Question
In: Accounting
2. Deb is the sole shareholder of Timeless Corporation, a calendar year C corporation. In the...
2. Deb is the sole shareholder of Timeless Corporation, a calendar year C corporation. In the current year, Trash earned taxable income of $250,000 and distributed $175,000 to Deb. Kyle is the sole shareholder of Swanky Corporation, an S corporation. In the current year, Swanky earned taxable income of $250,000 and distributed $175,000 to Kyle. Assume both Kyle and Deb are in the highest regular tax bracket (use 37%). Contrast the tax treatment of Timeless Corporation and Deb with the tax treatment of Swanky Corporation and Kyle.
Solutions
ekkarill92 answered 10 months agoRelated Solutions
Wonka Incorporated, is a C corporation that operates and operates on a calendar year. The sole...
Wonka Incorporated, is a C corporation that operates and
operates on a calendar year. The sole shareholder of the
corporation is Willy Wonka. Wonka’s only business since its
incorporation in 2015 has been land-surveying services. In Wonka’s
state of incorporation, only a licensed surveyor can perform land
surveying. Willy, Wonka’s only employee, is a licensed surveyor but
he is not a licensed engineer. Upon audit of Wonka’s 2015 and 2016
tax returns, the IRS assessed tax deficiencies stemming from its...
Wonka Incorporated, is a C corporation that operates and operates on a calendar year. The sole...
Wonka Incorporated, is a C corporation that operates and
operates on a calendar year. The sole shareholder of the
corporation is Willy Wonka. Wonka’s only business since its
incorporation in 2015 has been land-surveying services. In Wonka’s
state of incorporation, only a licensed surveyor can perform land
surveying. Willy, Wonka’s only employee, is a licensed surveyor but
he is not a licensed engineer. Upon audit of Wonka’s 2015 and 2016
tax returns, the IRS assessed tax deficiencies stemming from its...
Catherine is the sole stockholder of Cat Co., a calendar-year C corporation. The corporation has a...
Catherine is the sole stockholder of Cat Co., a calendar-year C
corporation. The corporation has a business need for a tract of
land that Catherine owns personally. The plan is for the
corporation to use the land for eighteen months from March 1, 2018
through August 31, 2019. The fair market value of the land is
$500,000. Catherine’s basis in the land is $100,000. She has held
the land as an investment for the last five years. Catherine is
considering...
Eva has been the sole shareholder of a calendar year S-Corporation since its inception. Eva’s stock...
Eva has been the sole shareholder of a
calendar year S-Corporation since its inception. Eva’s stock basis
is $50,000, her debt basis is $15,000 and she receives a cash
distribution of $88,000. There are no special elections made.
a. What
is the tax impact of the distribution if the S-Corporation has
accumulated adjustment account of $40,000, adjusted earning and
profit of $30,000 and $0 other adjustment account before the
distribution?
1. Eva has been the sole shareholder of a calendar year S-Corporation since its inception. Eva’s...
1. Eva
has been the sole shareholder of a calendar year S-Corporation
since its inception. Eva’s stock basis is $50,000, her debt basis
is $15,000 and she receives a cash distribution of $88,000. There
are no special elections made.
b. What
is the tax impact of the distribution if instead the S-Corporation
has accumulated adjustment account of $40,000, $0 adjusted earning
and profit and $0 other adjustment account before the
distribution?
Eva has been the sole shareholder of a calendar year S-Corporation since its inception. Eva’s stock...
Eva has been the sole shareholder of a calendar year
S-Corporation since its inception. Eva’s stock basis is $50,000,
her debt basis is $15,000 and she receives a cash distribution of
$88,000. There are no special elections made. All calculations must
be shown. Answers containing words or paragraph, without
calculations, will not be counted.
What is the tax impact of the distribution if the S-Corporation
has accumulated adjustment account of $40,000, adjusted earning and
profit of $30,000 and $0 other...
Eva has been the sole shareholder of a calendar year S-Corporation since its inception. Eva’s stock...
Eva has been the sole shareholder of a calendar year
S-Corporation since its inception. Eva’s stock basis is $50,000,
her debt basis is $15,000 and she receives a cash distribution of
$88,000. There are no special elections made. All calculations must
be shown. Any answers containing words or paragraphs without
calculations will not be counted.
What is the tax impact of the distribution if instead the
S-Corporation has accumulated adjustment account of $40,000, $0
adjusted earning and profit and $0...
Bart has been the sole shareholder of a calendar year S-Corporation since its inception. Bart’s stock...
Bart has been the sole shareholder of a calendar year
S-Corporation since its inception. Bart’s stock basis is $35,000,
his debt basis is $15,000 and he receives a cash distribution of
$65,000. There are no special elections made. What is the tax
impact of the distribution if:
The S-Corporation has AAA of $30,000, AEP of $20,000 and $0 OAA
before the distribution.
The S-Corporation has AAA of $30,000, $0 AEP and $0 OAA before
the distribution.
Birch Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, James, who...
Birch Corp., a calendar-year corporation, was formed three years
ago by its sole shareholder, James, who has operated it as an S
corporation since its inception. Last year, James made a direct
loan to Birch Corp. in the amount of $7,200. Birch Corp. has paid
the interest on the loan but has not yet paid any principal.
(Assume the loan qualifies as debt for tax purposes.) For the year,
Birch experienced a $25,500 business loss.
What amount of the loss...
After several years of profitable operations, Javell, the sole shareholder of JBD Inc., a C corporation,...
After several years of profitable operations, Javell, the sole
shareholder of JBD Inc., a C corporation, sold 15 percent of her
JBD stock to ZNO Inc., a C corporation in a similar industry.
During the current year JBD reports $1,470,000 of after-tax income.
JBD distributes all of its after-tax earnings to its two
shareholders in proportion to their shareholdings. Assume ZNO’s
marginal tax rate is 30 percent.
How much tax will ZNO pay on the dividend it receives from JBD?...
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