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CH5Q38 - issue in 3 Decision Makin'yr f 3'7 t Iih’ it...

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Unformatted text preview: issue in 3' Decision Makin'yr f- 3'7 t Iih’ it) «12 >13 sH Purple (Iot'por in November of the current year. Sapphire Corporation ( share (the shareholder record date is Ben ember sufficient cur rent it Se 3’ to court" the ditidend payment ii Alexis purrh Sapphire stock on Deee 5—«30 Partll Corporations academic cengage com/taxation/SWFT Eeelar'ed a dividend of $2 per 1:3) Assume that Sapphire itns ases 5300 shares ol other :3 and seils the stock on Deeernbc ‘ 325, how is she taxed on the SE .000 ditidentl? outstanding stock in (Iopper Corporation l rears ago. and her basis is $8,000. At the beginning of this tear. the corporation has $38000 oi accumulated ii 8; ‘ and no current ii &- l> (before considering the elleet ol the distributions) What are the tax consequences to Kathryn {amount oi dititiettd income and basis in proper tr received) and Copper" (lor'pottttiot't (gain or loss and effect on i‘. 1's 1‘) in each of the [blit‘rwing situations? a Copper distrii'nnes land to Kathryn. The land was held as an intestinent and has a Eair market tahre t'rleiSJltil) and an adjusted basis oi $21.00i.) tt Copper Corporation has no current or accumulated E S: P prior to the Kathrjtn, an individual. owns all oi the Kathryn purchaser] her stock in Copper i b .-\sstrtrtt-: th'. distribution i-lott- wouid your answer to (a) change? c Assume that the land distributed in (a) is subject to a $23 000 mortgage (which liatlm' n assttrnes) How to raid your answer Change? d Assume that the land has a [air market mine of 5528.000 and art adjusted basis oi SS] 000 on the date oi the distr ibution Hott- would your" answer to (at) change? instead oi distributing land assume that Copper decides to distribute iut'niture used in its business The furniture has 21 537.000 l'air' market vaitre. 21 S000 adjusted basis [in income tax purposes and a $2,000 adjusted basis for li & P purposes rsed [our years ago. its original ia'rr market mine was (t When the furniture ttas pttrcit; $9.000 Apricot L'lor‘poration distributes propern (Siflfitlifll basis and 5150.000 iair market table) to its sole shareholdei, iilia 'I he propern is subject to a iiabilitr oi $200,000.. \tliit‘ii Ella assumes Apricot has E. k 5‘ ol Sf-l25._0(lti ptiot to the distribution a What gain. ii any. does Apricot recognize on the distribution? i) What is the amount oi'lilla‘s ditidend income on the distribution? Red ('lot'poration ttitit is; Sc l" of $800 000. distributes land worth $275,000. adjusted basis oi $300 000 to Andrew. its soie shareholder The land is subject to a liabilitt oi Si l0.000 \thieh Andrew asstnnes What are the tax consequences to Red and to Andrew? At the beginning?r oi the current year. Northern Fttlmar (Iot'pt'tration (a calendar year taxpayer) has accumulated l1 Bk 1’ ol 340.000 During the tear. Northern iiuhnar' incurs a Si’rlttltiti loss lron‘r oper'atit'rns that accrues ltttably On jttl} 1. Northern fttlnrar distributes SEES 000 in easlr to .=\driarra‘ its sole shareholder i-lott will Adriana be taxed on the distribution} (.Zrarre Corporation distributes equipment {adjusted basis of Si 00.000: lair mar Stet ralue of $70,000) to its sitareltoidet. Meng What are the tax consequences to Crane Corporation and to A-Eertg? (.Ier'ttleart Corporation has l\\'0 equal shareholder‘s. liloise and Oiivia Eloise acquired her (ierttiean stock three tears ago b} tt'arrslerring property worth $700,000. basis oi $300000. lor 70 shares oi the stock ()l'rtia acquired 70 shares in Cerulean Corporation :ring property worth $000000 basis of $110,000 Cerulean two tears ago bi transit: i latruarit l oi tire current year is $350,000 011 Corporation 5 accumulated 1% t‘\- i’ as o March l of the current year. the corporation distributed to Eloise property worth $20,000. basis to ('let'ttieatt (313330000. it distributed cash olISEZtitiriiUtl to Olitia On in!) i of the current year. Olitia sold iter sunk to h‘lztgnus ior 5820.0t'10 Orr Decerrrber l ol' the current year. (Serulean distributed (rash oi $00,000 eaclt to h‘iiigl‘lllS and Eloise What are the tax issues? atiorr has accumulated ii S: 1’ ol 305000 at the beginning of the year. its current—rear taxable income is 3320.000 On December Iii. i’ttrple distributed business prr'apertr (worth $40,000. adjusted basis of' 5290000) to l‘eter. its sole shareholder i’eter‘ asstnnes an $80000 liability on the property included in the (Emerrrtination ol i’trr‘ple‘s current tasahie income is Sititiilfl of ineorrte recognized from an installment .: EFW A “smeWNWWW . ...
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