CPA Regulation R4 Corp Tax

Question 1

When a person is investing in a corp as a shareholder with more the 80% of the shares, and they are exchanging a building with FMV $180K and Adj basis of $100 plus cash of $50K. What is the tax income

Answer 1

It would be the $50K boot or if they assum a liability.

Question 2

The following were contribution to the investment of a corp as shareholders:
Angie a building FMV $150K, Adj basis $100K, Mike $250K cash, and Peter $125 legal service; with shareholder % of 40%, 40% and 20% percent, respectively. what is the g/l for the corp and individuals

Answer 2

The total shareholders investment be over 80% and it is.
Corp G/L = 0 no gain or loss shareholder transaction = capital.
Angie: 0 shares g/l

Mike: 0 share g/l
Peter: $125 gain and tax due to legal service are tax. Pete transition to shareholder was he trans services to earned income which was taxed and her return the earned to Corp for interested in Corp with basis of $125K

Question 3

The following were contribution to the investment of a corp as shareholders:
Angie a building FMV $150K, Adj basis $100K, Mike $250K cash, and Peter $125 legal service; with shareholder % of 40%, 40% and 20% percent, respectively. what are the basis of the stock to the individual and corp.

Answer 3

Angie : $120K no. liabilities were assumed by corp for Angie’s build. non taxed
Mike: $250K
Peter: $125K
For Corp:
Angie’s building: $150K
Mike’s cash: $250K
Not Pete’s services $125K. The corp either expenses or amortized as start up.

Question 4

When completed a exchange in corp for shares and you exchange building @ $50K basis with a $10K mortgage liab assumed by corp. what is your basis.

Answer 4

It is the $50. the $10K mortgage is handle differently for tax purposes.

Question 5

of the SCorp, C Corp, LLC , Sole Proprietors, Personal Service Corp, which one has more flexibility with accounting periods

Answer 5

C Corp same as indv tax payers.

Question 6

During a shareholder exchange for stock interest in corp there was a land exchange of $40K adj basis, FMv $70K, and $20K boot cash received. What is the tax basis for the corp

Answer 6

There is more than 80% interest by shareholders. It would be the greater of adj basis + gain recognize or debt assumed by corp. Corp assumed no debt. 40 adj basis + 20K boot = 60K

Question 7

An S Corp with a Fiscal y-e of june 30 that has more than $30M revenue under both cash and accrual methods of accounting. Change to C Corp. using cash basis. What is the rule.

Answer 7

While cash basis is the general rule for most taxpayers,accrual method must be followed for the following reasons:
1. purchase & sales of inventory is more than $25M of avg gross receipts over a 3 yr period.
2. tax shelters
3 Certain farming Corp with rev. of $25M over 3 yr avg prior period.
4. C Corp, trust, unrelated trade or business income, partnerships with C Copr as partners with rev. over $25M avg 3 yr period.

Question 8

If corp formed with John giving services @ $25K for 30 shares or 30%, Bill giving land with adj basis of $10K and FMV of $100K for 60%, and Ed giving $10K cash. 10% what is the income or tax basis share recognized

Answer 8

When forming corp it must have 80% interest that is non services related. In the form only 70% is non service.
So Bill’s land exchange is FMV 100- adj basis 10 = 90K recognized plus services from John $25K.
Ed’’s cash is not recognized
Total shareholders recogniezed 90 + 25.

Question 9

When a shareholder in forming a S Corp contributes equipment with basis of $6K and and FMV of $15K, it also has liab on equipment of $12K. how much must corp recognized.

Answer 9

Normally, this is a non transaction. Since the corp is assuming the liab $12K it will offset to adj basis of $6K = $6K recognized.

Question 10

If John has a corp @ 100% ownership and has basis of $50K. Two yrs later Peter joins @10% with equipment adj basis of $250K and FMV of $500K. What is new basis

Answer 10

Since Peter join at 10% the 80% test basis was not met, he joins at FMV $500. The new basis is $550K

Question 11

What are the deduction for dividend Received deductions ( DRD)

Answer 11

When you own less than 20% of the other entity you get a 50% deduction on the lessor of dividend received or NOI.

When you own 20% to 80% of the other entity you get a 65% deduction on the lesser of dividend or NOI received

When you own greater than 80% of an entity you get 100% of lessor of dividend received or NOI

NOL does not apply

Question 12

Example of DRD: Angie owns 15% of Mike Memories.
Mike paid Angie $50,000 in dividend and Mike had taxable income before DRD, NOL deduction, or capital loss carryback of $45,000. what is Angie’s deduction

Answer 12

Angie owns 15% so the gets a 50% deduction in dividend.
Total dividend before DRD is $50,000/2 = 25.000
Tax income before DRD $45,000/2 = $22,500. Lessor of two. take deduction on NOI @ $22,500

Question 13

From a tax perspective are prepaid rent, prepaid royalties and prepaid interest received are on a cash basis or accrual basis

Answer 13

They are all on a cash basis for tax purposes.

