Locate the following cited items, and give a brief description of the topic or opinion in the item. a. § 6694(a). b. Reg.§ I.6694-I(b) c. Rev.Rul. 86-55, 1986-1 C.B. 373. d. PLR 8022027.
> Determine the subparts of§ 1563(a)(l ) (A).
> If a tax bill is vetoed by the President, the provisions cannot become law. Evaluate this statement.
> Federal tax legislation generally originates in the Senate Finance Committee. Comment on the validity of this statement.
> Explain the continuity of interest concept.
> List some tax provisions used to deter affluent taxpayers from obtaining preferential tax treatment.
> In general, what is the limitation on the deductibility of business interest expense? What happens to any business interest deduction disallowed under the limitation?
> Contrast the tax treatment between a community property state and a common law state.
> Why is there a grace period for contributions to a Keogh retirement plan?
> Aqua Corporation purchases nonresidential real property on May 8, 2015, for $1 million. Straight-line cost recovery is taken in the amount of $89,765 before the property is sold on November 30, 2018, for $1.5 million. a. Compute the amount of Aqua's reco
> Diego transfers real estate with an adjusted basis of $260,000 and fair market value of $350,000 to a newly formed corporation in exchange for 100% of the stock. The corporation assumes the liability on the transferred real estate in the amount of $300,0
> Fargo Corporation distributes property (basis of $260,000 and fair market value of $310,000) to a shareholder. Fargo Corporation has sufficient E & P for its distributions. What are the tax consequences of this distribution to Fargo?
> Henry, a freelance driver, finds passengers using various platforms such as Uber and Grubhub. He is single and has no other sources of income. In 2018, Henry's net income from driving is S61,000. Con1pute Henry's QBI Deduction and his tax liability.
> Jason and Paula are married. They file a joint return for 2018 on which they report taxable income before the QBI deduction of $200,000. Jason operates a sole proprietorship, and Paula is a partner in the PQRS Partnership. Both are a qualified trade or b
> Thad, a single taxpayer, has taxable income before the QBI deduction of $187,500. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2018, his proprietorship reports net income of $150,
> Maria and Javier are the equal partners in Maria, a partnership that is a qualifying trade or business. In the current year, Maria had $350,000 of ordinary income after reporting $500,000 in guaranteed payments to Maria and Javier for their services to M
> Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current year, ABC has net income of$325,000 after deducting Robert's Sl 00,000 salary. In addition to his compensation, ABC pays Rober
> Orion Corporation's board of directors decides to distribute property to its shareholders rather than pay a cash dividend. Why might Orion's board make this decision?
> Charlotte is a partner in, and sales manager for, CD Partners, a domestic business that is not a "specified services" business. During the tax year, she receives guaranteed payments of $250,000 from CD Partners for her services to the partnership as its
> Hummingbird Corporation, a closely held C corporation that is not a PSC, has $40,000 of net active income, $15,000 of portfolio income, and a $45,000 loss from a passive activity. Compute Hummingbird's taxable income for the year.
> Goose Corporation, a C corporation, incurs a net capital loss of $12,000 for 2018. I t also has ordinary income of $10,000 in 2018. Goose had net capital gains of $2,500 in 2014 and S5,000 in 2017. a. Determine the amount, if any, of the net capital loss
> Crane and Loon Corporations, two unrelated calendar year C corporations, have the following transactions for the current year. a. Compute the dividends received deduction for Crane Corporation. b. Compute the dividends received deduction for Loon Corpo
> Compute the charitable contribution deduction (ignoring the percentage limitation) for each of the following C corporations. a. Amber Corporation donated inventory of clothing (basis of $24,000, fair market value of $30,000) to a qualified charitable org
> Several years ago, Minjun, who is single, acquired§ 1244 stock in Blue Corporation at a cost of $60,000. He sells the Blue stock for $5,000 in the current year. Determine the amount and nature of Minjun's gain or loss recognized this year.
