C11-Chp-02-1E-Corp-Problems-In-Class-Prb

C11-Chp-02-1E-Corp-Problems-In-Class-Prb - Tab: 1. Acct...

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File: e60cd7dda6f79b372283e574455e54806370e758.xls Page 1 of 5 1 Jan is single, age 30, with no dependent. Jan takes the standard deduction. Jan's Office Suppply Business Sales $1,000,000 Operating expenses (800,000) Net income $200,000 Jan will incorporate the business. She will draw a salary of $100,000. All after-tax earnings will be invested in growth of corporation. Do your recommend an S election? Suppose there will be losses. 2 Sue works in all businesses, but only receives compensation (salary) from the corporations. Sue Corp. SueCorpS. Sue Prtship. Sue-1040 Sue's ownership of each entity 100% 50% 50% Sue's beginning basis in each entity $100,000 $100,000 $100,000 Revenue $100,000 $100,000 $100,000 Compensation to Sue 20,000 10,000 61 Other Expenses 30,000 60,000 30,000 Net Income and taxable income 50,000 Net Income and taxable income 30,000 1366(a)(1)(B) Net Income and taxable income 70,000 702(a)(8) Income tax paid by entity Total dividends paid to shareholder 6,000 301(c)(1) Total dividends paid to shareholders $4,000 1368(b) Total distribution to Partners $10,000 731(a)(1) How much gross income is reported by Sue from these three entities? What is her basis in the C corporation stock at end of first year? 1011 What is her basis in the S corporation stock at end of first year? 1367 What is her basis in the partnership at end of first year? 705(a) 3 Local Corporation - First year of operations (Independent cases) First year was a break-even year-zero taxable income. All assets that were sold had been owned for 15 months, Case 1 Case 2 Case 3 Case 4 Case 5 Revenue $100,000 $100,000 $100,000 $100,000 $100,000 Operating Expenses ($40,000) ($40,000) ($40,000) ($40,000) ($40,000) Net operating income $60,000 $60,000 $60,000 $60,000 $60,000 Gain (loss) on sale of: IBM Stock $10,000 ($10,000) ($10,000) ($10,000) Land (customer parking) ($20,000) $30,000 Total from above $60,000 $70,000 $50,000 $30,000 $80,000 Taxable Income Tax Table Tax Computation Below $50,000 15% $25,000 25% $25,000 34% Tax. Inc. Tax Code: 11, 1201(a), 1211, 1212, 1221, 1222, 1231, 1.1231-1(old) Repeat Case 4 if bus. is a proprietorship? Suppose Case 4 is for 2009 and Case 5 is for 2010 for a local corporation. How does 1231(c) lookback work? 4 Maria owns 100% of two corporations in Charlotte that have taxable income of $100,000 each. How much income tax is paid by each corporation? May they file a Consolidated return? Furniture Place, Inc $100,000 Appliance Place, Inc 100,000 Total Taxable Income $200,000 $50,000 25,000 25,000 100,000 $200,000 Sec. 11, 1561, 1563(a)(2). Suppose Furniture Place has NOL carryover of $100,000 from last year.
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Tab: 2. Sale of Property File: e60cd7dda6f79b372283e574455e54806370e758.xls Page 2 of 5 No 1 Sale of Depreciable Property Case 1 Case 2 Case 3 Asset Machine Machine Machine Owner Individual Individual Individual Recapture Section? Cost
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C11-Chp-02-1E-Corp-Problems-In-Class-Prb - Tab: 1. Acct...

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