Law 531 Week 4 Beta Corporation Case

As shareholders of VAFLA Corporation, an S corporation, the appellants claimed deductions to reflect the corporation’s operating losses. The commissioner disallowed deductions above the $10,000 bases from original investment. The appellants contend that the adjusted basis in their stock should be increased to reflect a $300,000 loan. The loan was obtained by VAFLA from bank and was guaranteed by the shareholder-guarantors. VAFLA made all of the loan payments, principals and interest to the bank and the appellants did not. Neither VAFLA nor the shareholder-guarantors treated the loan as constructive income taxable to the shareholder-guarantors.

Wise-Holland Corporation, an S corporation, is split evenly between Marianne and Dory, two women with limited business knowledge. Wise Holland’s previous accountant of ten years was fired after Marianne received a notice of deficiency on her 2012 tax return due to $20,000 of disallowed flow through loss from Lucky Partnership, a small partnership deemed to have no profit motive; interest and a 20% penalty for substantial underpayment was also required, all of which Marianne paid immediately. She also signed a waiver extending her 2012 individual return statute of limitations three more years.

An accrual is not made for a loss contingency because any of the conditions in paragraph 450-20-25-2 are not met., b.  An exposure to loss exists in excess of the amount accrued pursuant to the provisions of paragraph 450-20-30-1.” Therefore, they also need to disclose the range of the possible loss with some explanation.

Parent Corporation owns 85% of the common stock and 100% of the preferred stock of Subsidiary Corporation. The common stock and preferred stock have adjusted bases of $500,000 and $200,000, respectively, to Parent. Subsidiary adopts a plan of liquidation on July 3 of the current year, when its assets have a $1 million FMV. Liabilities on that date amount to $850,000. On November 9, Subsidiary pays off its creditors and distributes $150,000 to Parent with respect to its preferred stock. No cash remain to be aid to Parent with respect to the remaining $50,000 of its liquidation preference for the preferred stock, or with respect to any common stock. In each of Subsidiary’s tax years, less than %10 of its gross

Enclosed please find a copy of the 08/29/17 letter from Bruce Schonberg as well as a check made payable to the Monroe-Woodbury CSD c/o Benetech in the amount of $30,000.00. The check number is 1072 and it is dated 08/28/17.

3. Lem Lumberjack sells 100 shares (basis of $5,000) of Redwood Corporation common stock on March 8, 2013, for $4,000. On March 29, 2013, Lem purchases 50 shares of Redwood Corporation common stock for $2,500. Lem’s recognized loss on the sale is:

According to the pro and contra Section 203D and 203E of the Corporations Act as above, most judges and scholars agree that the procedure of removal directors as stipulated in the Corporations Act provides fairness treatment for the directors who may be removed. However, they still strongly argue whether the Section 203D is mandatory or not. Moreover, they questioned the existence of Section 203E since it eliminates flexibility for companies to make decision particularly in the emergency situation as explained above. Therefore, in order to provide broader perspectives about the relevancy of Section 203D and Section 203E, it is necessary to compare the procedure of removal directors in the Australian legislation with the

According to FASB ASC 450-20-25-2, in order to recognized a loss contingency, two of the following conditions have to be met; information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and the amount of loss can reasonably be estimated. Since eVade considers the risk of detection to not be probable, there is no need to make any provision as of December 31, 2011. However, a suitable disclosure has to be made

The exception to that incremental approach is that all items (for example, discontinued operations, other comprehensive income, and so forth) be considered in determining the amount of tax benefit that results from a loss from continuing operations and that shall be allocated to continuing operations. That modification of the incremental approach is to be consistent with the approach in Subtopic 740-10 to consider the tax consequences of taxable income expected in future years in assessing the realizability of deferred tax assets. Application of this modification makes it appropriate to consider a gain on discontinued operations in the current year for purposes of allocating a tax benefit to a current-year loss from continuing

Agricultural Investments, Inc., files a financing statement to provide notice of its security interest in the property of Harbor Farms. The initial effective term of a financing statement is a period of

If a capital loss is incurred the same cannot be claimed against the income, however the same can be used to reduce the capital gains made in the same financial year. Also if the losses are higher than the gains over the financial year then the losses can be carried

Disallowance of the Entire Carryforward. If the loss corporation does not continue its historic business during the two-year period following the ownership change, the entire carryforward is disallowed. Even after the carryforward is disallowed, the built in gain can be offset by the built in losses.

Corporate social responsibility (CSR) has long been a touchy issue for governments not just in Australia, but around the world as well. Companies in Australia are governed by the corporation’s act, which outlines the legal capacity and power of a company. The Corporations Act 2001 (Cth) s 57A1, defines a corporation as a separate legal entity, that includes any corporate body and unincorporated bodies that may sue, be sued or hold property in the name of an office holder appointed for that purpose. In context of corporate governance, the main issue is with the current legislation is in regards to director’s duties. Under the Corporations Act 2001 (Cth) s1802, directors have a civil obligation to act with due care and

A loss contingency which is possible but not probable, or the amount cannot be estimated, will not be recorded in the accounts. Rather, it will be disclosed in the notes to the financial

Based on this advice, Daren transfers the business assets (fair market value $1.5 million, adjusted basis $450,000) along with the associated debt ($750,000) to the newly formed corporation. As far as he is concerned, nothing has really changed in his relationship with the creditor bank: he still feels personally obligated to pay off the debt. In fact, before the debt is assigned to the newly formed corporation, the bank insists that Daren remain secondarily responsible for its payment (i.e., he guaranteed the debt). Even though the proprietorship’s liabilities transferred exceed the basis of the assets transferred, Daren regards the transaction as tax-free because: