Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 10, Problem 2MCQ
To determine
Introduction:
To choose: An option that forms a partnership for tax purposes.
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Margie and her sister, Jan, each own half of the shares of a closely held business. Margie is concerned about what will happen to the business if Jan dies because Jean just married a man who Margie cannot stand. Jan is also concerned because, although Margie is currently single, she has children from a prior marriage who Jan feels are spendthrifts. Neither sister is ready to quit the business and retire. Neither sister is financially able to pay a gift tax or a capital gains tax.
Which one of the following is the most appropriate business transfer technique for Margie and Jan to use in this situation?
A)
A private annuity agreement between the two sisters
B)
A cross-purchase buy-sell agreement between the two sisters
C)
An installment sale contract between the two sisters
D)
A preferred stock recapitalization of the business
Levi-Sensei (Sensei) owns a piece of land with structures built on it. Sensei, with his wife and children, exchanged the properties for stocks in LeeOppa Incorporated, which is basically owned and managed by Sensei and his family only. Some few years after, Levi-Sensei died. Somehow through an "anonymous tip" submitted to it, BIR discovered about these properties and it went after Levi-Sensei's estate for evading payment of estate tax for the said properties. Sensei's daughter as the administratrix of his father's estate argued against the BIR that the said properties are not subject to estate tax because they are owned by LeeOppa Inc. which has a distinct personality from that of his deceased father. Besides, a corporation cannot die and thus cannot be subjected to estate tax. Was there tax evasion? Explain.
If Margo and Bruce purchase and operate an ice cream store, for tax purposes they have formed a partnership. True or False
Chapter 10 Solutions
Income Tax Fundamentals 2020
Ch. 10 - Which of the following may not be treated as a...Ch. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQCh. 10 - Abigail contributes land with an adjusted basis of...Ch. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - Prob. 10MCQ
Ch. 10 - Prob. 11MCQCh. 10 - Prob. 12MCQCh. 10 - Prob. 13MCQCh. 10 - Prob. 14MCQCh. 10 - Prob. 15MCQCh. 10 - Prob. 16MCQCh. 10 - Kendra is an attorney and owns 60 percent of a law...Ch. 10 - Prob. 18MCQCh. 10 - In 2019, Gloria, a single taxpayer, receives a...Ch. 10 - Prob. 20MCQCh. 10 - Prob. 21MCQCh. 10 - Prob. 22MCQCh. 10 - Prob. 23MCQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16P
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