Question 14

For start up cost how can you deduct on corp taxes

Answer 14

The $5000 and amortized less 5000 /180 month ( 15 years) = total per month in the current month.
For example, In March y1 Corp had $40K in start up cost
$40000- 5000 can take = 35000/180= 194.44 per month 10 months( March 1, yr) 1944. total start up deduction is 6,944

Question 15

For corp tax purpose total salaries are $360,000 and of that $210,000 is compensation for officer

Answer 15

For Corp separate the officer compensation @$210K for other employees $150K

Question 16

How can be deducted on Corp tax for charitable contribution

Answer 16

Limited to 10% of gross income

Question 17

How can be deducted on Corp tax for charitable contribution

Answer 17

Adjusted gross tax income $800K- all other deducton without charitable 436.944= 363.086 taxable income without charitable included *10% = 36,308.

Question 18

What entities that are not eligible for DRD

Answer 18

The personal ones:
personal service corporation
personal holding companies
personal taxed ( Scorp)

Question 19

A C corp must complete a M1 reconciliation on 1120 corp tax return :
Accrual basis; purchase assets of a Sole prop including good will $300K; Current federal tax exp. $110.1 and $7.5 goodwill impairment to arrive at the $239.2 book income

Answer 19

book income` or net income :      239.2
\+fed income tax book:                   110.1
\+excess capital losses                     0
\+income subject to tax not record
on books this year (intstallment
or rent received in advance)            0
\+Expenses recorded on books but 
not on tax returns :                          0
Book Depr
meals in excess of 50% allowance
Allw for doubful accounts (increase)
Warranty accrual
Goodwill impairment(  Goodwill/15year = tax amortization- book impairment = Excess tax amortization goodwill)
Pension accrued
penalties
Add all lines
Less
-Income recorded on books but 
not on tax returns :     
tax exempt interest
life insurance proceeds
-Deductions: on books and not on returns:
Tax depreciation
Section 179
Direct Write off
Actual warranty cost
amortization of organizational cost
Good per return
Add all less
then exp - less ( taxable income before DRD and NOL carryforward)

Question 20

Which of the following fees are expense/amortized for 263 organization startup cost:
Commission paid to corp underwriter
Legal fees for drafting corp charter
professional fees for issue stock
printing cost of corp stocl

Answer 20

Just legal fees.

The rest are selling expense.

Question 21

If DRD recipient has a loss on its I/S, how is DRD handle

Answer 21

will deduct drd = loss - drd = taxable income than split by % ownership. ( most of time 20% or less at 50%)

Question 22

If a company’s taxable income before credits or DRD is $70K and included $10K dividend unrelated taxable domestic corp. What is taxable income before any credits at a 21% tax rate

Answer 22

The 10K dividend from unrelated domestic is 10% interest and 50% DRD 10,000 * 50% = 5000
70000 - 5000 = 65000*21% tax rate = 13,650

Question 23

Income before special deduction is

Answer 23

Sales- COS= NI + dividends. Special deduction is DRD

Question 24

With accrual questions an increase in a/r 35K year 2 from year 1 25K means

Answer 24

There was a $10K increase in revenue

Question 25

A company with taxable income before charitable contribution deduction is $410K =, including a $20K DRD. Co contributable is $43K. what is charitable contribution

Answer 25

10% of taxable income before charitable. must add back DRD to computation
$410+20K DRD= $430*10% = 43K charitable

Question 26

In order to have DRD deduction how long must company on stock

Answer 26

specified minimum holding period is 45 days.

Question 27

When computing the maximum charity contrib @ 10% should you include DRD or any other credits

Answer 27

No : DRD, carryforward loss.

Question 28

If a sole proprietorship wants to convert to either a C corp or S corp, how would it handle charitable contribution, carryforward loss

Answer 28

C corp : deduct charitable contribution from NI, separately state carryforward loss.
S Corp. separately state bothe charitable and carryforward loss.

Question 29

Which of the following are 263 expenses and which are not: Research and Dev, advertising, QC, Selling

Answer 29

263: QC

Regular expenses: Research and dev, advertising, selling.

