Question: Who can claim the qualified business income (

> 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.

> 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.

> 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.

> 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.

> In general, what is the limitation on the deductibility of executive compensation that applies to publicly traded corporations?

> Define each of the following terms, and explain how each is used in determining the QBI deduction: a. Modified taxable income. b. Qualified business income. c. Qualified trade or business. d. "Specified services" business.

> Why did the TCJA of 2017 include a deduction for qualified business income?

> Why is personal saving desirable for the U.S. economy?

> H0w does the tax law encourage technological progress?

> The board of directors of Orange Corporation, a calendar year taxpayer, is holding its year-end meeting on December 27, 2018. One topic on the board's agenda is the approval of a $25,000 gift to a qualified charitable organization. Orange has a $20,000 c

> Under the annual accounting period concept, what time period is normally selected for final settlement of most tax liabilities?

> Can recognized gain exceed the realized gain' Explain.

> Give some examples of the wherewithal to pay concept.

> Assume the same facts as in Question 13. Heather is also wonned that once the partnership incorporates, the business will be subject to the Federal corporate income tax. What suggestions do you have?

> Heather and her partners operate a profitable partnership. Because the business is expanding, the partners would like to transfer it to a newly created corporation. Heather is concerned, however, over the possible tax consequences that would result from

> Why do you think the QBI deduction is limited to earnings from a business conducted in the United States and doesn't also include business income from a foreign business activity?

> Which of the following taxpayers may claim a deduction for qualified business income? a. A driver for Uber or Lyft. b. A veterinarian operating as an S corporation. In addition to veterinary services, revenues are also derived from the sale of pet food a

> How does the tax law encourage the development of natural resources?

> Savings leads to capital formation and thus makes funds available to finance home construction and industrial expansion. What is a major tax law incentive to encourage savings?

> What purpose is served by allowing a deduction for contributions to qualified charitable organizations'

> On December 27, 2018, the directors of Partridge Corporation, an accrual basis calendar year taxpayer, authorized a cash contribution of $10,000 to the American Cancer Association. The payment is made on April 12, 2019. Can Partridge deduct the charitabl

> The concept of equity is relative. Explain.

> A provision of the Code allows a taxpayer a deduction for Federal income tax purposes for some state and local income taxes paid. Does this provision eliminate the effect of multiple taxation of the same income? Why or why not? In this connection, consid

> Other than raising revenue, what considerations explain various provisions in our tax laws?

> Discuss task-based simulations that are part of the CPA examination.

> What are the key components of effective tax planning?

> Determine whether the following items are primary sources or secondary sources for the purpose of substantial authority. a. Revenue Procedure. b. Article written by a judge in Journal of Taxation. c. U.S. District Court decision. d. The "Bluebook." e. A

> Where does most tax research begin when someone is searching for an answer about a tax dispute?

> Aleshia needs to learn quickly about§ 351 transfers to a controlled corporation. How should Aleshia approach her research?

> What is the justification for the favorable treatment of corporate reorganizations?

> Will Thomas calls you with respect to a tax issue. He has found a tax case in the U.S. District Court of Soud1 Carolina that is in favor of his position. The IRS lost and did not appeal the case. Over the phone, you explain to Will the significance of th

> Jane and Ben are married and usually file a joint return. They live in a separate property state (rather than a con1munity property state). Jane is a partner in a law firm and typically generates income of $150,000. Ben is a grade school teacher with wag

> Kenny Merinoff and his son, John, own all outstanding stock of Flan1ingo Corporation. Both John and Kenny are officers in the corporation and, together with their uncle, Ira, comprise me entire board of directors. Flamingo uses the cash method of account

> For an in-control process with subgroup data n = 3, X ̅ = 100, and R ̅= 3.386, compute the Cp, CPL, CPU, and Cpk if a. LSL = 98 and USL = 102. b. LSL = 93 and USL = 107.5.

> For an in-control process with subgroup data n = 3, X ̅= 100, and R ̅= 3.386, compute the percentage of outcomes within specifications if a. LSL = 98 and USL = 102. b. LSL = 93 and USL = 107.5. c. LSL = 93.8 and there is no USL. d. USL = 110 and there is

> For an in-control process with subgroup data n = 4, X ̅ = 20, and R ̅ = 2, find the estimate of a. the population mean of all X values. b. the population standard deviation of all X values.

> The file Cities contains a sample of 25 cities in the United States. Variables included are city average annual salary ($), unemployment rate (%), median home value ($thousands), number of violent crimes per 100,000 residents, average commuter travel tim

> A molding machine that contains different cavities is used in producing plastic parts. The product characteristics of interest are the product length (in.) and weight (g). The mold cavities were filled with raw material powder and then vibrated during th

> The J. Conklin article, “It’s a Marathon, Not a Sprint,” Quality Progress, June 2009, pp. 46–49, discussed a metal deposition process in which a piece of metal is placed in an acid bath and an alloy is layered on top of it. The key quality characteristic

> Financial analysts engage in business valuation to determine a company’s value. A standard approach uses the multiple of earnings method: You multiply a company’s profits by a certain value (average or median) to arrive at a final value. More recently, r

> You are a real estate broker who wants to compare property values in Glen Cove, Freeport, and Roslyn. Use the data in GCFreeRoslyn . a. Develop the most appropriate multiple regression model to predict fair market value. b. What conclusions can you reach

> You are a real estate broker who wants to compare property values in Glen Cove and Roslyn (which are located approximately 8 miles apart). Use the data in GCRoslyn . Make sure to include the dummy variable for location (Glen Cove or Roslyn) in the regres

> Data similar to Problem 15.32 are available for homes located in Freeport (located approximately 20 miles from Roslyn) and are stored in Freeport . a. Perform an analysis similar to that of Problem 15.32. b. Compare the results in (a) with those of Probl

> Data similar to those in Problem 15.32 are available for homes located in Roslyn (approximately 8 miles from Glen Cove) and are stored in Roslyn . a. Perform an analysis similar to that of Problem 15.32. b. Compare the results in (a) with those of Proble

> Nassau County is located approximately 25 miles east of New York City. The file GlenCove contains a sample of 30 singlefamily homes located in Glen Cove. Variables included are the fair market value, land area of the property (acres), interior size of th

> Hemlock Farms is a community located in the Pocono Mountains area of eastern Pennsylvania. The file HemlockFarms contains information on homes that were recently for sale. The variables included were List Price—Asking price of the house Hot Tub—Whether t

> An investor has a certain amount of money available to invest now. Three alternative investments are available. The estimated profits ($) of each investment under each economic condition are indicated in the following payoff table: Based on his own pas

> In the production of printed circuit boards, errors in the alignment of electrical connections are a source of scrap. The file RegistrationError contains the registration error, the temperature, the pressure, and the cost of the material (low versus high

> A specialist in baseball analytics has expanded his analysis, presented in Problem 14.77 on page 580, of which variables are important in predicting a team’s wins in a given baseball season. He has collected data in Baseball related to wins, ERA, saves,

> How do you choose among models according to the Cp statistic in best subsets regression?

> What is the difference between stepwise regression and best subsets regression?