Max owns 60% of Big Bang Ltd. and owns 60% of Beta Inc. Hence, they are associated. Max owns 20% of Alpha Ltd. and 10% Tiny Bang Ltd., which is not an associated company. Each of the four corporations has $400,000 of active business income earned in Canada.
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Max owns 60% of Big Bang Ltd. and owns 60% of Beta Inc. Hence, they are associated. Max owns 20% of Alpha Ltd. and 10% Tiny Bang Ltd., which is not an associated company. Each of the four corporations has $400,000 of active business income earned in Canada.
What is the maximum small business deduction combined (i.e., total combined SBD deduction of all four companies) that the four corporations can claim on corporate income?
Group of answer choices
$1,300,000
$1,200,000
$1,600,000
$1,500,000
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- X Corp, a personal holding company, is owned by two individuals and has gross income as follows: $30,000 gross profits from sales, tax-exempt interest of $3,000, dividends of $5,000 from a 10% owned corporation, and taxable interest of $40,000. What is the amount of X Corp's personal holding company income?ABC, an S corporation, has net ordinary income from sales of its products of $5,000. During the year, ABC distributes $12,000 cash to XYZ, its sole shareholder. XYZ's in ABC stock, before the net ordinary income and cash distribution are considered, is $4,000 and ABC owes XYZ $2,000. ABC has been an S corporation since it was formed. XYZ has includable income from ABC of: A) $5,000 ordinary income and $6,000 capital gain B) $5,000 ordinary income and $3,000 capital gain C) $5,000 ordinary income and $1,000 capital gain D) $11,000 ordinary income and zero capital gain E) $8,000 ordinary income and zero capital gainG Ltd., a Canadian private corporation, owns 30% of the voting shares of X Ltd., a Canadian private corporation. In the current year X paid a non-eligible dividend of $40,000 and received a dividend refund from its NERDTOH account of $10,000. In addition, G received eligible dividends of $15,000 from various Canadian public corporations. Determine G’s refundable Part IV tax.
- Quantro Enterprises Ltd. and Baizley Holdings Ltd. (BHL) are both 100% owned by Harold Baizley. Both companies are Canadian- controlled private corporations. Quantro operates a wholesale business and pays rent to BHL for the use of a warehouse property. BHL owns only one asset-the warehouse building and related land that is rented by Quantro for $36,000 per year. The property was originally owned by Quantro but was sold to BHL several years ago as a means to reduce the risk exposure of this appreciating asset. On December 31, 2023 (the year-end of both companies), BHL sold the warehouse property to a third party for $370,000 (land $40,000, building $330,000). The property originally cost $320,000 (land $25,000, building $295,000). The undepreciated capital cost of the building at December 31, 2022, was $254,000. One month before selling the warehouse property, BHL purchased a newly constructed warehouse property for $480,000. (land $50,000, building $430,000.). Required: Determine…Castle and Dave formed an S corporation that is owned as follows: Castle 75% and Dave 25%. The corporation distributes an asset to each owner. The corporation has a basis of $45,000 for each asset. The fair market value of each of the assets is as follows: Castle $90,000 and Dave $50,000. a. What is the recognized gain for the corporation? b. How much of the gain does Castle report? c. How much of the gain does Dave report?Three owners join together to form ABC, INC., which properly elects to be taxed as a C corporation. Shareholder A contributes cash of $10,000 and a collection of jewelry display cases to be placed in the jewelry store operated by the C corporation. The jewelry display cases have a basis in A’s hands of $112,000, and a fair market value of $81,000. B contributes $10,000 in cash and jewelry inventory having a basis in B’s hands of $35,000 and a fair market value of $81,000. C contributes inventory having a basis in C’s hands of $120,000 and a fair market value of $96,000. Since each of the three of them have agreed to be equal shareholders, it was determined that it was fair to distributed $5,000 in cash to Shareholder C because her initial contribution had a fair market value of $5,000 more than the contribution of either A or B. What is the balance in B’s capital account immediately following his contribution?
