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 Problem—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 ×$100,000= $7,143$210,000Building 2:$15,000 ×$80,000= $5,714$210,000Building 3:$15,000 ×$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:©2015 CCH Incorporated. All Rights Reserved.Chapter 14
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36CCH Federal Taxation—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 Problem—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) =$65,000©2015 CCH Incorporated. All Rights Reserved.Chapter 14
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37Instructor’s ManualSecurities Basis = $5,000 (fair market value)Shriver Corporation—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 costs—either capitalize and amortize (if elected) or expense—depends on the type of work.Research Problem—Net Operating Losses©2015 CCH Incorporated. All Rights Reserved.Chapter 14
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38CCH Federal Taxation—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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