Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 10, Problem 32AP
For each of the following situations, indicate whether the corporation is eligible to elect S corporation status.
- a. Carman Corporation has two shareholders, Carla and Manuel. Carla is a United States citizen permanently residing in Mexico. Manuel is a Mexican citizen permanently residing in the United States.
- b. Same given info as in part (a), except that Manuel resides in Mexico.
- c. Devin Corporation has 110 individual shareholders, of which 12 are members of the same family.
- d. Evans Corporation has two shareholders, Mark and Joan, who are both United States citizens and residents. Mark owns all of the 100 shares of Evans common stock outstanding, and Joan owns all of the 100 shares of Evans
preferred stock outstanding. - e. Grant Corporation has two shareholders: William, a United States citizen and resident, and ABC
Partnership . ABC is a domestic partnership with six individual partners, all of whom are United States citizens and residents.
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Complete this question by entering your answers in the tabs below.
Required…
Which of the following will disqualify a corporation from electing Subchapter S status?
All shareholders are U.S. citizens except for 10% who are resident aliens.
The election form is signed by 80% of the shareholders.
The corporation has one class of stock.
The corporation has 80 shareholder
Tia Kline, a resident of Canada, is the sole shareholder of KI Inc. She plans to transfer four assets, which she owns, to Kl Inc. in
exchange for cash and preferred shares of KI Inc. She wishes to receive the maximum amount in cash that she can receive and still
defer the recognition of income for tax purposes on the transfer of the assets. Tia and KI Inc. will jointly make a Section 85 election for
each of the assets. The following chart outlines the details of the assets.
Inventory
Automobile
Patent
Customer list
FMV
ACB
UCC
$ 260,000 $
22,500
52,000 $
30,000
50,000
100,000
60,000
16,500
30,000
Required:
$432,500 $ 142,000 $ 46,500
For each of the four assets individually, state the amount that should be elected as proceeds under Section 85 of the Income Tax Act,
state the amount of cash consideration, and state the value of the preferred shares Ms. Kline should accept as consideration for the
assets.
FMV
ACB
UCC
Elected
amount
Cash
Preferred
Shares
Inventory
$
260,000 $
52,000
0…
Chapter 10 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
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Ch. 10 - Prob. 11QPDCh. 10 - Prob. 12QPDCh. 10 - Prob. 13QPDCh. 10 - Prob. 14QPDCh. 10 - Prob. 2APCh. 10 - Prob. 3APCh. 10 - Prob. 4APCh. 10 - Colin, a self-employed consultant, uses a room of...Ch. 10 - Prob. 6APCh. 10 - Prob. 7APCh. 10 - For 2019, Ms. Deming earned wages totaling...Ch. 10 - Calculate the total Social Security and Medicare...Ch. 10 - Prob. 11APCh. 10 - Prob. 12APCh. 10 - Jane is a self-employed attorney. This year, her...Ch. 10 - Prob. 14APCh. 10 - Prob. 15APCh. 10 - Amit is a limited partner in Reynolds Partnership....Ch. 10 - Kari is a limited partner in Lizard Partnership....Ch. 10 - Rochelle is a limited partner in Megawatt...Ch. 10 - Prob. 19APCh. 10 - Prob. 20APCh. 10 - Prob. 21APCh. 10 - Prob. 23APCh. 10 - AV Inc. is a member of an LLC. This year, AV...Ch. 10 - Prob. 25APCh. 10 - Prob. 26APCh. 10 - Prob. 27APCh. 10 - Prob. 28APCh. 10 - Prob. 29APCh. 10 - Refer to the facts in the preceding problem. BLS...Ch. 10 - Refer to the facts in part (c) of the preceding...Ch. 10 - For each of the following situations, indicate...Ch. 10 - a. If Video Associates is a partnership, and her...Ch. 10 - Prob. 34APCh. 10 - Prob. 1IRPCh. 10 - Javier is a full-time employee of B Inc. and...Ch. 10 - Mr. and Mrs. Chou file a joint income tax return....Ch. 10 - Travis is a professional writer who maintains his...Ch. 10 - Prob. 5IRPCh. 10 - Prob. 6IRPCh. 10 - Prob. 7IRPCh. 10 - Prob. 8IRPCh. 10 - Prob. 9IRPCh. 10 - Paulas Schedule K-1 from an LLC reported a 12,000...Ch. 10 - Marcus, a cash basis individual, is a general...Ch. 10 - Prob. 12IRPCh. 10 - Mr. and Mrs. West are the only shareholders in WW,...Ch. 10 - Prob. 14IRPCh. 10 - Prob. 15IRPCh. 10 - Prob. 16IRPCh. 10 - Prob. 17IRPCh. 10 - Prob. 1RPCh. 10 - Prob. 2RPCh. 10 - Herold had been a calendar year S corporation...Ch. 10 - Prob. 4RPCh. 10 - Mr. and Mrs. Janus operate a restaurant business...Ch. 10 - Prob. 2TPCCh. 10 - Prob. 3TPCCh. 10 - Marla recently inherited 50,000 and is considering...
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