PRINCIPLES OF TAXATION F/BUS.+INVEST.
PRINCIPLES OF TAXATION F/BUS.+INVEST.
22nd Edition
ISBN: 9781259917097
Author: Jones
Publisher: MCG
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Chapter 9, Problem 2RP
To determine

Explain whether Person P’s exchange of business assets for corporate stock qualify as a non-taxable exchange even though Person P decreased his ownership interest from 100 percent to only 20 percent on the day after Incorporation P was incorporated.

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Eminem Industries estimates its manufacturing overhead to be $750,000 and its direct labor costs to be $600,000 for year 4. Eminem worked three jobs for the year. Job 4-1, which was sold during year 4, had actual direct labor costs of $180,000. Job 4-2, which was completed but not sold at the end of the year, had actual direct labor costs of $320,000. Job 4-3, which is still in work-in-process inventory, had actual direct labor costs of $140,000. The actual manufacturing overhead for year 4 was $785,000. Manufacturing overhead is applied on the basis of direct labor costs. a) How much overhead was applied to each job in year 4? b) What was the over-or underapplied manufacturing overhead for year 4?
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PRINCIPLES OF TAXATION F/BUS.+INVEST.

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