, Ed invests 30,000 in an...Ch. 11 - Prob. 28CECh. 11 - Prob. 29CECh. 11 - LO.7 Rhonda has an adjusted basis and an at-risk...Ch. 11 - LO.8 Noah Yobs, who has 62,000 of AGI (solely from...Ch. 11 - LO.9 Rose dies with passive activity property...Ch. 11 - Prob. 33CECh. 11 - Prob. 34PCh. 11 - LO.2 In the current year, Bill Parker (54 Oak...Ch. 11 - LO.2, 11 Heather wants to invest 40,000 in a...Ch. 11 - LO.1, 3 Dorothy acquired a 100% interest in two...Ch. 11 - Prob. 38PCh. 11 - Prob. 39PCh. 11 - LO.3, 11 Emily has 100,000 that she wants to...Ch. 11 - LO.3 Seojun acquired an activity several years...Ch. 11 - LO.3, 11 Jorge owns two passive investments,...Ch. 11 - LO.3 Sarah has investments in four passive...Ch. 11 - LO.3 Leon sells his interest in a passive activity...Ch. 11 - LO.3 Ash, Inc., a closely held personal service...Ch. 11 - Prob. 46PCh. 11 - LO.2, 3, 7, 11 Kristin Graf (123 Baskerville Mill...Ch. 11 - LO.2, 3, 7, 11 The end of the year is approaching,...Ch. 11 - Prob. 49PCh. 11 - Grace acquired an activity four years ago. The...Ch. 11 - Prob. 51PCh. 11 - LO.2, 3, 7 Five years ago Gerald invested 150,000...Ch. 11 - LO.3, 8 Several years ago Benny Jackson (125 Hill...Ch. 11 - Prob. 54PCh. 11 - Prob. 55PCh. 11 - Prob. 56PCh. 11 - Prob. 57PCh. 11 - Prob. 58PCh. 11 - LO.8 Jiu has 105,000 of losses from a real estate...Ch. 11 - Prob. 60PCh. 11 - LO.9 In the current year, Abe gives an interest in...Ch. 11 - Prob. 62PCh. 11 - Prob. 63PCh. 11 - Prob. 64PCh. 11 - Carol is a successful physician who owns 100% of...Ch. 11 - Prob. 2RPCh. 11 - Prob. 3RPCh. 11 - Prob. 4RPCh. 11 - Which of the following statements regarding...Ch. 11 - Michael owns a rental house that generated a...Ch. 11 - Prob. 3CPACh. 11 - Prob. 4CPACh. 11 - Sally recently invested 10,000 (tax basis) in a...
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- Required information [The following information applies to the questions displayed below.] Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments. Land Totals Liabilities and capital: Nonrecourse liabilities Lance* Robert* Totals Tax basis Dave Basis Lance $ 220,000 300,000 100,000 $ 620,000 Robert $ 200,000 210,000 210,000 $ 620,000 *Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.) Fair Market Value b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his…arrow_forward(1a) How much gain (loss) will Gloria realize on the contribution of the assets to YCI? (1b) How much gain (loss) will Gloria recognize on the contribution of the assets to YCI? (1c) What will be Gloria’s basis in the 16,800 shares of YCI common stock he receives?arrow_forward0 Required information [The following information applies to the questions displayed below] This year, Justin B's share of S corporation income includes $5,000 of interest income, $6,500 of dividend income, and $45,000 of net income from the corporation's professional service business activity. a. Assume that Justin B. materially participates in the S corporation. How much of his S corporation income is potentially subject to the net investment income tax? S-Corporation income subject to net investment income taxarrow_forward
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