Accounting 6120. Corporate Taxation – Examination No. 2-Night Class
Spring, 2011. The University of North Carolina at Charlotte
Row In Class
You may use your code and regs book during the test.
You may also use up to 4 pages of notes-front
and back, as well as any outlines of code provided by the instructor in class or on the web page.
You may not use
your regular tax textbook when answering questions on this test. Avoid all appearances of impropriety.
§301] Charlotte Corporation is a calendar year corporation which had accumulated earnings and profits of $32,000
as of January 1, 2011. Charlotte Corporation had a deficit in earnings and profits for 2011 of $100,000 and
distributed $15,000 to one of its shareholders, John, on April 1, 2011. The adjusted basis of John's stock before the
distribution was $2,000.
What is the amount of John's dividend income and capital gain from this distribution?
§301] Barrel Corporation which had earnings and profits of $40,000, made a nonliquidating distribution of
property to its sole shareholder as a dividend in kind. This property had an adjusted basis of $20,000 and a fair
market value of $30,000 at the date of distribution. There was no debt on the property.
How much dividend income does the shareholder recognize on this distribution?
§305] Jane purchased 100 shares of Smith Corp. common stock on June 1, 1990, for $7,700.
On June 30, 2011,
she received a 10% stock dividend from Smith Corp. (ten shares of Smith Corp. common stock).
Jane did not have
an option of receiving cash rather than stock.
On September 1, 2011, she sold 10 shares of Smith Corp. common
stock for $1,000.
As a result of these transactions she should report gain for 2011 of:
§311] Rally Corporation distributed a sailboat to its sole shareholder, Ms. H.
The sailboat had a fair market value of $175,000 and an adjusted basis to Rally of $150,000.
The sailboat was subject to a loan of $190,000, which Ms. H assumed.
What is the amount of Rally's gain or (loss) on the distribution?
The following information pertains to Green Corp.:
Deficit in accumulated earnings and profits at January 1, 2011
Earnings and profits for the year ended December 31, 2011
Cash distributions to individual stockholders during 2011
What is the total amount of distributions taxable as dividend income to Green's stockholders in 2011?