> In the current year, Nighthawk Corporation, a calendar year C corporation, has $3.7 million of adjusted taxable income, S 125,000 of business interest income, zero floor plan financing interest, and $1.4 million of business interest expense. a. Assume th
> Interpret each of the following citations. a. 54 T.C. 1514 (1970) b. 408 F.2d 1117 (CA-2, 1969) . c. 69-1 USTC ¶ 9319 (CA-2, 1969). d. 23 AFTR 2d 69-1090 (CA-2, 1969). e. 293 F.Supp. 1129 (D.Ct. Miss., 1967). f. 67-1 USTC ¶ 9253 (D.Ct. Miss., 1967). g. 1
> Benny sells property basis of $70,000) to Jet Corporation for $100,000. Based on the following conditions, how could the IRS challenge this transaction? a. Benny is the sole shareholder of Jet Corporation. b. Benny is the son of the sole shareholder of J
> Assume the same facts as in Problem 31, except that Susan's business reports net income of $150,000 (all of which is qualified business income). What is Susan's QBI deduction? Problem 31: Susan, a single taxpayer, owns and operates a bakery (as a sole p
> Assume the same facts as in Question 6, except that property is distributed. What factors must be considered when determining how the distribution is treated for tax purposes by Orange Corporation?
> Assume the same facts as in Problem 35, except that the business is a "specified services" business (e.g., a consulting firm) owned equally by Elliot and Conrad (an unrelated individual) in a two-member LLC. Assume that each member's share of net income,
> Susan, a single taxpayer, owns and operates a bakery (as a sole proprietorship). The business is not a "specified services" business. In 2018, the business pays $100,000 in W-2 wages, has $150,000 of qualified property, and has $350,000 in net income (al
> Troy Kennedy (1635 Maple Street, Syracuse, NY 13201) exchanges property (basis of $200,000 and fair market value of $850,000) for 75% of the stock of Red Corporation. The other 25% is owned by Sarah Mitchell, who acquired her stock several years ago. You
> Stella Watters is a CPA and operates her own accounting firm (Watters CPA LLC). As a single member LLC, Stella reports her accounting firm operations as a sole proprietor. Stella has QBI from her accounting firm of $540,000, she reports W-2 wages of $156
> Benton Company (BC), a calendar year entity, has one owner, who is in the 37% Federal income tax bracket (any net capital gains or dividends would be taxed at a 20% rate). BC's gross income is $395,000, and it5 ordinary trade or business deductions are $
> Assume the same facts as in Problem 31, except that Susan's business pays $60,000 of W-2 wages and reports net income of $200,000 (all of which is qualified business income). Susan also has a part-time job earning wages of $14,000 and receives $3,000 of
> Assume the same facts as in Problem 29, except that Tammy does not have a part-time job at BigCo. How, does this affect her qualified business income deduction?
> Tammy, a single taxpayer, has a part-time job at BigCo, a company in which she has no ownership interest. In addition, she owns and operates LittleCo, a sole proprietorship that is a qualified trade or business. Tammy is paid wages of $40,000 by BigCo an
> To which U.S. Court of Appeals would a person living in each of the following states appeal from the U.S. Tax Court' a. Texas. b. Colorado. c. Georgia. d. Montana. e. New York.
> In January of the current year, Don and Steve each invested $100,000 cash to form a corporation to conduct business as a retail golf equipment store. On January 5, they paid Bill, an attorney, to draft the corporate charter, file the necessary forms with
> In the current year, Jeanette, an individual in the 24% marginal tax bracket, recognized a $20,000 long-term capital gain. Also in the current year, Parrot Corporation, a calendar year C corporation, recognized a $20,000 Jong-term capital gain. Neither t
> Explain what is meant by the following citations. a. Rev.Proc. 2001-10, 2001-1 C.B. 272. b. Rev.Rul. 2011-14, 201 1-27 I.R.B. 31. c. Ltr.Rul. 201125030.
> In the current year, Pelican, Inc., incurs $50,000 of nondeductible fines and penalties. Its depreciation expense is $245,000 for financial statement purposes and $310,000 for tax purposes. How is this information reported on Schedule M-3?
