constructive_dividends - use of corporate property 56,000 =...

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Chapter 5: Problem #47 Parrot Corporation Shareholder (a) Land Adjusted basis 350,000 (a) Decrease of $75,000 ($50,000 + $25,000) Fair value (300,000) Disallowed loss (Sec. 267) Fair value 300,000 "Bargain" selling price (275,000) Tom Constructive dividend + Gross income $25,000 (b) 0% loan Imputed interest income 13,125 = increase in taxable income (b) $0 ($13,125 - $13,125) Jerry 13,125 = constructive dividend + Gross income $13,125 (c) Use of Tom (c) Decrease of $98,000 ($42,000 + $56,000) plane Shareholder use of corporate property 42,000 = constructive dividend + Gross income $42,000 (120 x $350) (120 x $350) Jerry Shareholder
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Unformatted text preview: use of corporate property 56,000 = constructive dividend + Gross income $56,000 (160 x $350) = decrease in E&P (160 x $350) "Excess" rent 20,000 (d) Rent Reasonable rent (9,000) Tom (d) $0 ($11,000 - $11,000) 11,000 = constructive dividend + Gross income $9,000 = decrease in E&P also 11,000 = decrease in rent expense = increase in taxable income = increase in E&P (c) Use of What if it was …. Employee Net (decrease) to E&P plane Employee use of corporate property = additional compensation + Gross income (not shareholder/owner) = decrease in taxable income (included in W-2) = decrease in E&P Shareholder vs Employee use of corporate property ($250,000 x 7% x 9/12)...
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This note was uploaded on 09/09/2011 for the course TAX 5015 taught by Professor Kelliher,c during the Spring '08 term at University of Central Florida.

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