CHAPTER 20--CORPORATIONS AN

B what is noahs basis for his partnership interest as

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b. What is Noah’s basis for his partnership interest as of January 1, 2012? 133.Regarding the check-the-box Regulations, comment on each of the following: a. The main reason these Regulations were issued. b. An entity is a corporation under state laws c. A limited liability company defaults (no election is made). d. A one-person business defaults (no election is made). 23
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134.Corporate taxpayers lose the benefits of lower tax brackets and the rates cease to be progressive once taxable income reaches a certain level. Explain this statement. 135.In what manner do the tax rules dealing with capital gains differ for corporations and individuals? 136.In contrasting the tax treatment of excess capital losses with individual taxpayers: a. What advantages do corporate taxpayers enjoy? b. Disadvantages? 137.Regarding the tax treatment of charitable contributions, corporations enjoy two major advantages over individuals. Explain. 24
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138.How does the domestic production activities deduction differ for corporations than for individuals? 139.Without special rules, corporate-source income can be subject to triple taxation. Explain. a. How does the tax law mitigate this problem at the corporate shareholder level? b. How does the tax law mitigate this problem at the individual shareholder level? 140.Rust Corporation and Rose Corporation are unrelated C corporations and hold as investments the same number of shares of stock in BP Corporation. As such, they each receive an equal amount of dividends from BP Corporation. If each claims a different dividends received deduction, what could cause the variation? 25
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141.As of January 1, 2010, Crimson Corporation, a calendar year C corporation, has a deficit of $300,000 in accumulated E & P. For 2010, it has current E & P of $100,000, and during the year distributes $120,000 as a dividend to the shareholders. Comment on the following assumptions. a. The shareholders recognize no dividend income as Crimson still has negative E & P for the year of the distribution [($300,000) beginning deficit + $100,000 current E & P = ($200,000) ending deficit]. b. Crimson’s accumulated E & P on January 1, 2011, is ($320,000). 142.In adjusting the taxable income of a corporation to arrive at current E & P, Federal income taxes paid is subtracted. Why? 143.Explain how a constructive dividend result could occur in each of the following situations. 26
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144.Jody, her parents, and her brother and sisters own all of the stock in Mauve Corporation. Discuss the various possible tax consequences to the parties involved if Jody borrows money from Mauve and the loan: a. Is not bona fide.
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  • Spring '12
  • honig
  • Corporation, Income tax in the United States, C CORPORATION

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