> In the current year, Pelican, Inc., a calendar year C corporation, incurs $l0,000 of meals and entertainment expenses that it deducts in computing net income per the corporation's financial statements. All of the meals and entertainment expenditures are
> Using the legend provided, classify the overall objective of the particular tax provision. a. Like-kind exchange treatment. b. An increase in the individual tax rate. c. The S corporation election. d. Adoption expense credit. e. Percentage depletion. f
> Juniper, Inc., exchanges some real estate (basis of $800,000 and fair market value of $1 million) for other real estate owned by Birch, Inc., (basis of $1.2 million and fair market value of $900,000) and $100,000 in cash. The real estate involved is unim
> Elliot operates his clothing store as a single member LLC (which he reports as a sole proprietorship). In 2018, his proprietorship generates net income of $280,000, he pays W-2 wages of S 170,000, and he has qualified business property of $140,000. Ellio
> Grouse Corporation, a calendar year C corporation, had taxable income of $1.4 million, $1.2 million, and $700,000 for 2016, 2017, and 2018, respectively. Grouse has taxable income of $1.6 million for 2019. What are Grouse Corporation's minimum required e
> Jennifer is a CPA and a single taxpayer using the standard deduction. In 2018, her CPA practice generates net income of $162,000 and she has no other income or losses. Jennifer's taxable income before the QBI deduction is 150,000 ($162,000 - $12,000 stan
> Your client, Heron Corporation, has a deficit in accumulated E & P $300,000. Starting this year, it expects to generate annual E & P of $150,000 for the next four years and would like to distribute this amount to its shareholders. How should Heron Corpor
> Using the legend provided, classify each of the following tax sources. a. Sixteenth Amendment to the Constitution. b. Tax treaty between the United States and China. c. Temporary Regulations (issued 2015) . d. Revenue Procedure. e. An IRS publication.
> Identify the name of the publisher for the following tax services. a. United States Tax Reporter. b. Standard Federal Tax Reporter. c. Federal Tax Coordinator 2d. d. Mertens Law of Federal Income Taxation. e. Tax Management Portfolios. f. CCH's Tax Resea
> Using the legend provided, classify each of the following citations as to the court. a. 388 F.2d 420 (CA-7, 1968). b. 79 T.C. 7 (1982) c. 54 S.Ct. 8 (USSC, 1933). d. 3 B.T.A. 1042 (1926) e. T.C.Memo 1954-141. f. 597 F.2d 760 (Ct.Cl., 1979). g. Ltr.Rul.
> Florence is the Chief Financial Officer of Hazel Corporation, a publicly traded, calendar year C corporation. For the current year, her compensation package consists of: How much of Florence's compensation is deductible by Hazel Corporation?
> Using the legend provided, classify each of the following citations as to the location. A citation may have more than one answer. a. § 61(a)(13). b. Prop.Reg. § I.368-2(b)(l) c. Rev.Pree. 77-37, 1977-2 C.B. 568. d. Temp.Reg.&Aci
> In 2018, Gray Corporation, a calendar year C corporation, has a $75,000 charitable contribution carryover from a gift made in 2013. Gray is contemplating a gift of land to a qualified charity in either 2018 or 2019. Gray purchased the land as an investme
> Answer the following questions. a. What are letter rulings? b. What are technical advice memoranda (TAMs)?
> Benny sells property basis of $70,000) to Jet Corporation for $100,000. Based on the following conditions, how could the IRS challenge this transaction? a. Benny is the sole shareholder of Jet Corporation. b. Benny is the son of the sole shareholder of J
> Cornflower Corporation distributes equipment (adjusted basis of $70,000, fair market value of $55,000) to its shareholder, Roy. Assume that Cornflower has more than $100,000 of current E & P. What are the tax consequences to Cornflower Corporation and to
> Heron Company purchases commercial realty on November 13, 2000, for $650,000. Straight-line depreciation of $287,492 is claimed before the property is sold on February 23, 2018, for $850,000. What are the tax consequences of the sale of realty if Heron i
> During 2018, Gorilla Corporation, a calendar year C corporation, has net short- Critical Thinking term capital gains of $15,000, net Jong-term capital losses of $105,000, and taxable income from other sources of $460,000. Prior years' transactions includ
> The TV show TMZ spoke with Larry Edema from Michigan, who Communications was selected to be in the audience for Oprah's big giveaway: a free trip to Australia. Supposedly, Winfrey had a certified public accountant on hand to address the tax issue right a
> Apricot Corporation distributes property ($125,000 basis and $150,000 fair market value) to it5 sole shareholder, Ellie. The property is subject to a liability of $200,000, which Ellie assumes. Apricot has E & P of $325,000 prior to the distribution. a.
