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76) Ralph and Yolanda purchased 20% of the initial offering of Major Corporation common stock for $150,000. Major Corporation is a qualifying small business corporation and the stock qualifies as Sec. 1244 stock. Ten months later, Major Corporation files for bankruptcyand the shareholders are notified that the stock is worthless. Ralph and Yolanda, who are married and file a joint return, have aA) $150,000 ordinary loss.B) $150,000 capital loss.C) $100,000 ordinary loss; $50,000 capital loss.D) $100,000 ordinary loss; $50,000 ordinary loss carryforward.Answer: CPage Ref.: C:2-32; Example C:2-46Objective: 6
77) Yenhung, who is single, forms a corporation using a tax-free asset transfer, which qualifies under Sec. 351. She contributes property having an adjusted basis of $50,000 and an FMV of $40,000. The stock received from the corporation is Sec. 1244 stock. When Yenhung sells the stock for $30,000, her loss is00BPage Ref.: C:2-33; Example C:2-47Objective: 678) Nathan is single and owns a 54% interest in the new NT Partnership, a calendar-year entity. The NT Partnership reports $100,000 of profits for its first year. Assuming Nathan is taxed at a 35% marginal tax rate on the additional income, how much tax does Nathan owe if the NT Partnership does not distribute any of its profits to him?Page Ref.: C:2-4Objective: 179) On January of the current year, Rae purchases 100% of Sun Corporation stock for $30,000. Sun Corporation reports taxable income of $25,000 in the current year, on which it pays tax of $3,750. None of the remaining $21,250 is distributed to Rae. However, on January 1 of the next year, Rae sells her stock to Lee for $51,250. What are the tax consequences to Rae of the sale?Page Ref.: C:2-5; Example C:2-6Objective: 1