CHAPTER 4 PROBLEMS SOLUTIONS
(LO 1, 3)
$6,000 of ordinary gain.
$30,000 [$30,000 (basis of inventory) + $6,000 (gain recognized) $6,000 (boot
$36,000 [$30,000 (basis of inventory) + $6,000 (gain recognized)].
CHAPTER 2 PROBLEMS SOLUTIONS
If Goshawk is a proprietorship, only $21,000 of the $40,000 long-term capital loss can
be deducted in the current year. The loss will offset the short-term capital gain of
$18,000 first; then, an additional $3,00
MULTIPLE CHOICE QUESTIONS CHAPTER 16
WILL HAVE 15 MULTIPLE CHOICE WORTH 3 POINTS EACH
1. Be able to compute the Allocation and Apportionment of Income amount States (See Problems 31, 32,
33 & 34)
2. Be able to compute State Taxable Income based on the Sta
1. Know the definition and primary purpose of TAX TREATIES.
2. Understand the purpose of the FOREIGN TAX CREDIT the TYPE OF TAXES
IT APPLY TO and how it relates to DOUBLE TAXATION.
3. Know INCOME SOURCING RULES for the sale of INVENTORY.
CORPORATIONS: EARNINGS & PROFITS AND DIVIDEND DISTRIBUTIONS
1) DISTRIBUTIONS (EFFECT ON SHAREHOLDERS)
1) TAXABLE INCOME (ORDINARY INCOME DIVIDENDS) TO EXTENT OF
EARNINGS AND PROFITS.
2) DISTRIBUTIONS IN EXCESS OF EARNINGS DISTRIBUTIONS IN EXCESS
ANALYSIS PROBLEM WILL COME FROM THESE: SHOULD I GO C CORP, S
CORP OR PARTNERSHIP AND WHY. THIS WILL BE EXTEND OF
MEMORADNUM. WRITE A COUPLE OF THREE PARAGRAPHS ON WHICH ONE
AND WHY, NO NUMBERS ONLY ANALYSIS.
COMPARATIVE FORMS OF DOING BUSINESS
This Chapter is concerned with deciding which form of business is most
advantageous in specific circumstances.
(This chapter serves as a summary and comparison of the difference
1. Capital F
PARTNERSHIP: DISTRIBUTION, TRANSFER OF INTERET AND TERMINATIONS
SALE OF A PARTNERSHIP
When a partner disposes of their entire partnership interest in the partnership, the partnerships tax
year closes for that partner at that time (time of sale)
DISTRIBUTIONS FROM PARTNERSHIP
Routine cash withdrawal (draw) paid by partnership to a partner reduces the partners
outside basis by the amount of cash received.
$(50,000) AT THE END OF YEAR
Not federal income tax paying entities
Income gains, losses, deductions and credit pass through to partners per partnership agreement
File Form 1065, Partner receives K-1
TWO CONFLICTING CONCEPTS THAT GOVERN PARTNERSHIP