> In the current year, Tanager Corporation (a calendar year C corporation) had operating incon1e of $480,000 and operating expenses of $390,000. In addition, Tanager had a long-term capital gain of $55,000 and a short-term capital loss of $40,000. a. Compu
> Jonathan owns 100% of Lemon Company (a calendar year entity). In the current year, Lemon recognizes a long-term capital gain of $70,000 and no other income (or loss). Jonathan is in the 37% tax bracket (and 20% tax bracket for any net capital gains or di
> Sean, a shareholder of Crimson Corporation, is single and in the 35% tax bracket. This year, he receives a $7,000 qualified dividend fron1 Crim5on. Sean has investment interest expense of $16,000 and new investment income of $9,000 (not including the qua
> Juan, an attorney, is the sole shareholder of Carmine Corporation, a C corporation and professional association. The corporation paid Juan a salary of $336,000 during its fiscal year ending September 30, 2018. a. How much salary must Carmine pay Juan dur
> Kim is an employee of Azure Corporation. In the current year, she receives a cash salary of $30,000 and also is given IO shares of Azure stock for services she renders to the corporation. The shares in Azure Corporation are worth $1,000 each. For tax pur
> Assume in Problem 32 that the property Bob transfers to Robin Corporation is worth $15,000 (basis of $3,000) and that his services in organizing the corporation are worth $165,000. What are the tax consequences to Ann, Bob, and Robin Corporation?
> Torsten owns 100% of Taupe Corporation (a calendar year corporation), which had net operating income of $420,000 and long-term capital gain of $30,000 in the current year. Torsten has significant income from other sources and is in the 37% marginal tax b
> At the beginning of the year, Teal Corporation had accumulated E & P of $210,000. On March 30, Teal sold an asset at a loss of $200,000. For the calendar year, Teal incurred a deficit in current E & P of $305,000, which includes the $200,000 loss on the
> Dan Knight and Patricia Chen, ~vho are good friends, form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for 50% of the stock in Crane. Patricia transfers machinery (worth $150,000, adjusted basis of $30,000) and provides servic
> Tern Corporation, a calendar year C corporation, is solely owned by Jessica Ramirez. Tern's only business since its incorporation in 2015 has been land surveying services. In Tern's state of incorporation, land surveying can be performed only by a licens
> Yellow Corporation, a calendar year taxpayer, made estimated tax payments of $40,000 for 2018 ($10,000 per quarter). Yellow filed its Federal income tax return for 2018 reflecting a tax liability of $15,000. Due to its overpayments, Yellow received a $25
> Ben and Molly are married and will file jointly. Ben earns $300,000 from his single member LLC (a Jaw firm). He reports his business as a sole proprietorship. Wages paid by the Jaw firm amount to $40,000; the Jaw firm has no significant property. Molly i
> Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2018, it5 second year of operation. Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by $ l 0,000 during 2018. In addition, S
> Scott and Laura are married and will file a joint tax return. Scott has a sole proprietorship (not a "specified services" business) that reports net income of $300,000. The proprietorship pays W-2 Wages of $40,000 and holds property with an unadjusted ba
> Donald owns a wide variety of commercial rental properties held in a single member LLC. Donald's LLC reports rental income of S 1,500,000. The LLC pays no W-2 wages; rather, it pays a management fee to an S corporation Donald controls. The management com
> White Corporation lends $425,000 to Blue Corporation with no provision for interest. White Corporation and Blue Corporation are owned by the same shareholders. How might the IRS restructure this transaction with adverse tax consequences?
