National Tax 432 Chapter 14 Solutions

National Tax 432 Chapter 14 Solutions - Chapter14

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Chapter 14 Corporate Status Recognition by IRS 1. Yes, a partnership is an eligible entity. It must use the check-the-box system to indicate its election to be taxed as a corporation for federal tax purposes. Corporate Status Recognition by IRS 2. No, a corporation is a corporation per se and will be taxed as such. No election to be taxed as some other entity is available. Tax Advantage of the Corporate Form 3. The main advantage of the corporate form of organization is the fringe benefi t plans available as deductions to corporations and tax-free to the employees. Section 351 Transfers 4. Section 351 allows certain transfers of property to a corporation to escape taxation. This allows taxpayers to postpone any gain or loss until there is a substantive change in the taxpayer’s investment (e.g., a business may be incorporated tax free). Section 351 Accounts Receivable Basis 5. Accounts receivable have a zero basis to the corporation when transferred by a cash-basis taxpayer under Code Sec. 351. Incorporation Requirements 6. A Section 351 transaction requires Code Sec. 368(c) control (i.e., the transferor needs to own at least 80 percent voting power and 80 percent of all classes of stock). Securities in a Section 351 Transfer 7. Securities are treated as boot. Loss Recognition Under Section 351 8. Loss is never recognized under Code Sec. 351. Boot Received Under Section 351
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This note was uploaded on 11/22/2011 for the course ACC 432B taught by Professor Wolod during the Fall '11 term at National.

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National Tax 432 Chapter 14 Solutions - Chapter14

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