Homework Answers
Calculation of Fargo Corporation gain= 310,000-260,000= $ 500,00
Fargo Corporation recognizes a gain of $ 500,00. The net decrease to Fargo's E & P is $ 310,000. The shareholder has dividend income of $ 310,000.
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Exercise 13-4 (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to...
Exercise 13-4 (Algorithmic) (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes...
Exercise 13-4 (Algorithmic) (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to Leilei, one of its shareholders, land worth $1,760,640; basis of the land to Fargo is $1,467,200. Determine the Federal income tax consequences of the distribution to Fargo. . The net to Fargo's E & P is $ Fargo Corporation recognizes a of $ The shareholder has dividend income of $
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Problem 22-39 (LO. 8, 9) At the beginning of the tax year, Lizzie holds a $10,000 stock basis as the sole shareholder of Spike, Inc., an S corporation. During the year, Spike reports the following: Net taxable income from sales $25,000 Net short-term capital loss (18,000) Cash distribution to Lizzie, 12/31 40,000 If an amount is zero, enter "0". 57,000 X. a. Determine Lizzie's stock basis at the end of the year. $ b. Of Lizzie's $40,000 cash distribution, $...
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Problem 13-21 (LO. 1, 3) Black Corporation and Tom each own 50% of Tan Corporation's common...
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Problem 13-9 (LO. 1, 3) At the start of the current year, Blue Corporation (a calendar...
Problem 13-9 (LO. 1, 3) At the start of the current year, Blue Corporation (a calendar year taxpayer) holds accumulated E & P of $100,000. Blue's current E & P is $60,000. At the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pam and Jon. Their basis in the stock is $11,000 for Pam and $26,000 for Jon. How is the distribution treated for tax purposes? If an amount is zero, enter "O". Pam has...
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Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of...
Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of the current year, Chang holds accumulated E & P of $33,000. The corporation incurs a deficit in current E&P of $46,000 that accrues ratably throughout the year. On June 30, Chang distributes $20,000 to its sole shareholder, Libby. If Libby's stock has a basis of $4,000, how is she taxed on the distribution? Taxable dividend income in the amount of $ Return of capital...
Longhorn Company reports current E&P of $130,000 in 20X3 and accumulated E&P at the beginning of...
Longhorn Company reports current E&P of $130,000 in 20X3 and accumulated E&P at the beginning of the year of negative $260,000. Longhorn distributed $390,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in Longhorn is $130,000. How is the distribution treated by the shareholder in 20X3? Multiple Choice $130,000 dividend. $130,000 dividend, $130,000 tax-free return of basis, and $130,000 capital gain. $130,000 dividend and $260,000 tax-free return of basis. $0 dividend, $130,000 tax-free...
Question 22 (2 points) Blue Corporation has a deficit in accumulated E & P of $300,000...
Question 22 (2 points) Blue Corporation has a deficit in accumulated E & P of $300,000 and has current E & P of $225,000. On July 1, Blue distributes $250,000 to its sole shareholder, Sam, who has a basis in his stock of $52,500. As a result of the distribution, Sam has: Dividend income of $225,000 and reduces his stock basis to $27,500. Dividend income of $52,500 and reduces his stock basis to zero. Dividend income of $225,000 and no...
Exercise 13-4 (Algorithmic) (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to Leilei, one of its shareholders, land worth $1,760,640; basis of the land to Fargo is $1,467,200. Determine the Federal income tax consequences of the distribution to Fargo. . The net to Fargo's E & P is $ Fargo Corporation recognizes a of $ The shareholder has dividend income of $
Problem 22-39 (LO. 8, 9) At the beginning of the tax year, Lizzie holds a $10,000 stock basis as the sole shareholder of Spike, Inc., an S corporation. During the year, Spike reports the following: Net taxable income from sales $25,000 Net short-term capital loss (18,000) Cash distribution to Lizzie, 12/31 40,000 If an amount is zero, enter "0". 57,000 X. a. Determine Lizzie's stock basis at the end of the year. $ b. Of Lizzie's $40,000 cash distribution, $...
Exercise 20-12 (LO. 1) Sunset Corporation, with E & P of $400,000, makes a cash distribution of $120,000 to a shareholder. The shareholder's basis in the Sunset stock involved is $50,000 a. Determine the tax consequences to the shareholder if the distribution is a nonqualified stock redemption The shareholder has dividend incomeof b. Determine the tax consequences to the shareholder if the distribution is a qualifying stock redemption The shareholder has a capital gain of c. Determine the tax consequences...
Problem 13-21 (LO. 1, 3) Black Corporation and Tom each own 50% of Tan Corporation's common stock. On January 1, Tan holds a deficit in accumulated E & P of $200,000. Its current E & P is $90,000. During the year, Tan makes cash distributions of $40,000 each to Black and Tom. Click here to view the Dividend Received Deduction Table. a. Complete the statements below that outline how the two shareholders are taxed on the distribution. Black Corporation has...
Problem 13-9 (LO. 1, 3) At the start of the current year, Blue Corporation (a calendar year taxpayer) holds accumulated E & P of $100,000. Blue's current E & P is $60,000. At the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pam and Jon. Their basis in the stock is $11,000 for Pam and $26,000 for Jon. How is the distribution treated for tax purposes? If an amount is zero, enter "O". Pam has...
Comprehensive Problem 7-65 (LO 7-1, LO 7-2, LO 7-3, LO 7-4, LO 7-5) Lance Corporation, an accrual method corporation, reported taxable income of $1,460,000 this year. Included in the computation of taxable income were the following items: • MACRS depreciation of $200,000. Straight-line depreciation would have been $120,000 • Anet capital loss carryover of $10.000 from last year . Anet operating loss carryover of $25.000 from last year • $65.000 capital gain from the distribution of land to the company's...
Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of the current year, Chang holds accumulated E & P of $33,000. The corporation incurs a deficit in current E&P of $46,000 that accrues ratably throughout the year. On June 30, Chang distributes $20,000 to its sole shareholder, Libby. If Libby's stock has a basis of $4,000, how is she taxed on the distribution? Taxable dividend income in the amount of $ Return of capital...
Question 22 (2 points) Blue Corporation has a deficit in accumulated E & P of $300,000 and has current E & P of $225,000. On July 1, Blue distributes $250,000 to its sole shareholder, Sam, who has a basis in his stock of $52,500. As a result of the distribution, Sam has: Dividend income of $225,000 and reduces his stock basis to $27,500. Dividend income of $52,500 and reduces his stock basis to zero. Dividend income of $225,000 and no...
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