Exam 14: Choice of Business Entity -- Operations and Distributions

Carlota owns 4% of Express Corporation and has a basis of $5,000 in her stock.During the year,Express distributes a $300,000 dividend.As a result of the dividend,Carlota has

Roy receives a nonliquidating distribution from Ageless Corporation.Which of the following statements concerning nonliquidating distributions from a corporation are correct? I.A nonliquidating cash distribution is taxable if the distribution comes from the corporation's current or accumulated earnings and profits. II.The amount of the dividend on a nonliquidating distribution of property is the basis of the property distributed. ​

Bronco Corporation realizes $270,000 from sales during the current year.Bronco also receives $20,000 of dividends from a 2% owned corporation.Operating expenses totals $275,000.Bronco's taxable income is

Byron is a partner in the Dowdy Group.At the close of the current year,Byron's basis in the partnership is $34,000.At that time,the partnership distributes cash of $8,000 and property with a basis of $9,000 and a fair market value of $13,000 to each partner.What is Byron's basis in the partnership after the distribution?

The Gilpin Partnership has an operating loss of $400,000 for the current year.Hawkins is a general partner and owns a 40% interest in the partnership.At the beginning of the year,Hawkins' adjusted basis in the partnership interest is $30,000.During the year the partnership borrows $120,000 with a recourse note.How much of the partnership loss can Hawkins deduct on his current-year income tax return?

The Polaris S Corporation has operating income of $50,000.Andrew is the sole shareholder of the corporation that has had the S election in effect since its inception.At the beginning of the current year,Andrew's basis in his S corporation stock is $2,000.During the year Andrew receives cash distributions totaling $55,000.How much income must Andrew recognize for the current tax year?

Roger owns 65% of Silver Trucking,a partnership.During the current year,Roger sells a truck with an adjusted basis of $30,000 to Silver for $20,000. I.Silver's basis in the truck is $30,000. II.Roger can deduct the $10,000 loss on the sale of the truck. ​

Mario receives a liquidating distribution of land with a fair market value of $19,000 and a basis of $15,000 from Blithe Corporation,an S corporation.Mario's basis in the stock is $21,000.What must Mario and Blithe report as income (loss)from the property distribution? ​ Mario Blithe

Salem Inc.is an electing S corporation with current year operating income of $300,000.The $300,000 does not include the amount it realized on the sale of a building for $330,000.The building was purchased in 2004 for $250,000 and $20,000 in straight-line depreciation had been taken on the building up to the date of its sale.How should Salem Inc.report these results to its shareholders?

Although nontaxable income and nondeductible expenditures are not included in the computation of taxable income,they do affect the shareholder's basis in their S corporation stock.

Withdrawals of cash by a partner are taxable.

Match the term with the entity to which it applies. -Dividends-received deduction

Match the term with the entity to which it applies. -Losses flow-through limited to basis plus the amount of any direct loans

Olivia owns 40% of Addison Company,a partnership.Olivia's adjusted basis in the partnership is $22,000 at the beginning of the year.During the current year,Olivia receives a $10,000 cash distribution from the partnership.Addison Company reports a $100,000 operating loss for the current year.If Olivia is a material participant in Addison Company,how much of the partnership loss can she deduct on her income tax return?

Serenity receives a nonliquidating distribution from the Hickock Corporation,an S corporation.Which of the following statements concerning nonliquidating distributions from an S corporation are correct? I.A nonliquidating cash distribution is taxable if the amount distributed exceeds Serenity's basis in Hickock. II.The amount of the dividend on a nonliquidating distribution of property is the fair market value of the property distributed. ​

When a corporation pays a dividend,it is nontaxable if it is in excess of earnings and profits.

Sandi and Jodie are partners who operate Household Humanities.Sandi owns 60% and Jodie owns 40% of Household.During the current year,Household has the following results: ​ a.How must Household report these results to Sandi and Jodie? Show calculations. b.Sandi is a head of household with two dependent children (ages 17 and 18).She has $19,000 of other income,which includes a $6,000 short-term capital gain.Sandi has $16,750 of other allowable itemized deductions.Calculate Sandi's taxable income and income tax liability for 2017.

Lane Inc. ,an electing S corporation,realizes $150,000 from sales during the current year.Lane also receives $20,000 of dividends from a 3% owned corporation.Operating expenses total $155,000.Lane's operating income is

At the beginning of the current year,Harrison's adjusted basis in FLM Partnership is $50,000.During the year,Harrison receives a cash distribution of $25,000.How much income must Harrison recognize because of the cash received?

Laurie and Lodi are dentists who have incorporated their practice.Laurie owns 60% of the stock of DENT-LL's Corporation and Lodi owns 40%.During the current year,the dentistry corporation has operating income of $125,000,interest income of $22,000 from investments,and losses from investments in limited partnerships of $24,000.The corporation pays $14,000 in dividends.What is DENT-LL's taxable income for the current year?