> Peter Samuels owns and manages his single member LLC that provides a wide variety of financial services to his clients. He is married and will file a joint tax return with his spouse, Amy. His LLC reports $300,000 of net income, W-2 wages of S 120,000, a
> Shelly has $200,000 of QBI from her local jewelry store (a sole proprietorship). Shelly's proprietorship paid $30,000 in W-2 wages and has $20,000 of qualified property. Shelly's spouse earned $74,000 of wages as an employee, they earned $20,000 of inter
> Purple Company has $200,000 in net income for 2018 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,000 standard deduction for 2018. Purple Company is Kirsten's only source of income.
> Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, Otter Enterprises has $320,000 of gross income and $210,000 of operating expenses. In addition, Otter has a long-term capital gain of SI 5,000 and m
> Determine the disposition of the following decisions at the appellate level. a. Gary A. Sargent, 93 T.C. 572 (1989) b. Charles Johnson, 78 T.C. 882 (1982). c. Smith & Wiggins Gin, Inc., 37 T.C. 861 (1962). d. George W Wiebusch, 59 T.C. 777 (1973) e. Zane
> How does the installment n1ethod overcome the harsh treatn1ent of the annual accounting treatn1ent concept?
> Omar, an individual in the 37% tax bracket, wants to shift some of his income to a new corporation in order to take advantage of the 21% corporate tax rate. Omar plans to avoid any tax on dividends by retaining all earnings within the corporation. Will O
> In a like-kind exchange, recognized gain is postponed and not avoided. Explain.
> Mustard Corporation (a C corporation) owns 15% of the stock of Burgundy Corporation (a C corporation), which pays an annual dividend to its shareholders. Mustard is considering the purchase of additional shares of Burgundy stock. Would this stock purchas
> Hai, a single taxpayer, invested $75,000 in the stock of Penguin Corporation, which recently declared bankruptcy. Although distressed over the loss of her investment, Hai is relieved that she can claim a $75,000 ordinary (rather than capital) loss deduct
> In stn1cruring the capitalization of a corporation, what are the advantages and disadvantages of utilizing debt rather than equity?
> Discuss the impact each of the following has on generating or adding to a deficit in E & P. a. The distribution of a property dividend, where the basis of the property exceeds its fair market value. b. An operating loss of the corporation.
> Which of the following C corporations will be allowed to use the cash method of accounting for 2018? Explain your answers. a. Jade Corporation, which had gross receipts of $25.3 million in 2015, $24.1 million in 2016, and $25 million in 2017. b. Lime Cor
> Ann is the sole shareholder of Salmon Corporation, a newly formed C corporation. Fran is the sole shareholder of Scarlet Corporation, a newly formed C corporation that is a personal service corporation. Both Ann and Fran plan to have their corporations e
> Have nonrevenue factors had any in1pact upon the development of our taxation system? If so, how?
> In detern1ining Blue Corporation's current E & P for 2018, how should taxable income be adjusted as a result of the following transactions? a. A capital loss carryover from 2017, fully used in 2018. b. Nondeductible meal expenses in 2018. c. Interest on
> What are the general rules surrounding the QBI Deduction? How is it computed?
> A corporation acquires property as a contribution to capital from a shareholder. Describe the rules pertaining to the property's basis.
> Who can claim the qualified business income (QBI) deduction?
> Explain how the following tax provisions encourage small businesses. a. The nature of a shareholder's loss on a stock investment. b. The S corporation election.
> What is meant by revenue neutrality'
> Marmot Corporation pays a dividend of $100,000 in the current year. Otter Corporation, a calendar year C corporation, owns 15% of Marmot's stock. Gerald, an individual taxpayer in the 24% marginal bracket, also owns 15% of Marmot's stock. Compare and con
> Gold Corporation, a calendar year C corporation, was formed in 2012 and has been profitable until the current year. In 2018, Gold incurs a net operating loss. Identify the issues that Gold Corporation should consider regarding its NOL.
