Question

In: Accounting

Georgia, an individual, owns all of the stock of Malific Xenophobe Oil Distributing Corporation, which not...

Georgia, an individual, owns all of the stock of Malific Xenophobe Oil Distributing Corporation, which not only has not shown a profit, but has consistently lost money in every year since Georgia acquired the stock. Georgia also conducted an oil and gas equipment leasing business as a sole proprietor. Georgia’s largest drilling rig normally leases for $1,000 a day. Recently Malific Xenophobe used Georgia’s drilling rig for 60 days, and because Malific Xenophobe’s reserves and credit were insufficient to permit it both to pay its workers and pay Georgia $60,000, Georgia rented the drilling rig to Malific Xenophobe for the 60 days for $5,000.

Question: What are the tax consequences to Georgia and Malific Xenophobe?

Solutions

Expert Solution

Georgia have an income equal to $5000.therefore tax will be paid on this amount only.As malific Xenophobe paid amount of $5000 it will be allowed to claim expense of $5000 only.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Zane, an individual, owns all of the outstanding common stock in Sturdley Utilities Corporation. Zane purchased...
Zane, an individual, owns all of the outstanding common stock in Sturdley Utilities Corporation. Zane purchased his Sturdley stock seven years ago and his basis is $8,000. At the beginning of the current year, Sturdley had $25,000 of accumulated earnings and profits and no current earnings and profits. Determine the tax consequences to Zane and Sturdley [gains/losses, basis, etc.] in each of the following alternative situations: **PLEASE do not just post the same answer to this question that has already...
Maureen owns all of the stock in Green Corporation. Green owns 10,000 shares of Micro Corporation,...
Maureen owns all of the stock in Green Corporation. Green owns 10,000 shares of Micro Corporation, whose value has increased by 1000% since they were purchased eight years ago. Maureen would like to have the shares distributed to her, but she wants to avoid the tax bill that would result if they were distributed as a dividend from Green Corporation. Her son, who is taking classes for his MBA, has suggested that she create Brown Corporation with herself as the...
Green Corporation owns 100% of the stock of Yellow Corporation (all common) with a basis of...
Green Corporation owns 100% of the stock of Yellow Corporation (all common) with a basis of $100. Yellow Corporation owns a rental building (its only asset) with a gross FMV of $1,000, subject to a nonrecourse mortgage of $400. Yellow’s adjusted basis in this building is $300. Yellow has $200 of E&P. Yellow is on the accrual method of accounting and reports on the calendar year. Yellow Corporation and Green Corporation do not report on a consolidated basis. Yellow Corporation...
Green Corporation owns 100% of the stock of Yellow Corporation (all common) with a basis of...
Green Corporation owns 100% of the stock of Yellow Corporation (all common) with a basis of $100. Yellow Corporation owns a rental building (its only asset) with a gross FMV of $1,000, subject to nonrecourse mortgage of $400. Yellows adjusted basis in the building is $300. Yellow has $200 of E&P. Yellow is on the accrual method of accounting and reports on the calendar year. Yellow Corporation and Green Corporation do not report on a consolidated basis. Yellow Corporation sells...
LN Corporation, a U.S corporation, owns all the stock of Foreign Sub 1, a foreign corporation....
LN Corporation, a U.S corporation, owns all the stock of Foreign Sub 1, a foreign corporation. Foreign Sub 1 in turn owns 20% of the voting stock of Foreign Sub 2, also a foreign corporation. LN Corporation also owns 10% of the nonvoting common stock of Foreign Sub 2 but owns no voting stock in Foreign Sub 2. During the current year, Foreign Sub 2 pays dividends on its nonvoting common stock, but pays no dividends on its voting stock....
fireball corporation is an s corporation, Leya owns all of the stock. During the current year....
fireball corporation is an s corporation, Leya owns all of the stock. During the current year. fireball earned a taxable income of 500000 and paid a 300000 distribution to Leyla. which of the following statement is correct a) fireball will pay corporate income tax in its earnings, and leyla will pay individual income tax on the distribution. b) only fireball will pay taxes, but leyla will not pay and taxes due to her holding in fireball C) fireball will not...
P Corporation is a publicly held corporation which owns 10% of S Corporation’s stock. S Corporation...
P Corporation is a publicly held corporation which owns 10% of S Corporation’s stock. S Corporation has taxable income of $100,000 and distributes a $50,000 dividend to P. P has taxable income of $1,000,000 before the dividend. a. P’s corporate income tax is $345,100 on $1,015,000 of taxable income. S Corporation tax is $22,250 b. P’s corporate income tax is $345,100 and S’s corporate income tax is $34,000. c. P Corporation owes AMT. d. None of the above ***Explain answer.
Amy, a single individual and sole shareholder of Brown Corporation, sold all of the Brown stock...
Amy, a single individual and sole shareholder of Brown Corporation, sold all of the Brown stock for $30,000. Amy's stock basis was $150,000. She had owned the stock for 3 years. Brown Corporation meets the Section 1244 requirements. 1) How much of an ordinary loss does Amy have? 2) How much of a capital loss does Amy have? 3) Do your answers above change if Amy is married? Explain how.
10. Google Corporation owns 85% of the single class of Yahoo Corporation stock. Yahoo Corporation owns...
10. Google Corporation owns 85% of the single class of Yahoo Corporation stock. Yahoo Corporation owns 35% of Twitter Corporation. Google Corporation also owns 50% of Twitter Corporation, and Twitter Corporation owns 75% of Facebook Corporation. A) Google, Twitter, Yahoo, and Facebook Corporations are an affiliated group. B) Google, Twitter, and Facebook Corporations are an affiliated group. C) Google, Twitter, and Yahoo Corporations are an affiliated group. D) None of the above are correct.
Assume that our class owns corporation A and further that we control all issued stock. We...
Assume that our class owns corporation A and further that we control all issued stock. We need capital for expansion; however, we are unable to make additional contributions. Do you recommend that we issue stock to new investors or obtain debt financing through the sale of bonds? Explain your answer. What are the benefits and drawbacks of each approach?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT