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In: Accounting
Sara is the sole owner of Yellow Corporation. Her basis in Yellow is $50,000. The value...
Sara is the sole owner of Yellow Corporation. Her basis in Yellow is $50,000. The value of her stock is $100,000. In addition, to compensate herself for services that she provides to Yellow, Sara pays herself an annual salary of $40,000. Because of recent downturn in business, she needs to put an additional $80,000 into her corporation to help meet short-term cash-flow needs (to pay for inventory costs, salaries, and administrative expenses). Should she do a capital contribution transfer of $80,000 or a loan? What is best for tax purposes? Explain your answer.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Sara is the sole owner of Yellow Corporation. Her basis in Yellow is $50,000. The value...
Sara is the sole owner of Yellow Corporation. Her basis in
Yellow is $50,000. The value of her stock is $100,000. In addition,
to compensate herself for services that she provides to Yellow,
Sara pays herself an annual salary of $40,000. Because of recent
downturn in business, she needs to put an additional $80,000 into
her corporation to help meet short-term cash-flow needs (to pay for
inventory costs, salaries, and administrative expenses). Should she
do a capital contribution transfer of...
Sara is the sole owner of Yellow Corporation. Her basis in Yellow is $50,000. The value...
Sara is the sole owner of Yellow Corporation. Her basis in
Yellow is $50,000. The value of her stock is $100,000. In addition,
to compensate herself for services that she provides to Yellow,
Sara pays herself an annual salary of $40,000. Because of recent
downturn in business, she needs to put an additional $80,000 into
her corporation to help meet short-term cash-flow needs (to pay for
inventory costs, salaries, and administrative expenses). Should she
do a capital contribution transfer of...
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...
When creating and operating a business the owner must determine his or her "basis" in the...
When creating and operating a business the owner must determine
his or her "basis" in the business. How does the owner compute his
or her basis in the business when the business is operated as a "C"
corporation, an "S" corporation or a partnership? What is the
significance (i.e. importance) of the basis amount to the
owners?
CREATION OF CORPORATION John Payne is the sole owner of a classic car restoration business that...
CREATION OF CORPORATION John Payne is the sole owner of a
classic car restoration business that specializes in the
restoration of classic and muscle cars for individuals. It is not
incorporated at this time. John has called his company the GAS
MONKEE CAR RESTORATION. John believes there might be an advantage
to creating a corporation for limited liability reasons. John has
assets to transfer for the stock in Gas Monkee totaling
approximately $250,000.00. In addition, he manages Gas Monkee's
operations...
Ashley, the sole shareholder of Hawk Corporation, has a stock basis of $400,000 at the beginning...
Ashley, the sole shareholder of Hawk Corporation, has a stock
basis of $400,000 at the beginning of the year. On July 1, she
sells all of her stock for $2 million to Matt (1 million) and Brody
(1 million) . On January 1, Hawk has accumulated E & P of
$180,000 and during the year, current E & P of $320,000. Hawk
makes the following cash distributions: $270,000 to Ashley on March
31, $180,000 to Matt on October1 and $180,000...
9. Ashley, the sole shareholder of Hawk Corporation, has a stock basis of $400,000 at the...
9. Ashley, the sole shareholder of Hawk Corporation, has a stock
basis of $400,000 at the beginning of the year. On
July 1, she sells all of her stock for $2 million to Matt
(1 million) and Brody (1 million) . On
January 1, Hawk has accumulated E & P of
$180,000 and during the year, current E & P of
$320,000. Hawk makes the following cash
distributions: $270,000 to Ashley on March 31,
$180,000 to Matt on October1 and...
Kip Bowman is owner and sole employee of KB Corporation. He pays himself a salary of...
Kip Bowman is owner and sole employee of KB Corporation. He pays
himself a salary of $1,500 each week.
Additional tax information
includes:
FICA tax—OASDI
6.2% on first $132,900
FICA tax—HI
1.45% on total pay
Federal income tax
$232.00 per pay
State income tax
22% of the federal income tax withholding
Federal unemployment tax
0.6% on first $7,000
State unemployment tax
0.05% on first $14,000
Additional payroll deductions
include:
401(k) plan
3% per pay
Child support garnishment
$100 per pay...
Due Saturday Oct. 26 CREATION OF CORPORATION John Payne is the sole owner of a classic...
Due Saturday Oct. 26
CREATION OF CORPORATION
John Payne is the sole owner of a classic car restoration
business that specializes in the restoration of classic and muscle
cars for individuals. It is not incorporated at this time.
John has called his company the GAS MONKEE CAR RESTORATION. John
believes there might be an advantage to creating a corporation for
limited liability reasons. John has assets to transfer for the
stock in Gas Monkee totaling approximately $250,000.00. In
addition, he...
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