Corporation Flashcards
Damages received for patent infringement
Included in book income and taxable income
Interest paid on loan is deductible or not
Not deductible cuz loan was used to produce tax exempt income
Sec 1244- small business Corp stock
Deduct ordinary loss on sale or worthlessness of stock
Shareholder must be original holder of stock &individual or partnership
Stock must be issued for money or property
Ordinary loss limited to 50000 ($100k mfj), excess is CL
Sec 1244 stock is received in exchange foe property whose FMV
Stock’s basis- FMV= Realized loss
Sale price-FMV= Ordinary loss under sec 1243
Capital loss= Realized loss- ordinary loss
Increase in basis through capital contribution
Amount o f ordinary loss was calculated by allocate to stock which is not Sec 1244 stock
Chariable contribution allow to deduct limited to
10% of Corp taxable income before charitable contribution, dividend received deduction, NOL carry backs but after NOL carry forwards
The remain charitable contribution carryover 5yr ( not carry back)
Dividends received deduction (DRD)
Own 70%DRD
Own >20% & 80%DRD ( DRD is limited to 80%of taxable income , except if full 80%of DRD increases NOL)
Own >80% -> 100%DRD
Research and develop exp
Currently expenses in year paid or occurred
Amortized over 60 months or more if life not determine
Capitalized and depreciated over determinable life
Loss is disallowed if sale or exchange of property between
Corp &>50%shareholders ( S Corp or partnership)
EXCEPT:
Loss from sale of property between corp in same controlled group is deferred until the property is sold outside of the group
No deduction is allowable until the year the amount is actually paid
Capital loss
Deductible ONLY to extend of capital gains
Unused CLs are carried back 3yr and forward 5yr to offset CG ( treat as STCL)
Bad debt losses and casualty losses are treated as
Ordinary deductions
NOL
Calculated same as taxable income
DRD is deductible in NOL
No deduction is allowed for NOL carry back or over and no deduction for DPAP
NOL carried back 2yrs & forward 20yr to offset taxable income
Sec 351, sale or exchange property for stock of stockholders and got control>80%stocks
No taxable event,
Basis of stock=basis of property
Sec 351, sale or exchange property for stock of stockholders and got control>80%stocks
No taxable event,
Basis of stock=basis of property
When CORP distributes property in exchange for its stock in partial or complete liquidation
For CORP:No gain or loss is recognized
Recog gain when liab assumed>basis of property received
Disallowed loss
EXCEPT: For SHAREHOLDERS
Recog Gain/loss when the value of property received >or
