35. a. Otter, a partnership, is not a taxpaying entity. Its profit (loss) and separate items flow through to the partners. The partnerships Form 1065 reports net profit of $150,000 ($400,000 income $250,000 expenses). The partn
P roblem Solutions Chapter Five
18. Adam would prefer a dividend because he would have $21,250 after tax [$25,000 dividend ($25,000 15% tax rate)]. If he were paid a bonus, only $18,000 after tax [$25,000 bonus ($25,000 28% tax rate)] results. However, th
20. Corporate distributions in redemption of stock are governed under 311. Under that provision, gains, but not losses, are recognized on the distribution of noncash property when the propertys fair market value differs from it
C hapter Seven Problem Solutions
27. Atif realizes a gain on the transaction of $800,000 ($900,000 stock + $300,000 land $400,000 basis). Gain is recognized by Atif to the extent of the boot received ($300,000 land) which is less than the realized gain of
None of the three individuals will recognize gain. The nonrecognition
provisions of 351 apply to all of the exchanges.
Clyde will recognize gain of $260,000 ($350,000 $90,000) on the
Corporate distributions in redemption of stock are governed under 311. Under
that provision, gains, but not losses, are recognized on the distribution of noncash
property when the propertys fair market value differs
Jon and Pam each have dividend income of $80,000 cfw_[$100,000 (accumulated
E & P) + $60,000 (current E & P)] 2. The dividend income will be subject to
the reduced tax rate on dividends available to all individuals.
Otter, a partnership, is not a taxpaying entity. Its profit (loss) and separate
items flow through to the partners.
The partnerships Form 1065 reports net profit of $110,000 ($320,000
income $210,000 expenses).
Chapter 10 Partnerships: Formation, Operation, and Basis
10-1 Overview of Partnership Taxation
10-1a. Whats a Partnership
A general partnership (GP) consists of two or more partners who are general
partners and who may participate in management of the en
Chapter 1 Understanding and Working with the Federal Tax Law
1-1. The whys of the tax laws
1-1a. Revenue needs
The foundation of any tax system has to be the raising of revenue to absorb the
cost of government operations.
Revenue Neutrality:A descriptio
Net operating loss carryover
Federal income tax
Meals and entertainment expenses ($8,000 x .50)
Life insurance premiums
Life insurance proceeds
Cash surrender value of life insurance
Capital loss carryforward
Excess of E&
School of Management
Acct. 476/576: Tax II
Entity Income Tax
Tuesdays & Thursdays
Sec. 01: 6.00 -7.25 p.m.
Sec, 02: 4.25-5.50 p.m.
Acad. A: Room G - 007
Instructor: Richard W. Mertens, Esq., BBA. JD, LLM
25. Leasing some property to a controlled corporation may be a more attractive alternative than transferring ownership. Leasing provides the taxpayer with the opportunity of withdrawing money from the corporation without the p