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Unformatted text preview: She did not charge her sister any interest on the loan. The day-care business was unincorporated. Her sister operated this business at a loss for the first year and then decided that she really did not want to be in the day-care business after all. Her sister sold the business for total proceeds of $150,000, the gain of $30,000 being attributed to the existence of a solid client base after one year of operations. None of the gain represented gains on any of the assets purchased with the $120,000 loan. Her sister repaid the loan upon receiving the proceeds from the sale of the business. Required : Discuss all of the possible income tax implications of these transactions through to the ultimate disposition by the recipient of the property involved. Assume that these transactions have all taken place within the last two year period....
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This note was uploaded on 11/19/2010 for the course ACC 742 taught by Professor Sydor during the Spring '10 term at Ryerson.
- Spring '10