Question - 1. Adam t ransfers cash of $300,000 and land...

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1. Adam transfers cash of $300,000 and land worth $200,000 to Camel Corporation for 100% of the stock in Camel. In the first year of operation, Camel has net taxable income of $70,000. If Camel distributes $50,000 to Adam: (Points : 5) A. Adam has taxable income of $50,000. B. Camel Corporation has a tax deduction of $50,000. C. Adam has no taxable income from the distribution. D. Camel Corporation reduces its basis in the land to $150,000. 2. Ten years ago, Connie purchased 4,000 shares in Platinum Corporation for $40,000. In the current year, Connie receives a nontaxable stock dividend of 40 shares of Platinum preferred. Values at the time of the dividend are: $8,000 for the preferred stock and $72,000 for the common. Based on this information, Connie's basis is: (Points : 5) A. $40,000 in the common and $16,000 in the preferred. B. $4,000 in the common and $136,000 in the preferred. C. $36,000 in the common and $4,000 in the preferred. D. $39,600 in the common and $400 in the preferred. 3. Carl transfers land to Cardinal Corporation for 90% of the stock in Cardinal Corporation worth $20,000 plus a note payable to Carl in the amount of $40,000 and the assumption by Cardinal Corporation of a mortgage on the land in the amount of $100,000. The land, which has a basis to Carl of $70,000, is worth $160,000. (Points : 5) A. Carl will have a gain on the transfer of $70,000. B. Carl will have a gain on the transfer of $30,000.
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C. Cardinal Corporation will have a basis in the land transferred by Carl of $70,000. D. Cardinal Corporation will have a basis in the land transferred by Carl of $160,000. 4. Wendy receives a proportionate nonliquidating distribution from the WXY Partnership. The distribution consists of $75,000 cash and property with an adjusted basis to the partnership of $20,000 and a fair market value of $25,000. Immediately before the distribution, Wendy's adjusted basis for her partnership interest is $90,000. Wendy's basis in the noncash property received is: (Points : 5) A. $0. B. $15,000. C. $20,000. D. $25,000. 5. Which of the following statements is incorrect regarding the taxation of C corporations? (Points : 5) A. The highest corporate marginal tax rate is 39%. B. Taxable income of a personal service corporation is taxed at a flat rate of 39%. C. A tax return must be filed whether or not the corporation has taxable income. D. Unlike those applicable to individuals, the marginal tax rate brackets for corporations are not adjusted for inflation.
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6. Samantha owned 1,000 shares in Evita, Inc., an S corporation, that uses the calendar year. On October 11, 2010, Samantha sells all of her Evita stock. Her basis at the beginning of 2010 was $60,000. Her share of the corporate income for 2010 was $22,000, and she receives a distribution of $37,000 between January 1 and October 11, 2010. Her basis at the time of the sale is: (Points : 5) A. $45,000. B.
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Question - 1. Adam t ransfers cash of $300,000 and land...

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