Grape Corporation makes a nonliquidating distribution of appreciated property to its shareholders. The shareholders will report a gain. The shareholders will report dividend income equal to the basis of the property distributed. The corporation will report a gain. The corporation will report dividend expense equal to the fair value of the property distributed.

Grape Corporation makes a nonliquidating distribution of appreciated property to its shareholders. The shareholders will report a gain. The shareholders will report dividend income equal to the basis of the property distributed. The corporation will report a gain. The corporation will report dividend expense equal to the fair value of the property distributed.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 9DQ

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True or False: An S Corporation recognizes gain on the distribution of appreciated property to its shareholders which is then reported to its shareholders on Schedule K-1.
when a C-Corp distributes appreciated assets to its shareholders should recognize in in the corporate return a taxable profit on the appreciation?
What is meant by the term "pass through entity"? Select one: a. The entity is subject to double level income tax b. All of these are correct C. The products that are produced by the entity are passed down to lower level producers to add value d. The profits pass down to the owners to pay tax only at the ownership level
-If the donor is a shareholder, a revenue or gain is recognized at an amount equal to the value of the donated asset. - If the donor is a shareholder, the donation is recorded by crediting an appropriately titled additional paid in capital account. - PPE received as donation is recorded at its fair value less cost to sell at the time of donation. True or False
If a corporation sells certain capital equipment for more than its initial purchase price, the difference between the sale price and the purchase price is called a(n). O revenue gain O abnormal gain O capital gain O ordinary gain
1. When a shareholder receives a noncash distribution of property that is encumbered by a liability (the shareholder assumes the liability on the distribution), how does the shareholder determine the amount of the distribution?
1) Which of the following is not true? A) A not-for-profit entity operates for purposes other than to provide goods or services at a profit. B) A not-for-profit entity may be governmental or non-governmental. C) A not-for-profit entity may possess ownership interests like a corporation. D) A not-for-profit entity receives resources from resource providers who do not expect commensurate or proportionate pecuniary return.
Which of the following statements is correct? Earnings and profits are exactly the same as retained earnings. Distributions paid in excess of earnings and profits are taxable to the extent of stockholder basis. Distributions of appreciated property create a gain to the stockholder recipient. A distribution from earnings and profits is a dividend
COMPREHENSIVE PROBLEMS a connect Select problems are available in Connect®. 56. Several years ago, your client, Brooks Robertson, started an office cleaning service. His business was very successful, owing much to his legacy as the greatest defen- sive third baseman in major league history and his nickname, “The Human Vacuum Cleaner." Brooks operated his business as a sole proprietorship and used the cash method of accounting. Brooks was advised by his attorney that it is too risky to op- erate his business as a sole proprietorship and that he should incorporate to limit his liability. Brooks has come to you for advice on the tax implications of incorpora- tion. His balance sheet is presented below. Under the terms of the incorporation, Brooks would transfer the assets to the corporation in return for 100 percent of the company's common stock. The corporation would also assume the company's liabilities (payables and mortgage). Balance Sheet Adjusted Basis FMV Assets Accounts receivable…
Which of the following statements is correct? Multiple Choice Earnings and profits are exactly the same as retained earnings. Distributions of appreciated property create a gain to the stockholder recipient. A distribution from earnings and profits is a dividend. Distributions paid in excess of earnings and profits are taxable to the extent of stockholder basis.
The tax rules for determining business income are identical to those used for determining property income True or False? When property acquired for personal use is sold for more than its cost, there will be a taxable capital gain True or False?
What is the fiduciary duty (i.e., the primary goal) for mostU.S. corporations?

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		The shareholders will report a gain.
		The shareholders will report dividend income equal to the basis of the property distributed.
		The corporation will report a gain.
		The corporation will report dividend expense equal to the fair value of the property distributed.