Kesha, a sole proprietor, is engaged in a cash basis service business. In the current year, she incorporates the business to form Kiwi Corporation. She transfers assets with a basis of $500,000 (fair market value of $1,200,000), a bank loan of $450,000 (which Kiwi assumes), and $80,000 in trade payables in return for all of Kiwi’s stock. What are the tax consequences of the incorporation of the business?

A taxpayer operates a business through a single-member LLC (disregarded for federal tax purposes). The taxpayer contributes $30,000 cash and equipment worth $50,000 (having an adjusted basis of $20,000) to the LLC to fund its operations. The LLC obtains a loan from a bank of $100,000. Because the LLC has no established credit, the taxpayer has to personally guarantee the loan. What is the taxpayer's amount at risk? O The taxpayer is at risk in the amount of $30,000. The taxpayer is at risk in the amount of $50,000. O The taxpayer is at risk in the amount of $80,000. O The taxpayer is at risk in the amount of $150,000.

T owns a sole proprietorship, and L is the sole shareholder in a C corporation. In the current year, both businesses make a net profit of $60,000.  Neither business distributes any funds to the owners in the year.  For the current year, T must report $60,000 of income on his individual return, but L is not required to report any income from the corporation on her individual return.   Question 1 options:   True   False

Mr. Young operates a photography studio as a sole proprietorship. His average annual income from the business is $100,000. Because Mr. Young does not need the entire cash flow for personal consumption, he is considering incorporating the business. He will work as a corporate employee for a $40,000 annual salary, and the corporation will accumulate its after-tax income to fund future business expansion. For purposes of this case, assume that Mr. Young's marginal income tax rate is 32 percent and ignore any employment tax consequences. a. Assuming Mr. Young's sole proprietorship does not qualify for the QBI deduction, by how much would Mr. Young's annual tax burden increase or decrease by incorporating? b. Assuming Mr. Young's sole proprietorship qualifies for the 20% QBI deduction, by how much would Mr. Young's annual tax burden increase or decrease by incorporating? Complete this question by entering your answers in the tabs below. Required A Required B Assuming Mr. Young's sole…

Jana is a shareholder in Jasmine Company, a partnership. Her share of the business's current ordinary business income was $250,000. She received no guaranteed payments and a $100,000 cash distribution from the business on December 1. Assuming that Alice's marginal tax rate is 37%, calculate her after-tax cash flow from the business this year. Ignore self-employment taxes and assume she is not eligible for the Section 199A deduction.  a. 92,500 b. 100,000 c. 7,500 d. 63,000

Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $1,075,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent. LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. a. How much cash after taxes would Sandra receive from her investment in the first year if LAB is organized as either an S corporation or a C corporation? b. What is the overall tax rate on LAB's income in the first year if LAB is organized as an S corporation or as…

Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent. LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. a. How much cash after taxes would Sandra receive from her investment in the first year if LAB is organized as either an S corporation or a C corporation? S corporation C corporation After tax cash flow Show Transcribed Text Mason (single) is a 50 percent shareholder…

Lena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $63,000 with an adjusted basis of $37,800 for $41,580. Later in the year, Lena sold another piece of equipment purchased two years ago with an adjusted basis of $18,900 for $12,285. What are the tax consequences of these tax transactions? Lena has an ordinary gain of $fill in the blank 2 from the sale of the first equipment. Lena has a section 1231 loss of $fill in the blank 4 from the sale of the second equipment.

Subject:- accounting

Peter Samuels owns and manages his single member LLC that provides a wide variety of financial services to his clients. He is married and will file a joint tax return with his spouse, Amy. His LLC reports $300,000 of net income, W-2 wages of $120,000, and assets with an unadjusted basis of $75,000. Their taxable income before the QBI deduction is $ 285,000 (this is also their modified taxable income). What is their QBI deduction for 2023?