Joe wants to sell stock to his brother Michael. The fair market value of the stock is $10,000 and as this stock is traded on a national exchange it is very easy to demonstrate that this price is a fair price. Joe's basis in the stock is $30,000. Will the Related party disallowance rules from section 267 still apply? What abuse are the IRS trying to prevent with the 267 rules?
Joe wants to sell stock to his brother Michael. The fair market value of the stock is $10,000 and as this stock is traded on a national exchange it is very easy to demonstrate that this price is a fair price. Joe's basis in the stock is $30,000. Will the Related party disallowance rules from section 267 still apply? What abuse are the IRS trying to prevent with the 267 rules?
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 50P
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Joe wants to sell stock to his brother Michael. The fair market value of the stock is $10,000 and as this stock is traded on a national exchange it is very easy to demonstrate that this price is a fair price. Joe's basis in the stock is $30,000. Will the Related party disallowance rules from section 267 still apply? What abuse are the IRS trying to prevent with the 267 rules?
b) Joe sells the stock two months after the distribution for $47,000. The alternative valuation date was elected. What does Joe recognize on his tax return with respect to this transaction?
Dan wishes to determine if Thomas meets the requirements of a dependent on his 2021 federal income tax return. What 6 tests must be satisfied in order for Dan to treat Thomas as a dependent under the qualifying child test?
Sara is the sole shareholder of Lee Corporation. During 2021, Lee Corporation distributes $300,000 in cash to Sara. Lee Corporation's E&P was $120,000 prior to this distribution. Sara's basis in Lee Corporation was $100,000 prior to this distribution. How will Sara treat this distribution on her 2021 tax return?
During the taxable year, Kay receives the following interest income amounts:
$4,000 on US Treasury Bonds
$500 on a late payment for the prior year's federal refund
How much of this interest income is includable on her tax return?
$0
$4,500
$4,000
$500
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