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

During the current year the Newport Partnership is liquidated.Which of the following statements is correct concerning the liquidation of the partnership? I.If only cash is distributed by the partnership,the partners must recognize a gain but cannot recognize a loss. II.Gain is recognized only if the amount of cash and property distributed exceeds the partner's basis in the partnership. ​

Passive activity loss limitation rules do not apply to I.Publicly-held corporations. II.Personal service corporations. ​

Tippecanoe Corporation has the following income and expense items during the current year: ​ What is Tippecanoe 's dividends-received deduction?

During the current year,Mars Corporation receives dividend income of $20,000 from an 85%-owned domestic corporation.What is Mars' maximum allowable dividend-received deduction for the current year?

Corporations that sell depreciable real property are not subject to depreciation recapture rules

On a nonliquidating distribution of cash from a partnership,the partner will recognize gain if I.the cash distributed exceeds his/her basis in the partnership. II.the cash distributed exceeds his/her share of the net income of the partnership for the year. ​

A partner's basis is increased by the amount of deductible loss that flows through from the partnership.

A corporation's calculation of the maximum allowable deduction for charitable contributions includes using what percentage limitation of the appropriate taxable income amount?

Craig Corporation realizes $150,000 from sales during the current year.Craig also receives $20,000 of dividends from a 3% owned corporation.Operating expenses totals $155,000.Craig's dividends-received deduction is

During the current year,Swallowtail Corporation receives dividend income of $40,000 from a 15%-owned domestic corporation.What is Swallowtail's maximum allowable dividend-received deduction for the current year?

Pluto Corporation contributes $30,000 to qualified charitable organizations during 2017.Pluto's 2017 taxable income before any charitable contribution deduction is $280,000.Included in that amount is a $10,000 dividend-received deduction amount.Pluto also has a carryover charitable contribution of $2,000 from 2016.What is the maximum amount Pluto Corporation can deduct as a charitable contribution for 2017?

Chance Corporation has a $20,000 deficit in earnings and profits as of January 1,2017.During 2017,the corporation has current earnings and profits of $40,000 and makes a $70,000 cash distribution to its shareholders.What part of the distribution is taxable as dividend income to Chance's shareholders?

Luisa,Lois,and Lucy operate a boutique named Mariabelle's Dreams.Based on advice from Luisa's sister,an accountant,the three form a partnership.Luisa owns 40% and Lois and Lucy each own 30%.For the year,Mariabelle's Dreams reports the following: ​ What amount will Mariabelle's Dreams report to Luisa as her ordinary income from the partnership?

Louise is the marketing manager and a 30% owner of Walker Company.At the beginning of the current year,Louise's basis in Walker Company is $22,000.During the year,Walker borrows $50,000 to finance the construction of a new building.For the year,Walker suffers a $100,000 net operating loss and distributes $60,000 in cash to its owners.Determine Louise's deductible loss if Walker is organized as a.A partnership b.A corporation c.An S corporation

Anna owns 20% of Cross Co. ,an electing S corporation.Anna's adjusted basis in the stock is $32,000 at the beginning of the current year.During the current year,Cross pays a $50,000 cash dividend to its shareholders.Cross Co.reports a $200,000 operating loss for the current year.Which of the following statements is/are correct? I.If Anna is a material participant in Chris Co. ,she can deduct a $40,000 loss. II.Anna's maximum loss deduction is limited to $22,000. ​

Cornell and Joe are equal partners in Jones Company.For the current year,Jones reports the following items of income and expense: ​ In addition to his Jones earnings,Joe has other net taxable income of $45,000.Included in the $45,000 is $10,000 in income from a passive activity.Joe's income is:

Hammond Inc. ,sells a building that it purchased in 2001 for $1,500,000.The building cost $1,000,000 and had an adjusted basis of $700,000 at the date of the sale. I.Hammond has an $800,000 Section 1231 gain on the sale. II.Hammond must report $300,000 of Unrecaptured Section 1250 gain. ​

Dorothy operates a pet store as a sole proprietorship.During the year,she sells the business to Florian for $200,000.The assets sold and the allocation of the purchase price are as follows: Dorothy acquired the building in 1997 for $100,000 of which $20,000 was allocated to the land.She paid $40,000 for the equipment in the same year.What are the tax consequences of the liquidation for Dorothy?

Hawkins Corporation has $50,000 of taxable income before special deductions.Taxable income includes an operating loss carryforward of $10,000 and $60,000 of dividend income received from other corporations in which Hawkins owns less than a 20% interest.What is Hawkins' taxable income?

During the current year,Campbell Corporation receives dividend income of $40,000 from a 5%-owned domestic corporation.What is Campbell's maximum allowable dividend-received deduction for the current year?