Homework Answers
Ans is B
Finch has an interest expense deduction of $6, 300.
Reason:-
Amount of interest paid to George is allowed for deduction.
Rest of the choices are incorrect.
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2 George transfers Cash of $150,000 to Finch Corporation, a newly formed corporation, for 100% of...
On January 2, Chaz transfers cash of $60,000 to a newly formed corporation for 100% of...
On January 2, Chaz transfers cash of $60,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $15,000. The income is credited to its earnings and profits account. The corporation distributes $5,000 to Chaz. If an amount is zero, enter "0". a. How do Chaz and the corporation treat the $5,000 distribution? Chaz has a taxable dividend of $5000 and the corporation has a deduction of $0. b. Assume instead...
On January 2, Chaz transfers cash of $143,400 to a newly formed corporation for 100% of...
On January 2, Chaz transfers cash of $143,400 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $35,850. The income is credited to its earnings and profits account. The corporation distributes $10,755 to Chaz. If an amount is zero, enter "0". a. How do Chaz and the corporation treat the $10,755 distribution? Chaz has a____of $______ and the corporation has a deduction of $_____ b. Assume instead that Chaz...
| 24 LO.5 Chaz transfers cash of $60,000 to a newly formed corporation for 100% of...
| 24 LO.5 Chaz transfers cash of $60,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $15,000. The income is credited to its earnings and profits account. The corporation distributes $5,000 to Chaz. a. How do Chaz and the corporation treat the $5,000 distribution? b. Assume, instead, that Chaz transfers to the corporation cash of $30,000 for stock and cash of $30,000 for a note of the same...
Joe and Kay form Gull Corporation. Joe transfers cash of $250,000 for 200 shares in Gull...
Joe and Kay form Gull Corporation. Joe transfers cash of $250,000 for 200 shares in Gull Corporation. Kay transfers property with a basis of 550,000 and fair market value of $240,000. She agrees to accept 200 shares in Gull Corporation for the property and for providing bookkeeping services to the corporation in its first year of operation. The value of Kay's services is $10,000. With respect to the transfer: a. Guil Corporation has a basis of $240,000 in the property...
Problem 5-25 (LO. 1, 2) Cardinal Corporation, a calendar year taxpayer, receives dividend income of $250,000...
Problem 5-25 (LO. 1, 2) Cardinal Corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. Cardinal also receives interest income of $35,000 from municipal bonds. (The municipality used the proceeds from the bond issue to construct a library.) Cardinal borrowed funds to purchase the municipal bonds and pays $20,000 of interest on the loan. Excluding these three items, Cardinal's taxable income is $500,000. Cardinal has $150,000 of accumulated E...
Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000...
Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000 for 30 shares in Crow Corporation. Mary transfers property, basis of $80,000 and value of $1,480,000, and agrees to serve as manager of Crow for one year, in return Mary receives 50 shares of Crow. The value of Mary's services is $120,000. With respect to the transfers: a. Mary will not recognize gain or income, X b. Earl will recognize a gain of $1,400,000...
Dan Knight and Patricia Chen, who are good friends, form Crane Corporation. Dan transfers land (worth...
Dan Knight and Patricia Chen, who are good friends, form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for 50% of the stock in Crane. Patricia transfers machinery (worth $150,000, adjusted basis of $30,000) and provides services worth $50,000 for 50% of the stock. d. Enter the results of this transaction to Patricia on her Form 1040 (page 1). Assume Patricia is single, age 40, has no other income, and claims a standard deduction of $12,200 (for 2019)....
Part B. Gross Income Inclusions & Exclusions For each Q-6 through Q-19 below, determine whether the...
Part B. Gross Income Inclusions & Exclusions For each Q-6 through Q-19 below, determine whether the item described should be INCLUDED IN or EXCLUDED FROM the Gross Income of the taxpayer who receives the item. • Darken Box A on the Scantron sheet if the item should be INCLUDED IN gross income • Darken Box B on the Scantron sheet if the item should be EXCLUDED FROM gross income 6. $25,000 scholarship for tuition and books received by a full-time...
Project practice set 2
Practice Set #2 Due June 28, 2021 - at 10:00 pm This practice set will build on the Practice Set #1.All facts remain the same as in Practice Set #1. In addition to the facts in Practice Set #1, Mary has now started a business. She has named her business Mary’s Crafts – Made to Order. It is a SMLLC. Additionally, Eric wants to take an exotic vacation. He has heard wonderful things about climbing Mount Everest. To fund the trip...
Wilson consulting company was founded on January 2, 2016. Transactions for the first year operation are presented below:...
Wilson consulting company was founded on January 2, 2016. Transactions for the first year operation are presented below: ▪ January 2: Issued 600,000 shares of common stock for $ 10,000,000 (par value common stock). ▪ January 10: Acquired equipment in exchange for $ 2,000,000 cash and a $ 6,000,000 note payable. The note is due in 10 years. ▪ February 10: Paid $ 24,000 for an insurance policy covering the two-year period starting on February 1. ▪ February 22: Purchased...
| 24 LO.5 Chaz transfers cash of $60,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $15,000. The income is credited to its earnings and profits account. The corporation distributes $5,000 to Chaz. a. How do Chaz and the corporation treat the $5,000 distribution? b. Assume, instead, that Chaz transfers to the corporation cash of $30,000 for stock and cash of $30,000 for a note of the same...
Joe and Kay form Gull Corporation. Joe transfers cash of $250,000 for 200 shares in Gull Corporation. Kay transfers property with a basis of 550,000 and fair market value of $240,000. She agrees to accept 200 shares in Gull Corporation for the property and for providing bookkeeping services to the corporation in its first year of operation. The value of Kay's services is $10,000. With respect to the transfer: a. Guil Corporation has a basis of $240,000 in the property...
Problem 5-25 (LO. 1, 2) Cardinal Corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. Cardinal also receives interest income of $35,000 from municipal bonds. (The municipality used the proceeds from the bond issue to construct a library.) Cardinal borrowed funds to purchase the municipal bonds and pays $20,000 of interest on the loan. Excluding these three items, Cardinal's taxable income is $500,000. Cardinal has $150,000 of accumulated E...
Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000 for 30 shares in Crow Corporation. Mary transfers property, basis of $80,000 and value of $1,480,000, and agrees to serve as manager of Crow for one year, in return Mary receives 50 shares of Crow. The value of Mary's services is $120,000. With respect to the transfers: a. Mary will not recognize gain or income, X b. Earl will recognize a gain of $1,400,000...
Dan Knight and Patricia Chen, who are good friends, form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for 50% of the stock in Crane. Patricia transfers machinery (worth $150,000, adjusted basis of $30,000) and provides services worth $50,000 for 50% of the stock. d. Enter the results of this transaction to Patricia on her Form 1040 (page 1). Assume Patricia is single, age 40, has no other income, and claims a standard deduction of $12,200 (for 2019)....
Part B. Gross Income Inclusions & Exclusions For each Q-6 through Q-19 below, determine whether the item described should be INCLUDED IN or EXCLUDED FROM the Gross Income of the taxpayer who receives the item. • Darken Box A on the Scantron sheet if the item should be INCLUDED IN gross income • Darken Box B on the Scantron sheet if the item should be EXCLUDED FROM gross income 6. $25,000 scholarship for tuition and books received by a full-time...
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