Federal Tax Accounting Ii Week 1 Checkpoint Essay examples

1386 Words Mar 10th, 2013 6 Pages
1. | Question : | (TCO 2) Barry owns a 30% interest in a partnership that earned $300,000 this year. He also owns 30% of the stock in a C corporation that earned $300,000 during the year. The partnership did not make any distributions, and the corporation did not pay any dividends. How much income must Barry report from these businesses? | | | Student Answer: | | $0 income from the partnership and $0 income from the corporation | | | | $0 income from the partnership and $90,000 income from the corporation | | | | $90,000 income from the partnership and $0 income from the corporation | | | | $90,000 income from the partnership and $90,000 income from the corporation | | | | None of the above | | Instructor …show more content…
| | | | Points Received: | 2 of 2 | | Comments: | | | |

5. | Question : | (TCO 1) Albert transfers land (basis of $140,000 and fair market value of $320,000) to Gold Corporation for 80% of its stock and a note payable in the amount of $80,000. Gold assumes Albert’s mortgage on the land of $200,000. | | | Student Answer: | | Albert has a recognized gain on the transfer of $140,000. | | | | Albert has a recognized gain on the transfer of $80,000 | | | | Albert has a recognized gain on the transfer of $60,000. | | | | Gold Corporation has a basis in the land of $220,000. | | | | None of the above | | Instructor Explanation: | See Chapter 4. The mortgage on the land exceeds Albert’s basis in the land by $60,000 and is recognized as gain under § 357(c). Gold Corporation’s note payable of $80,000 is treated as boot. Thus, Albert’s recognized gain is $140,000. Gold Corporation’s basis in the land is $280,000 [$140,000 (Albert’s basis) + $140,000 (recognized gain)]. | | | | Points Received: | 2 of 2 | | Comments: | | | |

6. | Question : | (TCO 1) Kim owns 100% of the stock of Cardinal Corporation. In the current year, Kim transfers an installment obligation, tax basis of $30,000 and fair market value of $200,000, for additional stock in Cardinal worth $200,000. | | | Student Answer: | | Kim recognizes no

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