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Study Resources (Accounting)

79) For the calendar year, Elk Corporation, an S corporation, has book income of $55,000, which includes $45,000 from operations and a $10,000 net long-term capital gain. During the year, $22,500 is distributed to Elk's three equal shareholders, all of whom are calendar-year taxpayers. What are Elk's total ordinary income.
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102) Ed receives a $20,000 cash distribution from the EV Partnership, which reduces his partnership interest from one-third to one-fourth. The EV Partnership is a general partnership that uses the cash method of accounting and has substantial liabilities. EV's inventory has appreciated substantially since it was purchased. What issues should.
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84) The HMS Partnership, a cash method of accounting entity, has the following balance sheet at December 31 of last year: Assets Basis Fair Market Value Cash Accounts receivable Total $51,000  -0- $51,000  $  51,000   210,000 $261,000    Equities Basis Fair Market Value Notes payable Henry, capital Mark, capital Sam, capital Total $30,000   7,000 7,000  7,000 $51,000  $ 30,000   77,000 77,000 77,000 $261,000    Sam, who has a one-third interest in profits, losses,.
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84) King Corporation, an electing S corporation, is 100% owned by Crystal. On January 1 of the current year, her adjusted basis in the King stock is $30,000. During the year, King reports an ordinary loss of $30,000, tax-exempt municipal bond income of $15,000, dividend income from domestic corporations of.
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21) Vincent makes the following property transfers in the current year: •$5,000 tuition for a grandson paid directly to the school •$1,000 medical expense for a child paid directly to a hospital •$500 donation to the Democratic party •$10,000 property settlement in conjunction with a divorce •$3,000 room and board at college for a grandson.
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92) Shamrock Corporation has two classes of common stock outstanding. The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation. Class A has one vote per share. Class B is nonvoting. Can Shamrock Corporation make an S.
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61) The LM Partnership terminates for tax purposes on July 15 when Latasha sells her 60% capital and profits interest to Zoe for $100,000. The partnership has no liabilities, and its assets at the time of termination are as follows: Assets Basis FMV Cash $ 20,000 $ 20,000 Receivables 10,000 12,000 Inventory 22,000 28,000 Building 80,000 85,000 Land 30,000 21,667 Total $162,000 $166,667 Marika, a 40% partner in the LM Partnership, has.
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91) What is included in the definition of unrealized receivables? 92) Do most distributions made by a partnership require a Sec. 751 calculation? 93) What conditions are required for a partner to recognize a loss upon receipt of a distribution from a partnership? 94) What is the character of the gain/loss on the.
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11) Gift tax returns are filed on a calendar-year basis. 12) The purchase of a $15,000 engagement ring generates a taxable gift necessitating the filing of a gift tax return. 13) Identify which of the following statements is true. A) The gift tax is a wealth transfer tax that applies to transfers during.
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41) Identify which of the following statements is true. A) When unrealized receivables are distributed in a liquidating distribution, the basis of the receivables will be increased. B) The bases of unrealized receivables and inventory distributed by a partnership in liquidation of a partnership interest are never increased above their bases in.
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94) Jeremey is a partner in the Jimimey partnership. Why does he need to know his basis in his partnership interest? 95) Explain the difference between partnership distributions and distributive shares. 96) Does the contribution of services to a partnership in exchange for an unrestricted partnership interest qualify for Sec. 721 nontaxable.
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109) Tracy has a 25% profit interest and a 20% loss interest in the Dupont Partnership. The Dupont Partnership reports the following income and loss items for the current year: Net long-term capital loss              $50,000 Net Sec. 1231 gain              45,000 Ordinary income              110,000 What is Tracy's distributive share? 110) Mike and Jennifer form an equal.
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41) Matt and Joel are equal partners in the MJ Partnership. For the current year ended December 31, the partnership has book income of $80,000, which includes the following deductions: (1) guaranteed payments (salaries) to partners: Matt, $35,000; and Joel, $25,000; and (2) charitable contributions, $6,000. The book income amount.
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98) The limited liability company (LLC) has become a popular business form because of its limited liability protection for its owner. The S corporation also provides limited liability protection for its owner. What advantages does an LLC provide that are not available with an S corporation? 99) What is an electing.
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73) Connie's Restaurant has been an S corporation since it was formed in 2006. Its results for the previous year are as follows: Sales              $200,000 Supplies              90,000 Salaries              50,000 Depreciation              5,000 Interest on business loan              1,000 Charitable contributions              3,000 Advertising              4,000 Utilities expense              6,000 Property taxes              1,000 Gain on the sale of investment land (long-term)              8,000 What are Connie's separately stated items?.
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106) Brown Company recently has been formed as a limited liability company (LLC). Brown Company is owned equally by three individuals—Gene, Susan, and Sandra—all of whom have substantial income from other sources. Brown is a manufacturing firm and expects to earn approximately $130,000 of ordinary income and $30,000 of long-term.
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101) Under what conditions will a special allocation of partnership depreciation be recognized? Assume the partnership has no nonrecourse liabilities. 102) Explain the three different limitation provisions that a partner must satisfy before a loss can be deducted. 103) What is the tax impact of guaranteed payments on the partner and the.
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11) S shareholders cannot increase the basis of their stock by a ratable share of the general S corporation liabilities. 12) The accumulated adjustments account is the cumulative total of ordinary income or loss and separately stated items (excluding tax-exempt income and expenses) for the most recent continuous period during which.
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87) Tony sells his one-fourth interest in the WindyCity Partnership to Bill for $100,000 cash when the partnership's assets are as follows: Assets Basis Fair Market Value Cash Unrealized receivables Inventory Land Total $80,000  -0- 80,000 80,000 $240,000    $ 80,000   72,000 184,000  64,000 $400,000    The partnership has no liabilities on the sale date. Tony's basis in his partnership interest on the date of the.
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