Question 30

When calculating Ni for charitable deduction do you add back current charitable and DRD

Answer 30

Yes

Question 31

What is the maximum deduction for business gifts

Answer 31

$25

Question 32

What is LIFO and FIFO

Answer 32

Lifo low ending inventory, high COGS, low NI
FIFO high ending inventory, low COGC, high NI
NO IRS permission to you LIFO
Nothing that say LIFO use for tax purposes

Question 33

NI per book $210
Federal income taxes per book $114
tax depreciation in excess of book depr 66
Charitable contr per book 46
what is taxable income

Answer 33

NI per book        210
add back :
federal tax           114  because need to what is before tax income
charitable              46 because need to determine % of charitable
subtract excess depr  -66  not book dep
=tax before contrib %     304
less (304*10%)                   30.4
tax income                      273.6

Question 34

What does Sch M explain

Answer 34

Explains the difference between GAAP and Tax differences

Question 35

What are permanent

Answer 35

Permanent differences are items of income or expenses that are recognized for financial accounting purposes (book) but never for tax purposes or for tax purposes but never for book purposes. Meal all deductible book and 50% for tax. Entertainment not tax deductible.
Penalties and lobby/political expense all deductible book. No deductible tax. Muni Bonds : added to income on book not on tax. Key premium paid for officer.

Question 36

What are temporary differences

Answer 36

Temporary differences are items of income or expenses that are recognized in one period for financial (book) purposes but in a different period for tax. These cause differences between recognition of the amount of deductions, but in the long run there is no difference.
Example:
Installment sales; book you would debit a/r for full amount and credit revenue.. for tax you would take only the amount received during the taxable year.
Depr: Book use s/l, where as tax MACRS.
Charitable all is expense on book. Tax limited to 10% adj taxable income and rest carryforward for 5 years. ( remember to add back charitable contrib and drd in calculation)
Start up exp: Book exp all start up on book first $5000 is deducted and 180 months amortized or 15 years.
Bad debt: est. bad debt.on book, tax direct write off.
Warranty exp

Question 37

For M1 purposes, muni int expenses is added or subtracted

Answer 37

It is added.

Question 38

Warranty has a beg. credit balance of 120, accrued est exp of 16 and end with a credit balance of 90. what is the exp

Answer 38

T account.     DR     CR
beg bal                    120
est accru                   16
warranty exp    46
End bal                    90      
Diff = warranty exp 120+16-90 = 46 deb

Question 39

If a company had actually wrote off $5000 but for financal purposes accrued 15000. What is the MI adjustment

Answer 39

Difference between tax direct write off 5000 and accrued 15000 = add back on mi=1 10000

Question 40

In Jan 1, yr 1If a company expense startup 50000 over 10 year for book purposes what is the impact for tax purpose with before tax income of $435,000

Answer 40

Book 50000/10years = 5000 per year
tax 50000- first 5000 = 45000/180months= 250
250*12months = 3000
3000+5000 = 8000 used for tax
8000-5000 = 3000 adj for tax and M1
435,000- 3000 = 432,000

Question 41

If a accrual basis tax payer pays a cash basis tax payer what amount should the accrual basis tax payer use as exp

Answer 41

The amount paid to cash basis. not exp incurred.

Question 42

What are the fundamentals of the foreign tax credit

Answer 42

1. the US tax corp in the US on its world wide income and not just its income in the US.
2. The goal of the foreign tax credit is to keep a US taxpayer’s world wide tax rate from exceeding the US statutory rate. This is accomplish through the foreign tax credit.
   - This in done through determining the qualified foreign income taxed paid or accrued for the tax year.
   - must be a creditable tax on income tax on wages, interest, dividends, royalties.
   - Foreign tax limitation is calculated = pre credit US tax paid* foreign income source taxable income ( wages, interest, dividends, royalty ect)/world wide income
   - foreign tax credit = lesser of qualified foreign taxes paid or foreign tax credit limitation.

Example X Co. has $300,000 of US source taxable income and $200,000 of foreign taxable income of foreign source taxable income from country Y . X co. pays $80,000 ( foreign tax limitation) in income taxes to Country Y. The US tax before credits on the world wide income is $170,000 (pre tax credit US)
170,000*200,000/500,000 (200,000+300,000) or 40% = $68,000 foreign tax credit. lessor of 68,000 foreign tax credit or $80,000 foreign tax limitation = 68,000 foreign tax credit

Question 43

GBC ( general business credit) is made up of two separate credit: R&D tax credit and Work opportunity tax credit.
Wacky Co had the following R& D expenses in year 1:
$2,300,000 paid to salaries for experimenting
R&D supplies: $1,850,000 = total expense $4,150,000

Totall annual revenue gross average for last 4 years = $24,500,000.* 13%= $3,185.000 gross receipt limitation
It has fixed percentage rate of 13%.

