d Smelter Corporation was formed on January 1 2009 Mr Smith owns 25 of the

D smelter corporation was formed on january 1 2009 mr

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d. Smelter Corporation was formed on January 1, 2009. Mr. Smith owns 25% of the corporation’s stock. The 79. corporation made an S election immediately, and it is a calendar-year corporation. Mr. Smith contributed $15,000 cash to Smelter in exchange for his stock. On August 8, 2009, Smelter Corporation borrowed $20,000 from Mr. Smith, and $10,000 from First National Bank under a recourse financing arrangement. Smelter had losses from its operations of $80,000 in 2009 and $80,000 in 2010. At the end of 2010, Smelter Corporation had not repaid any of the loans from Mr. Smith or the bank. What part of Smelter Corporation’s 2010 loss may Mr. Smith report on his 2010 individual tax return? $0 a. $5,000 b. $15,000 c. $17,500 d. When a corporation distributes money or other property to its shareholders, the distribution can be 80. classified as: e. From the shareholder’s perspective, a distribution from a corporation in which they own stock may e. Dividends can be distributed in the form of: 82. cash. a. property other than cash. b. stock in the distributing corporation. c. a. and b. d. All of the above. e. When a corporation distributes cash or other property to its shareholders, the amount of the distribution 83. equals the sum of: the money distributed and the adjusted basis of any property distributed. a. the money distributed and the fair market value of any property distributed. b. the money distributed and the original market value of any property distributed. c. None of the above. d.
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667 Testbank © 2010 CCH. All Rights Reserved. Chapter 16 When a corporation distributes property to its shareholders, it: 84. may recognize either gain or loss. a. may recognize gain, but never a loss. b. may recognize a loss, but never a gain. c. never recognizes a gain or loss. d. Quali fi ed dividend income is taxed: 85. using the highest tax rate that applies to individuals. a. using the highest tax rate that applies to corporations. b. at the same rates as net capital gains to individual taxpayers. c. at the same rates as net capital gains to corporate taxpayers. d. A distribution is treated as a dividend as long as: 86. the corporation has current E&P. a. the corporation has accumulated E&P. b. the corporation has current and accumulated E&P. c. the corporation has accumulated or current E&P. d. Any portion of a distribution from a corporation to its shareholders that is not considered a dividend is 87. considered: a capital gain distribution. a. a return of capital distribution. b. accumulated earnings distribution. c. None of the above. d. Examples of transactions that may be recharacterized as constructive dividends include: 88. loan by a shareholder to the corporation. a.
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