- Three owners join together to form ABC, INC., which properly elects to be taxed as a C corporation. Shareholder A contributes cash of $10,000 and a collection of jewelry display cases to be placed in the jewelry store operated by the C corporation. The jewelry display cases have a basis in A’s hands of $112,000, and a fair market value of $81,000. B contributes $10,000 in cash and jewelry inventory having a basis in B’s hands of $35,000 and a fair market value of $81,000. C contributes inventory having a basis in C’s hands of $120,000 and a fair market value of $96,000. Since each of the three of them have agreed to be equal shareholders, it was determined that it was fair to distributed $5,000 in cash to Shareholder C because her initial contribution had a fair market value of $5,000 more than the contribution of either A or B. What is the balance in A’s capital account immediately following her contribution?Coconut, an individual, is the sole shareholder of Tropical Fruit Corporation, a U.S. based corporation. Coconut also owns the office building that serves as corporate headquarters for Tropical Fruit Corporation. Last year, Tropical Fruit Corporation paid $400,000 annual rent to Coconut for use of the building. Tropical Fruit Corporation 's marginal tax rate was 21% and Coconut's marginal tax rate on ordinary income was 37%. Also, Coconut's qualified dividend rate was 20%. The revenue agent who audited Tropical Fruit Corporation's return concluded that the fair rental value of the office building was $300,000. What is the net increased amount of Coconut and Tropical Fruit Corporation's combined income tax liability as a result of this audit conclusion? $21,000 $17,000 $3,000 $4,000Waterloo Wholesale Ltd. (WWL) is wholly owned by Barbara, a resident of Canada, who also owns allof the shares of Kitchener Closets Ltd. (KCL). Both corporations have a December 31 year-end. KKLhad both active business income and taxable income of $180,000 for its most recent taxation year.Barbara has decided to allocate as much of the small business limit as is needed to maximize the smallbusiness deduction for KKL. Most of WWL’s income is from an active business carried on in Canada. The following additionalthe information pertains to WWL:• Recapture of CCA on sale of operating assets $2,500• Net taxable capital gains 3,000• Charitable donations 1,500• Division B net income for tax purposes 180,000What is the appropriate small business deduction for WWL for 2020? (a) $31,140(b) $31,860(c) $31,950(d) $32,400 (e) 33,630
- Dominique and Terrell are joint owners of a bookstore. The business operates as an S corporation. Dominique owns 65%, and Terrell owns 35%. The business has the following results in the current vear Revenue $ 2,100,000 Business expenses 1,470,000 Charitable contributions 46,500 Short-term capital losses 13,840 Long-term capital gains 6,400 Required How do Dominique and Terrell report these items for tax purposes?Which of the following scenarios will qualify under Section 351 as a nontaxable corporate formation? For those that do not qualify, what requirements of Section 351 do they violate? Ginger, Mary Ann, and Mrs. Howell form GMH Corp. Ginger contributes tax memorabilia in exchange for 40% of GMH’s stock. Mary Ann contributes farmland in exchange for 30% of GMH, and Mrs. Howell contributes cash in exchange for the remaining 30%. Clyde founded ABC Corp. in 2009 and owns all of ABC’s 1,000 shares of outstanding stock. In 2013, ABC issues 300 shares of new stock to Bonnie in exchange for land that Bonnie owned. Will Bonnie’s contribution qualify under Section 351? With the same facts as in scenario b, now ABC issues 4,500 shares of new stock to Bonnie in exchange for Bonnie’s land. Bert and Ernie form Duckie Corp. in late 2013. Bert contributes $10,000 cash in exchange for 60% of Duckie’s stock; Ernie contributes services in exchange for the remaining 40% of Duckie.Gopher Corporation reported taxable income of $500,000 this year. Gopher paid a dividend of $100,000 to its sole shareholder, Sven Anderson. The dividend meets the requirements to be a qualified dividend, and Sven is subject to a tax rate of 15 percent on the dividend. What is the income tax imposed on the corporate income earned by Gopher and the income tax on the dividend distributed to Sven? Corporate tax Shareholder tax Total income tax