CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
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Chapter 2, Problem 24P
To determine
Prepare a memo to the controller of Incorporation N by explaining the potential tax problem with the sale of the land to Person T.
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Nancy contributed $50,000 of cash and land with a fair market
value of $100,000 and an adjusted basis of $50,000 to Kale, Inc.
(an S corporation) when it was formed. The land was
encumbered by a $30,000 mortgage. What is Nacy's tax basis in
Kale, Inc. after formation? (Assume the liability includes no
personal indebtedness and that the control requirement is met
for purposes of Sec. 351)
Select one:
OA. $40,000
OB. $70,000
OC. $100,000
OD. $150,000
s
Castle Construction, Inc. is a real estate development company organized as an S corporation. The company's sole shareholder, Celia, has a tax basis in her Castle stock of $100,000. This year, the company reported a net operating loss of ($129,000). It also decided to distribute a parcel of land with a tax basis (to Castle) of $65,000 and a fair market value of $185,000. Prior to the distribution, Castle was holding the land as inventory. It decided to distribute the land to Celia because it no longer planned to develop that particular property.
1. Will Celia recognize any gain in connection with the receipt of the distribution? See Treasury Regs. §1.1367-1(f).
2. What will be her tax basis in the land?
3. What will be her remaining tax basis in her stock after accounting for the distribution?
4. How would your answers change if the land had been encumbered by a $75,000 liability, for which Celia assumed personal responsibility upon receipt of the distribution?
Chapter 2 Solutions
CONCEPTS IN FED.TAX.,2020-W/ACCESS
Ch. 2 - Prob. 1DQCh. 2 - Prob. 2DQCh. 2 - What is an arms-length transaction? What is its...Ch. 2 - Prob. 4DQCh. 2 - Prob. 5DQCh. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQ
Ch. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Prob. 13DQCh. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - Prob. 16DQCh. 2 - Prob. 17DQCh. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Sheila, a single taxpayer, is a retired computer...Ch. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - Prob. 30PCh. 2 - Prob. 31PCh. 2 - Prob. 32PCh. 2 - Prob. 33PCh. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 36PCh. 2 - Prob. 37PCh. 2 - Prob. 38PCh. 2 - Prob. 39PCh. 2 - Prob. 40PCh. 2 - Chelsea, who is single, purchases land for...Ch. 2 - Prob. 42PCh. 2 - Prob. 43PCh. 2 - Prob. 44PCh. 2 - Prob. 45PCh. 2 - Prob. 46PCh. 2 - Prob. 47PCh. 2 - Prob. 48PCh. 2 - Prob. 49PCh. 2 - Prob. 50PCh. 2 - Prob. 51PCh. 2 - Prob. 52PCh. 2 - Prob. 53PCh. 2 - Prob. 54PCh. 2 - Prob. 55PCh. 2 - Prob. 56PCh. 2 - Prob. 57PCh. 2 - Prob. 58PCh. 2 - Prob. 59PCh. 2 - Prob. 60PCh. 2 - Determine the taxpayers adjusted basis in each of...Ch. 2 - Prob. 62PCh. 2 - Prob. 63IIPCh. 2 - Prob. 64IIPCh. 2 - Prob. 65IIPCh. 2 - Jerry and his wife, Joanie, own a successful...Ch. 2 - Prob. 67IIPCh. 2 - Prob. 68IIPCh. 2 - Prob. 69IIPCh. 2 - Prob. 70IIPCh. 2 - Prob. 71IIPCh. 2 - Prob. 79DCCh. 2 - Prob. 80DCCh. 2 - Prob. 81TPC
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