Question

— 3. In the current year, Warbler Corporation (E&P of $250,000) made the following property distributions to its shareholders (all corporations): Fair Market Adjusted Basis Value Pink Corporation stock (held for investment) $150,000 $120,000 Non-LIFO inventory 80,000 110,000 Warbler Corporation is not a member of a controlled group. As a result of the distribution: a. The shareholders have dividend income of $200,000. b. The shareholders have dividend income of $260,000. c. Warbler has a recognized gain of $30,000 and a recognized loss of $30,000. d. Warbler has no recognized gain or loss. e. None of these 4. Where is the § 199A deduction taken on Form 1040? a. It is a deduction from AGI, much like the standard deduction or itemized deductions, and is the last deduction taken in determining taxable income. b. It is a business deduction and is taken on Schedule C (Form 1040). c. It is a deduction that reduces self-employment income and is taken on Schedule SE (Form 1040). - d. It is an itemized deduction taken on Schedule A (Form 1040). e. None of these

Answer 1

3. e. None of these.

Explanation:- The shareholders have dividend income of $230,000 ($120,000 + $110,000). Warbler Corporation recognizes a

gain of $30,000 ($110,000 - $80,000) but no loss can be recognized.

4. a

Explanation:-

Gross Income- Adjustments = Adjusted Gross Income (AGI)

Adjusted Gross Income (AGI)- STD or Itemized Deduction = Taxable income before QBID

Taxable income before QBID - Qualified Business Income Deduction (QBID) = Taxable Income

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