Copy of 2119883-Week 2 - Individual Assignment

Copy of 2119883-Week 2 - Individual Assignment - Week 2...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Week 2 Individual Assignment ACC / 455
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Bruce and Bob organize Black LLC on May 10 of the current year. What is the entity’s default tax classification? Are any alternative classification(s) available? If so, (1) how do Bruce and Bob elect the alternative classification(s) and (2) what are the tax consequences of doing so? The company can also elect to be a general or limited partnership. A general partnership means that each partner has an unlimited liability for the the debt of the company. If they choose the limited partnership, either Bruce or Bob will have to be the general partner and the other one will be the limited partner, having only the responsibility of debt equal to his capital investment in the company. and be taxed as a corporation. would have at the individual rate. Once the election is made to file as a corporation, the company cannot change it's tax classification for 60 months. The partnership is deemed to distribute its assets to the partners, who are then deemed to contribute the assets to a new corporation in a nontaxable exchange for stock. If the company decides to file their tax return as a partnership after the five years is up, it is deemed to have distributed its assets and liabilities to its owners in a liquidation and the deemed distribution is then followed by a deemed contribution of assets and liabilities to a newly formed partnership. The default tax classification for Black LLC is a Partnership 1) The company can choose to file Form 8832 under the check-the-box regulations 2) The partnership could be taxed at a higher percentage as a corporation than they
Background image of page 2
On March 1 of the current year, Alice, Bob, Carla, and Dick form Bear Corporation and transfer the following items: Number of Basis to Common Transferor Asset Transferor FMV Shares Issued Alice Land $12,000 $30,000 Building 38,000 70,000 400 Mortgage on the land and building 60,000 60,000 Bob Equipment 25,000 40,000 300 Carla Van 15,000 10,000 50 Dick Accounting Services - 10,000 100 Alice purchased the land and building several years ago for $12,000 and $50,000, respectively. Alice has claimed straight-line depreciation on the building. Bob also receives a Bear note for $10,000 due in three years. The note bears interest at the prevailing market rate. Bob purchased the equipment three years ago for $50,000. Carla also receives $5,000 cash. Carla purchased the van two years ago for $20,000. a. Does the transaction satisfy the requirements of Sec. 351?
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

Copy of 2119883-Week 2 - Individual Assignment - Week 2...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online