Pine Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, Connor, who has always operated it as a C corporation. However, at the beginning of this year, Connor made a qualifying S election for Pine Corporation, effective January 1. Pine Corporation reported $70,000 of C corporation earnings and profits on the effective date of the S election. This year (its first S corporation year), Pine Corporation reported business income of $50,000. Connor's basis in his Pine Corporation stock at the beginning of the year was $15,000. What are the amount and character of income or gain Connor must recognize on the following alternative distributions, and what is his basis in his Pine Corporation stock at the end of the year? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) Problem 22-71 Part b (Static) b. Connor received a $60,000 distribution from Pine Corporation at the end of the year. Answer is complete but not entirely correct. Character Amount Dividend $ 10,000 N/A $ 75,000 Stock basis $ 15,000

Pine Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, Connor, who has always operated it as a C corporation. However, at the beginning of this year, Connor made a qualifying S election for Pine Corporation, effective January 1. Pine Corporation reported $70,000 of C corporation earnings and profits on the effective date of the S election. This year (its first S corporation year), Pine Corporation reported business income of $50,000. Connor's basis in his Pine Corporation stock at the beginning of the year was $15,000. What are the amount and character of income or gain Connor must recognize on the following alternative distributions, and what is his basis in his Pine Corporation stock at the end of the year? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) Problem 22-71 Part b (Static) b. Connor received a $60,000 distribution from Pine Corporation at the end of the year. Answer is complete but not entirely correct. Character Amount Dividend $ 10,000 N/A $ 75,000 Stock basis $ 15,000

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter6: Corporations: Redemptions And Liquidations

Section: Chapter Questions

Problem 58P

See similar textbooks

Similar questions

Pine Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, Connor, who has always operated it as a C corporation. However, at the beginning of this year, Connor made a qualifying S election for Pine Corporation, effective January 1. Pine Corporation reported $70,000 of C corporation earnings and profits on the effective date of the S election. This year (its first S corporation year), Pine Corporation reported business income of $50,000. Connor's basis in his Pine Corporation stock at the beginning of the year was $15,000. What are the amount and character of income or gain Connor must recognize on the following alternative distributions, and what is his basis in his Pine Corporation stock at the end of the year? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) d. Connor received a $150,000 distribution from Pine Corporation at the end of the year. Character Amount Capital gain Dividend Stock basis
Pine Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, Connor, who has always operated it as a C corporation. However, at the beginning of this year, Connor made a qualifying S election for Pine Corporation, effective January 1. Pine Corporation reported $70,000 of C corporation earnings and profits on the effective date of the S election. This year (its first S corporation year), Pine Corporation reported business income of $50,000. Connor's basis in his Pine Corporation stock at the beginning of the year was $15,000. What are the amount and character of income or gain Connor must recognize on the following alternative distributions, and what is his basis in his Pine Corporation stock at the end of the year? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) a. Connor received a $40,000 distribution from Pine Corporation at the end of the year. Character Amount N/A N/A Stock basis
Oak Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, Glover, and has always operated as a C corporation. However, at the beginning of this year, Glover made a qualifying S election for Oak Corp., effective January 1. Oak Corp. did not have any C corporation earnings and profits on that date. On June 1, Oak Corp. distributed $15,000 to Glover.What is the amount and character of gain Glover must recognize on the distribution, and what is his basis in his Oak Corp. stock in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable. If the answer is “0”, select "None".) a. At the time of the distribution, Glover’s basis in his Oak Corp. stock was $35,000. Amount Character Gain Stock basis
Presley Corp., a calendar-year corporation, was formed four years ago by its sole shareholder, Smith, who has always operated it as a C corporation. However, at the beginning of 2020, Smith made a qualifying S election for Presley Corp., effective January 1. Presley Corp. reported $140,000 of C corporation earnings and profits on the effective date of the S election. In 2020 (its first S corporation year), Presley Corp. reported business income of $100,000. Smith’s basis in his Presley Corp. stock at the beginning of 2020 was $30,000. What are the amount and character of gain Smith must recognize on the following distributions scenarios, and what is his basis in his Presley Corp. stock at the end of the year? Smith received a $80,000 distribution from Presley Corp. at the end of the year. Smith received a $260,000 distribution from Presley Corp. at the end of the year. Smith received a $300,000 distribution from Presley Corp. at the end of the year.
Oak Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, Glover, and has always operated as a C corporation. However, at the beginning of this year, Glover made a qualifying S election for Oak Corp., effective January 1. Oak Corp. did not have any C corporation earnings and profits on that date. On June 1, Oak Corp. distributed $15,000 to Glover.What is the amount and character of gain Glover must recognize on the distribution, and what is his basis in his Oak Corp. stock in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable. If the answer is “0”, select "None".) b. At the time of the distribution, Glover’s basis in his Oak Corp. stock was $8,000. Amount Character Gain Stock basis
ABC was formed as a calendar-year S corporation with Alan, Brenda, and Conner as equal shareholders. On May 1, 2020, ABC's S election was terminated after Conner sold his ABC shares (one-third of all shares) to his solely owned C corporation, Conner, Incorporated ABC reported business income for 2020 as follows: (Assume that there are 365 days in the year.) Period Income January 1 through April 30 (120 days) $ 217,000 May 1 through December 31 (245 days) 513,000 January 1 through December 31 $ 730,000 If ABC uses the specific identification method to allocate income, how much will it allocate to the S corporation short year and C corporation short year?
ABC was formed as a calendar-year S corporation with Alan, Brenda, and Conner as equal shareholders. On May 1, 2020, ABC's S election was terminated after Conner sold his ABC shares (one-third of all shares) to his solely owned C corporation, Conner, Incorporated ABC reported business income for 2020 as follows: (Assume that there are 365 days in the year.) Period Income January 1 through April 30 (120 days) $ 203,285 May 1 through December 31 (245 days) 533,285 January 1 through December 31 $ 736,570 If ABC uses the daily method of allocating income between the S corporation short tax year (January 1–April 30) and the C corporation short tax year (May 1–December 31), how much income will it report on its S corporation short tax year return and its C corporation short tax year return for 2020? Essay Toolbar navigation opens in a dialog
At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments account balance of $19,800 and accumulated E&P of $26,000 from a previous year as a C corporation. During the year, Nicolette (a 40 percent shareholder) received a $26,000. What is the amount and character of gain Nicolette must recognize from the distribution?
Money, Inc., a calendar year S corporation in Denton, Texas, has two unrelated shareholders, each owning 50% of the stock. Both shareholder record a $400,000 stock basis as of January 1. At the beginning of the tax year, Money reports balances in AAA of $300,000 and AEP of $600,000. During the year, Money generates operating income of $100,000. At the end of the year, Money distributes securities worth $1,000,000, with an adjusted basis of $800,000. The two shareholders consent to an AAA bypass election. What is the Federal income tax effects of these transactions for the shareholders? If an amount is zero, enter "0". Each shareholder receives a $fill in the blank 1 taxable distribution and a $fill in the blank 2 tax-free distribution from AAA. The AAA is $fill in the blank 3 at the end of the year, and each shareholder's basis is $fill in the blank 4 . AEP is reduced to $fill in the blank 5
On January 1, 2023, Kinney, Inc., an S corporation, reports $33,600 of accumulated E & P and a balance of $84,000 in AAA. Kinney has two shareholders, Erin and Frank, each of whom owns 500 shares of Kinney's stock. Kinney's nonseparately stated ordinary income for the year is $42,000. Kinney distributes $50,400 to each shareholder on July 1, and it distributes another $25,200 to each shareholder on December 21. How are the shareholders taxed on the distributions? Ignore the 20% QBI deduction. Do not round intermediate computations. If required, round your final answers to the nearest dollar. Erin and Frank each report $ dividend income for the July 1 distribution and $ distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free distribution from AAA. $ each for the December 21
Tiger Corp is a calendar year taxpayer that elected S status in its first year of operations. Tiger is owned by Harbert (600 shares with beginning AB = $12,000) and Leath (400 shares with beginning AB = $8000). The income statement for Tiger Corp is presented below. The corporation’s beginning AAA balance was -$30,000, OAA was $1,000, and Accumulated E&P from prior years as a C corp was $1,000. Sales Revenue $105,000 Municipal bond income $5,000 Cost of goods sold ($45,000) Salary expense to owners ($20,000) Employee wages ($5,000) Net STCG stock sale $2,000 Depreciation expense ($10,000) Charitable contributions ($1,000) Fines and Penalties ($2,000) Net Income $29,000 Tax depreciation is $15,000 of which $5,000 is Sec. 179 depreciation. Tiger Corp also made a $10,000 distribution. Provide a book-tax reconciliation above and distinguish between ordinary business income (loss) and separately stated items…
Tesla, Inc., is a calendar year, accrual basis corporation with Elon as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, Tesla has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E P is $50,000. On November 1, Tesla distributes an office building to Elon. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $90,000. Assume that the building has been depreciated using the ADS method for both income tax and E&P purposes. What are the tax consequences of the distribution to Tesla and to Elon? (In your answer, be sure to describe the effects on taxable income for both Tesla and Elon, the impact of the distribution on Tesla’s E&P, and Elon’s basis in the building.)