I Required information[The following information applies to the questions displayed below.]Birch Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, James, who hasoperated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corporation in theamount of $7,050. Birch Corporation has paid the interest on the loan but has not yet paid any principal. (Assume theloan qualifies as debt for tax purposes.) For the year, Birch experienced a $34,300 business loss.What amount of the loss clears the tax-basis limitation, and what is James's basis in his Birch Corporation stock andBirch Corporation debt in each of the following alternative scenarios?Note: Leave no answer blank. Enter zero if applicable.b. At the beginning of the year, James's basis in his Birch Corporation stock was $9,650 and his basis in his Birch Corporation debtwas $7,050.Amount of loss clearing tax basis limitationBasis in stockBasis in debt

The amount of loss deducted in a year is equal to the stock basis in the company. The excess amount…

Answered: Birch Corporatio

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter3: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 35P

See similar textbooks

Similar questions

Birch Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, James, who has operated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corp. in the amount of $5,000. Birch Corp. has paid the interest on the loan but has not yet paid any principal. (Assume the loan qualifies as debt for tax purposes.) For the year, Birch experienced a $25,000 business loss.What amount of the loss clears the tax-basis limitation, and what is James’s basis in his Birch Corp. stock and Birch Corp. debt in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable.) c. At the beginning of the year, James's basis in his Birch Corp. stock was $0 and his basis in his Birch Corp. debt was $5,000. Amount of loss clearing tax basis limitation Basis in stock Basis in debt
Birch Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, James, who has operated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corp. in the amount of $5,000. Birch Corp. has paid the interest on the loan but has not yet paid any principal. (Assume the loan qualifies as debt for tax purposes.) For the year, Birch experienced a $25,000 business loss.What amount of the loss clears the tax-basis limitation, and what is James’s basis in his Birch Corp. stock and Birch Corp. debt in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable.) a. At the beginning of the year, James's basis in his Birch Corp. stock was $45,000 and his basis in his Birch Corp. debt was $5,000. Amount of loss clearing tax basis limitation Basis in stock Basis in debt
corporation, was formed three years ago by its sole shareholder, James, who has operated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corp. in the amount of $5,000. Birch Corp. has paid the interest on the loan but has not yet paid any principal. (Assume the loan qualifies as debt for tax purposes.) For the year, Birch experienced a $30,000 business loss. At the beginning of the year, James’s basis in his Birch Corp. stock was $8,000 and his basis in his Birch Corp. debt was $5,000. What amount is the amount of suspended loss at the end of the year?
4) Montrose Corporation is classified as a personal holding company. It is almost year-end. The company's taxable income and regular federal income tax liability are expected to be $100,000 and $21,000, respectively. The company has claimed a $20,000 dividends-received deduction in K calculating its taxable income. Earlier in the year, Montrose paid $25,000 of dividends to its shareholders. How much in additional dividends must be paid to shareholders in order to avoid the personal holding company tax? A) $95,000 B) $74,000 C) $99,000 D) $54,000
1. Compute the income tax liability for Green Corporation that is a regular C Corporation operating on a calendar year basis. In 2018, Green Corporation has a taxable income of $170,000 (a) $59,500 (b) $35,700 (c) $30,800 (d) $68,000 (e) None of the above 2. Wren Corporation (a minority shareholder in Lark Corporation) has made loans to Lark Corporation that become worthless in the current year. (k) Wren Corporation is not permitted a deduction for the loans. (l) The loans result in a nonbusiness bad debt deduction to Wren Corporation. (m) The loans provide Wren Corporation with a business bad debt deduction. (n) Wren claims a capital loss due to the uncollectible loans. (o) None of the above.
Required information [The following information applies to the questions displayed below.] Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $100,000 tax basis in his LLC interest that includes his $90,000 share of Sierra Vista's general debt obligations. By the end of the year, Farell's share of Sierra Vista's general debt obligations has increased to $100,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $120,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $5,000. Farell is single and has no other sources of business income or loss. (Leave no answer blank. Enter zero if applicable.) d. Assuming Farell is deemed to be an active participant…
Two years ago, Lodi, Incorporated's shareholders voted to dissolve the corporation. Pursuant to the dissolution, Lodi sold all its assets, paid off its outstanding debts, and distributed $789,000 remaining cash to its shareholders in complete liquidation of their equity. This year, the IRS determined that Lodi underpaid its corporate income tax for its last three years. The tax deficiency totaled $1.4 million. Required: a. To what extent can the IRS collect the deficiency from the former Lodi shareholders? b. MN Partnership was a 5 percent shareholder that received a $39,450 liquidating distribution from Lodi. How much tax can the IRS collect from MN partnership? X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B MN Partnership was a 5 percent shareholder that received a $39,450 liquidating distribution from Lodi. How much tax can the IRS collect from MN partnership? Note: Enter your answer in dollars…

Recommended textbooks for you

SWFT Corp Partner Estates Trusts

Accounting

ISBN:

9780357161548

Author:

Raabe

Publisher:

Cengage

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

SWFT Corp Partner Estates Trusts

Accounting

ISBN:

9780357161548

Author:

Raabe

Publisher:

Cengage

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

CONCEPTS IN FED.TAX., 2020-W/ACCESS

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L

SWFT Individual Income Taxes

Accounting

ISBN:

9780357391365

Author:

YOUNG

Publisher:

Cengage

SWFT Comprehensive Vol 2020

Accounting

ISBN:

9780357391723

Author:

Maloney

Publisher:

Cengage

SEE MORE TEXTBOOKS