Accounting
Basil, Inc, a “C” corporation makes an “S” election which is effective beginning January 1, 2018. Basil is a calendar year entity reporting as an accrual basis taxpayer. On January 1, 2018, Basil had the following property:
Asset Fair Market Value Adjusted Tax Basis Built-In Gain
Cash $200,000 $200,000 $0
Unrealized Receivables $115,000 $0 $0*
Real Property #1 $230,000 $100,000 $130,000
Real Property #2 $520,000 $350,000 $170,000
Total $1,065,000 $650,000 $300,000
*This is an accrual basis taxpayer so the revenue from the unrealized receivables was recognized when the business was a “C” corporation
Calculate the Built-In Gains Tax assuming the tax rate is 21%
Homework Answers
Request Answer!
We need at least 9 more requests to produce the answer.
1 / 10 have requested this problem solution
The more requests, the faster the answer.
Basil, Inc, a “C” corporation makes an “S” election which is effective beginning January 1, 2018....
Basil, Inc, a “C” corporation makes an “S” election which is effective beginning January 1, 2018. Basil is a calendar year entity reporting as an accrual basis taxpayer. On January 1, 2018, Basil had the following property: Adjusted Tax Basis $200,000 SO Asset Cash Unrealized Receivables Real Property #1 Real Property #2 Total Fair Market Value $200,000 $115,000 $230,000 $520,000 $1,065,000 Built-In Gain $0 $0* $130,000 $170,000 $300,000 $100,000 $350,000 $650,000 *This is an accrual basis taxpayer so the revenue...
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder...
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351, The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Fair Market Built in Gain Shareholder's Basis $300,000 $525,000 or (Loss) $375,000 $75,000 $400,000 ($125,000) ($50,000) Value Property 1 Property 2 Net built-in loss Martin adopts a plan of liquidation later in the year and...
A U.S. individual investor held a real estate asset (a parcel of land) that that was...
A U.S. individual investor held a real estate asset (a parcel of land) that that was purchased for $10,000,000, then held for 10 years. Now, the individual will sell it for $30,000,000. a) Compute the tax on the sale if the land is held directly by the investor b) Compute the tax on the sale to the investor if land is held in a corporation (consider both entity tax and tax on the distributions) c) Compute the tax on the...
Ervin and Hyatt form Hendrix Corporation. Ervin transfers property (basis of $360,000 and fair market value of $440,000)...
Ervin and Hyatt form Hendrix Corporation. Ervin transfers property (basis of $360,000 and fair market value of $440,000) for 75 shares in Hendrix Corporation. Hyatt transfers property (basis of $215,000 and fair market value of $300,000) and agrees to serve as manager of Hendrix for one year; in return, Hyatt receives 75 shares in Hendrix. The value of Hyatt's services to Hendrix is $140,000. If an amount is zero, enter "0". a. Ervin recognizes $ gain on the transfer. Hyatt...
Ben and Jerry decide to incorporate their ice cream business. Allie would also like to be a shareholder in the bu...
Ben and Jerry decide to incorporate their ice cream business. Allie would also like to be a shareholder in the business. As such, Ben and Allie agree that immediately after the incorporation of the company and the issuance of stock, Ben will sell Allie half of his shares in the company. Ben contributes inventory (FMV $60,000, Basis $30,000), and accounts receivable (FMV $40,000, Basis $40,000) to the corporation for 50% of the stock, and Jerry contributes equipment (FMV $60,000, Basis...
QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the...
QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the fair market value of the property. With respect to the sale, The shareholder has a basis of S175,000 in the property. The corporation has a tax loss of S50,000. The corporation does not recognize a tax loss but reduces its E & P account $50,000. The shareholder has a constructive dividend of $50,000. None of the above QUESTION 8 Assume taxable income is the...
On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander...
On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander's book value was $925,000, Plymouth assessed Sander's total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock. The book values of Sander's individual assets and liabilities approximated their acquisition-date fair values except for the patent account, which was undervalued by $350,000. The...
Which of the following events is an intercompany transaction? A) a capital contribution B) a parent...
Which of the following events is an intercompany transaction? A) a capital contribution B) a parent corporation's sale of stock of a subsidiary corporation to a nonmember of the group C) dividend payment received from a subsidiary corporation to its parent corporation; the subsidiary corporation is not an includible corporation D) accrual of interest on a loan made by one group member to another group member; both group members use the accrual method of accounting 46. Which of the following...
On January 1, 2016,Plymouth Corporation acquired 80 percent of the outstanding votingstock of Sander...
On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander’s book value was $925,000, Plymouth assessed Sander’s total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock.The book values of Sander’s individual assets and liabilities approximated their acquisition-date fair values except for the patent account, which was undervalued by $350,000. The undervalued...
Problem 15-12 (AICPA Adapted) Nightmare Company provided the following information on December 31, 2019 regarding the...
Problem 15-12 (AICPA Adapted) Nightmare Company provided the following information on December 31, 2019 regarding the portfolio of equity securities: Aggregate cost 1,700,000Unrealized gains 40,000Unrealized losses 260,000Net realized gains during the current year 300,000The equity investments are measured at fair value through other comprehensive income. On January 1, 2019, the entity reported an unrealized loss of P15,000 to reduce investments to market on a portfolio basis. In the December 31, 2019 statement of changes in equity what amount of unrealized loss should be reported? a. 260,000 b. 220,000 c....
Basil, Inc, a “C” corporation makes an “S” election which is effective beginning January 1, 2018. Basil is a calendar year entity reporting as an accrual basis taxpayer. On January 1, 2018, Basil had the following property: Adjusted Tax Basis $200,000 SO Asset Cash Unrealized Receivables Real Property #1 Real Property #2 Total Fair Market Value $200,000 $115,000 $230,000 $520,000 $1,065,000 Built-In Gain $0 $0* $130,000 $170,000 $300,000 $100,000 $350,000 $650,000 *This is an accrual basis taxpayer so the revenue...
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351, The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Fair Market Built in Gain Shareholder's Basis $300,000 $525,000 or (Loss) $375,000 $75,000 $400,000 ($125,000) ($50,000) Value Property 1 Property 2 Net built-in loss Martin adopts a plan of liquidation later in the year and...
A U.S. individual investor held a real estate asset (a parcel of land) that that was purchased for $10,000,000, then held for 10 years. Now, the individual will sell it for $30,000,000. a) Compute the tax on the sale if the land is held directly by the investor b) Compute the tax on the sale to the investor if land is held in a corporation (consider both entity tax and tax on the distributions) c) Compute the tax on the...
Ben and Jerry decide to incorporate their ice cream business. Allie would also like to be a shareholder in the business. As such, Ben and Allie agree that immediately after the incorporation of the company and the issuance of stock, Ben will sell Allie half of his shares in the company. Ben contributes inventory (FMV $60,000, Basis $30,000), and accounts receivable (FMV $40,000, Basis $40,000) to the corporation for 50% of the stock, and Jerry contributes equipment (FMV $60,000, Basis...
QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the fair market value of the property. With respect to the sale, The shareholder has a basis of S175,000 in the property. The corporation has a tax loss of S50,000. The corporation does not recognize a tax loss but reduces its E & P account $50,000. The shareholder has a constructive dividend of $50,000. None of the above QUESTION 8 Assume taxable income is the...
On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander's book value was $925,000, Plymouth assessed Sander's total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock. The book values of Sander's individual assets and liabilities approximated their acquisition-date fair values except for the patent account, which was undervalued by $350,000. The...
Which of the following events is an intercompany transaction? A) a capital contribution B) a parent corporation's sale of stock of a subsidiary corporation to a nonmember of the group C) dividend payment received from a subsidiary corporation to its parent corporation; the subsidiary corporation is not an includible corporation D) accrual of interest on a loan made by one group member to another group member; both group members use the accrual method of accounting 46. Which of the following...
Most questions answered within 3 hours.
-
We sometimes have to choose between the highest NPV and IRR;
will we not always get...
asked 1 minute from now -
How do ethical issues affect decision making and what ethical
issues do you see in the...
asked 26 seconds ago -
The premium on a June 17 British pound call option with a strike
price of $1.2560...
asked 3 minutes ago -
Calculate the moment
of inertia (in kg·m2) of a skater given the following
information.
(a)
The...
asked 16 minutes ago -
A small body of mass m performs small oscillations sliding (no
rolling) along the bottom of...
asked 19 minutes ago -
The electric field in the region between two oppositely charged,
parallel, conducting plates has a magnitude...
asked 19 minutes ago -
A simple random sample was taken to test the claim that the
population mean is no...
asked 1 hour ago -
A set of length measurements are obtained with the values 165.6
± 0.3, 165.1± 0.4,166.4± 1.0,...
asked 1 hour ago -
1. Which of the following is true about unconscionable
contracts?
a. A term is substantially unconscionable...
asked 33 minutes ago -
A company is interested in estimating the costs of lunch
in their cafeteria. After surveying employees,...
asked 1 hour ago -
A 0.2m diameter ball with an initial velocity of 8m/s rolls up a
hill without slipping....
asked 48 minutes ago -
I want to redraft the solution, using other words , use your own
words don't copy...
asked 37 minutes ago