246b the dividends received deduction is simply 80 percent of 60000 or 48000 in

# 246b the dividends received deduction is simply 80

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246(b)), the dividends-received deduction is simply 80 percent of \$60,000, or \$48,000, in this case.b.The contribution base is computed prior to the charitable contribution anddividends-received deduction, including capital gains and after NOLcarryforwards:Dividends\$60,000Gross income300,000Less: Expenses250,000Capital gain30,000Less: NOL carryforward15,000\$125,000Thus, \$12,500 is allowed as a charitable deduction, with the remaining \$7,500being carried over for a maximum of five years.c.Taxable income equals \$64,500 (\$125,000 - \$48,000 - \$12,500).Comprehensive Problemâ€”Property Basis Computation112. a.Allocate liabilities in excess of basis in proportion to fair market value:(1)Aggregate liabilities\$60,000Aggregate basis45,000\$15,000(2)Allocation:Building 1:\$15,000 Ă—\$100,000= \$7,143\$210,000Building 2:\$15,000 Ă—\$80,000= \$5,714\$210,000Building 3:\$15,000 Ă—\$30,000= \$2,143\$210,000All gains are ordinary income via Sections 1250 and 1239. \$5,000 of Building 2 and\$2,143 of Building 3 are Section 1250 gains. All remaining gains are Section 1239gains.b.Corporation's basis:Â©2015 CCH Incorporated. All Rights Reserved.Chapter 14
36CCH Federal Taxationâ€”Comprehensive TopicsBuilding 1: \$10,000 + \$7,143 = \$17,143Building 2: \$15,000 + \$5,714 = \$20,714Building 3: \$20,000 + \$2,143 = \$22,143c.Mr. Trent's basis equals the aggregate building basis plus aggregate gainsrecognized, and minus the liability assumed, or \$0 (\$10,000 + \$15,000 + \$20,000+ \$15,000 - \$60,000).Comprehensive Problemâ€”Section 351 Transfers113.The tax consequences for Jones, Able, Smith, and the counselor are as follows:JonesAmount Realized\$205,000(\$125,000 + \$60,000 + \$20,000)Adjusted Basis135,000(\$ 70,000 + \$20,000 + \$45,000)Realized Gain\$ 70,000Boot Received\$ 20,000must allocate to each assetAllocate to each asset:Fair MarketValueAdjustedBasisRealized GainBootRecognizedGainMachine\$100,000\$70,000 \$30,000\$9,756\$9,756Sec. 1245Land40,00020,00020,0003,9023,902Sec. 1231Building65,00045,00020,0006,3426,342Unrecap. Sec. 1250\$205,000\$20,000\$20,000Stock Basis=\$70,000 + \$20,000 + \$45,000 - \$20,000 (boot received) + \$20,000 (recognizedgain) - \$60,000 (liability assumed) = \$75,000Shriver CorporationMachine Basis= \$70,000 + \$9,756 (gain recognized)= \$79,756Land Basis= \$20,000 + \$3,902= \$23,902Building Basis= \$45,000 + \$6,342= \$51,342AbleAmount Realized\$120,000Adjusted Basis145,000Realized Loss(\$ 25,000)Boot received but loss on each property, therefore no gain recognizedStock Basis = \$80,000 + \$65,000 - \$80,000 (boot received and liability assumed) =\$65,000Â©2015 CCH Incorporated. All Rights Reserved.Chapter 14
37Instructorâ€™s ManualSecurities Basis = \$5,000 (fair market value)Shriver Corporationâ€”each property has a built-in lossMachine Basis = \$80,000 - \$10,000 = \$70,000Building Basis = \$65,000 - \$15,000 = \$50,000SmithAmount Realized\$135,000(\$115,000 + \$20,000)Adjusted Basis120,000Realized Gain\$ 15,000Boot Received\$ 20,000Allocate to each asset:Fair MarketValueAdjustedBasisRealizedGainBootRecognizedGainMachine\$80,000\$80,0000\$11,8520Auto15,00010,000\$5,0002,222\$2,222*Truck40,00030,00010,0005,9265,926*\$135,000\$20,000\$8,148*As per Code Sec. 1245.Stock Basis = \$80,000 + \$10,000 + \$30,000 + \$8,148 - \$20,000 = \$108,148Securities Basis = \$20,000Shriver CorporationMachine Basis = \$80,000 + \$0 = \$80,000Auto Basis = \$10,000 + \$2,222 = \$12,222Truck Basis = \$30,000 + \$5,926 = \$35,926CounselorOrdinary Income=\$10,000Stock Basis=\$ 5,000Securities Basis=\$ 5,000Shriver Corporation\$10,000 organizational costsâ€”either capitalize and amortize (if elected) or expenseâ€”depends on the type of work.Research Problemâ€”Net Operating LossesÂ©2015 CCH Incorporated. All Rights Reserved.Chapter 14
38CCH Federal Taxationâ€”Comprehensive Topics114.In the carryback year, the corporation's regular tax liability becomes \$80,750, which isthe regular corporate tax on \$250,000 (\$300,000 reduced by the NOL). This wouldresult in a refund of \$19,500. However, since the corporation has large adjustments and

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• Taxation in the United States, CCH Incorporated