Melvin leases a building that he owes to his wholly-owned S corporation for $30,000 for the...
Melvin leases a building that he owes to his wholly-owned S corporation for $30,000 for the year. Melvin materially participates in the S corporation. What amount does Melvin have to report as net investment income for the year from the $30,000?
Homework Answers
It is not uncommon for the owners or shareholders in a racquet sports business to own the real estate or other assets personally, then rent them to their operation. In fact, it is often a smart move from both a tax and a business standpoint. Thus it can be understood that it is a transaction where one party is trying to curb its tax implications by taking a deduction of expenses on one part and earning an investment income. Hence in the above scenario, the full amount of $ 30,000 has to report as net investment income for the year.
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Melvin leases a building that he owes to his wholly-owned S corporation for $30,000 for the...
Melvin leases a building that he owes to his wholly-owned S corporation for $30,000 for the...
Melvin leases a building that he owes to his wholly-owned S corporation for $30,000 for the year. Melvin materially participates in the S corporation. What amount does Melvin have to report as net investment income for the year from the $30,000?
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for...
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On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $190,000 in cash. The equipment had originally cost $171,000 but had a book value of only $104,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $470,000 in net income in 2018 (not including any investment income) while Brannigan reported $154,100. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which...
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