C vs S vs Partner

Question 1

Which type of entity is taxed at its formation?

Answer 1

None of them

Question 2

What type of entity does the 80% ownership of control rule apply to?

Answer 2

C and S Corps

Question 3

What is the shareholder’s tax basis during formation of a C and S Corps?

Answer 3

Adjusted Basis of Shareholder + Gain Recognized + Boot Paid - Boot Received - Liabilities Transferred to C Corp

Question 4

Nonrecourse liabilities in this type of entity increase tax basis BUT NOT at-risk basis

Answer 4

S Corp

Question 5

How is the gain or loss for shareholder determined if boot is received for C and S Corps?

Answer 5

Limited to lesser of: FMV Boot Received / Realized Gain

Question 6

Which type of entity accepts services provided without being considered taxable?

Answer 6

None of them, with C and S corps it breaks that shareholder out of the 80% group

Question 7

Which type of entity considers EXCESS liability as taxable boot?

Answer 7

Partnerships, excess liability is not assumed by other partners (Gain = Adj Basis of Contrib - Liab assumed)

Question 8

G/L is generally recognized on which entities during formation?

Answer 8

None of them

Question 9

What is the C-Corps/S-Corps basis in a shareholder during formation?

Answer 9

Adjusted (Shareholder) Basis + Gain Recognized by Shareholder

Question 10

What is the partner’s basis in a partnership during formation?

Answer 10

Contribution (property at adj basis) - liabilities transferred + partner’s share of liabilities

Question 11

What is the Partnership’s basis in a partner during formation?

Answer 11

Partner’s carryover basis + recognized gain by the incoming partner