0Required information[The following information applies to the questions displayed below.)Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2019 (effectiveimmediately), in preparation for taking it public. Miley had previously elected S corporation status on January 1, 2018. Atthe time of the election, the corporation had an accumulated adjustments account balance of $165,000 and $462,500 ofaccumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $146,250. During2020, Miley's corporation reported $0 taxable income or loss. Also, during 2020 the corporation made distributions toMiley of $87,500 and $65,000.How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable.Enter N/A if not applicable.)a. Both distributions are in cash. The first was paid on June 15, 2020, and the second was paid on November 15, 2020.June 15November 15AmountTaxable$Taxable asN/ADividend

The amount of taxable depends upon the return from the corporation to the stockholder.Given in the…

Answered: a. Both distributions are in cash. The…

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a. Both distributions are in cash. The first was paid on June 15, 2020, and the second was paid on November 15, 2020.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter22: S Corporations

Section: Chapter Questions

Problem 53P

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Last year, Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2018 (effective immediately), in preparation for taking it public. At the time of the election, the corporation had an accumulated adjustments account balance of $189,000 and $482,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $164,250. During 2019, Miley’s corporation reported $0 taxable income or loss. Also, during 2019 the corporation made distributions to Miley of $99,500 and $73,000.How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) a. Both distributions are in cash. The first was paid on June 15, 2019, and the second was paid on November 15, 2019.
Last year, Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2018 (effective immediately), in preparation for taking it public. At the time of the election, the corporation had an accumulated adjustments account balance of $189,000 and $482,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $164,250. During 2019, Miley’s corporation reported $0 taxable income or loss. Also, during 2019 the corporation made distributions to Miley of $99,500 and $73,000.How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) c. The first distribution was a property (noncash) distribution (fair market value of distributed property equal to basis) and was paid on June 15, 2019; the second distribution was a cash distribution, and was paid on September 30, 2019.
On the effective date of the Bravo Corporation's (the Company) S Corporation election (January 1, 2020) the Company had a built in gain with respect to certain real estate held by the Corporation on that date of $100,000. The Company had zero basis in the real estate and it was appraised for $100,000. One year later (January 1, 2021) this built in gain was realized when the Company sold the real estate to an unrelated party $100,000 and there were no expenses associated with the sale. For the Company's calendar year 2021, the Company has, exclusive of this gain, taxable income of $2,000,000. Required: 1. Calculate the built-in gains tax (Federal) that will be paid by Bravo Corporation with its 2021 tax return as a result of the sale of this real estate. 2. Calculate the amount of gain that will be passed through to the Company's shareholders related to this sale.
Tempe Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation): Asset Cash Accounts receivable Inventory Land Totals Adjusted Basis $ 23,000 41,800 172,000 41,800 218,000 162,000 126,000 $ 398,800 $ 408,800 FMV $ 23,000 Tempe Corporation's business income for the year was $43,000 (this would have been its taxable income if it were a C corporation). During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $234,000. Built-in gains tax c. Assume the original facts, except the land was valued at $152,000 instead of $126,000. What is Tempe Corporation's built-in gains tax in 2022?
X-Rays was organized in January 2019 as a corporation in the jurisdiction of Puerto Rico. During 2020, the taxable (natural) year, it obtained the following results under the accumulation method (“accrual”) ended on December 31, 2020. Income Services $ 425,000 Dividends 28,000 Total $ 453,000 Expenses Administration 275,000 Food 12,000 Entertainment 10,000 Depreciation 10,000 Data: Dividend income comes from a domestic corporation in Puerto Rico where X-Rays owns 12% of the common stock. The corporation generated a net operating loss of $ 200,000 in 2019. The depreciation claimed under GAAP is equal to the depreciation granted for taxes. Determine the net taxable income (loss) of X-Rays as of December 31, 2020 in Puerto Rico.
Tempe Corporation is a calendar - year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation): Asset Adjusted Basis FMV Cash $31,500 $ 31,500 Accounts receivable 46, 900 46,900 Inventory 206, 000 269,000 Land 196,000 143,000 Totals $ 480, 400 $ 490, 400 Tempe Corporation's business income for the year was $ 51,500 (this would have been its taxable income if it were a C corporation). During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $ 302,000. a. What is its built - in gains tax in 2022 ? b. Assume the original facts, except that if Tempe Corporation were a C corporation, its taxable income would have been $ 8,800. What is its built - in gains tax in 2022?
During 2019, Quill Corporation, a calendar year C corporation, sold the following business assets on the dates listed below. Compute the amount and character of the gain or loss Quill Corporation must report from the disposition of each asset. Then determine the sum of each type of gain or loss and the net effect these gains and losses have on Quill Corporation’s 2019 taxable income. Assume that Quill has no Section 1231 losses in prior years. Please show your work and explain your calculations. Asset Acquired Sold Cost CostRecovery AdjustedBasis Sales Price Computer 1/13/18 5/16/2019 $208,000 $74,880 $133,120 $180,000 Office equipment 8/10/15 3/10/2019 $160,000 $117,160 $42,840 $40,000 Office building 7/23/12 2/12/2019 $320,000 $60,000 $260,000 $400,000 Land 7/23/12 2/12/2019 $80,000 $0 $80,000 $100,000
Tempe Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation): Asset Adjusted Basis FMV Cash $31,500 $ 31,500 Accounts receivable 46,900 46,900 Inventory 206,000 269,000 Land 196,000 143,000 Totals $ 480, 400 $ 490,400 Tempe Corporation's business income for the year was $51,500 (this would have been its taxable income if it were a C corporation). During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $ 302,000. a. What is its built-in gains tax in 2022? b. Assume the original facts, except that if Tempe Corporation were a C corporation, its taxable income would have been $8,800. What is its built-in gains tax in 2022?
Cedar Corporation has an S corporation election in effect. During the 2019 calendar tax year, the corporation had ordinary taxable income of $200,000, and on January 15, 2019, the corporation paid dividends to shareholders in the amount of $120,000. How much taxable income, in total, must the shareholders of the corporation report on their 2019 tax returns?
Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2023, it reported financial statement income after taxes of $1,572,350. Timpanogos provided the following information relating to its activities for the year: Life insurance proceeds as a result of CEO's death Revenue from sales (for both book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. Charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2023 Rental income payments received in 2022 but earned in 2023 Rental income payments received in 2023 but not earned by year-end Tax depreciation Book Depreciation Net capital loss Federal income tax expense for books Required: $ 234,000 2,340,000 24,400 210,600 351,000 a. Reconcile book income to taxable income for Timpanogos Incorporated. Be…
On January 1, 2020 EA Inc makes an S Corporation election. EA Inc has been operated as a C Corporation for several years and had E &P of $50,000 at January 1, 2020. Ellyn, the sole shareholder has a tax basis in her shares of EA Inc of $100,000 on January 1, 2020. During 2020, EA Inc has taxable income of $250,000. On December 31, 2020 EA Inc distributes $600,000 to Ellyn. What amount of dividend income and/ or capital gain will Ellyn recognize as a result of the cash distribution ? A. No dividend income or gain OB. Dividend income $50,000; capital gain $200,000 O C. Capital gain of $250,000 OD. $50,000 dividend income
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.