Opportunity tax credit: $10,000. Net income for year 1 is $600,000

Answer 43

What is R&D tax credit:
Calc Total qualified research expenses $4,150,000
Gross receipt limitation $3,185,000
Minimum base amount ( greater than receipt
limitation #,185,000 or 50% of qualified research exp 4,150,000/2 = 2,075,000) 3,185,000
Excess of current year qualified research
over minimum base amount 4,150.000-3,185,000 = 965,000
= R& D tax credit 965,000 *20% =193,000

Calc GBC ;
General business credit 193,000+ 10,000 opportunity credit = 203,000

maximum GBC allowed
Net income $600,000- 25000 allowed with no question = 575,000 * additional 75%= 356,250+25000 = 381,250 allowed
+

Question 44

What are Personal Holding Companies (PHC)

Answer 44

PHC are corp set up by high taxpayers to channel their investments income into a corp with lower tax rate 21% instead of the higher individual tax rate.

Question 45

What deductions must PHC make prior to DRD

Answer 45

1. federal income tax 2. Net l-t capital gain less related federal income taxes

Question 46

How can a non PHC or regular C Corp reduce accumulated earnings

Answer 46

1. . Determine that there is a “reasonable needs” of the business to retain all of the accumulated taxable income.
2. Pay dividends by April 15th of following for prior year taxable income

Question 47

Accumulated earning tax can be imposed on PHC, partnership and corporation, or companies that distribute excess accum earning or regardless of number of shareholders in corp

Answer 47

Accum earnings tax can be imposed regardless of numb of shareholders. and on regular corp not classified as PHC
Other factors: PHC, partnership and corporation, or companies. No

Question 48

If corp had a loss and zero tax liab. yr 1 how can co. est tax for year 2

Answer 48

It can use annualized income method. can not use preceding tax yr because no tax liab.

Question 49

Are tax exempt interest and dividend income are requirement to meet the PHC

Answer 49

Dividend income yes. tax exempt income no because not reported on gross taxable income.

Question 50

can GBC be apply to current year and carryback-carryforward years

Answer 50

yes

Question 51

What is the maximum accumulated tax earning credit a company may take

Answer 51

$50,000

Question 52

What type of dividends may a PHC distribute

Answer 52

Dividends paid during the current year and consent dividends reported in the current year individual inocme tax returns

Question 53

what is the estimated tax paid where IRS will not impose a penalty

Answer 53

less than $500 from actual tax.

Question 54

What are the requirements to be a PHC

Answer 54

1. more than 50% of stock owned by less than 5 or fewer individual. 2. at least 60% of adjusted ordinary gross income must consist of certain investment income.

Question 55

What corp are classified as personal service corp

Answer 55

Accounting, law, consulting, engineering, architectural, health, actuarial science.+

Question 56

From a consolidated perspective, a subsidiary takes a GBC how should be handle

Answer 56

It should be handle at group level with Parent co.

Question 57

From a consolidated perspective, a subsidiary reports a capital loss on sale of equipment how should be handle

Answer 57

It should be handle on a group level with parent co. to net capital gains to capital losses.

Question 58

Which of the following groups may select to file a consolidated return:
brother and sister corp
members and affiliated group
a parent corp with more than 50% ownership
a parent corp with more than 10% ownership

Answer 58

A group and member affiliated with parent owning more than 80% of stock.

Question 59

In a consolidated return what % of dividends are tax

Answer 59

100% because parent required to own more 80% and DRD over 80% ownership , 100% Dividends are reduce plus intercompany exchanges are eliminated.

Question 60

For corp. NOL are carry back and forward are

Answer 60

NOL no carry back. Carryfoward forever to offset operating income..

Question 61

For corp. Capital losses are carryback and forward

Answer 61

Capital losses are carryback 3 years to offset capital gains and carry forward fives and always treated as S-T capital loss in year used. Oppose to individual who can take a $3000 current year capital loss for taxes and carryforward remainder forever to offset capital gains but never can they be carry back.

Question 62

When a C corp has Gross Income of $900 and deductions ( expenses) of $1,100 and received dividend income of $100 which it owns 2%. What is C Corp operating loss

Answer 62

Add Gross Income 900 + divendend rec’d 100 = 1000 - less (1100) deduction 1000 - DRD special dedcution ( 100*50%)( 50) to calc operating loss =

Question 63

If corp has 30,000 capital loss it realize or recognize in the current year

Answer 63

It can realize 30,000 for book purposes but can not recognize for tax purposes.

Question 64

A corporation’s dividends are generally taxable as dividend to the extent of?

Answer 64

earning and profits or as long a corp has E &P. or retain earning

Question 65

What are retain earnings tax from

Answer 65

current RE + accum RE

Question 66

What is the tax dividend procedure

Answer 66

1. used dividend paid out of current RE (taxed)
2. if need more to used to pay out of Accum ( taxed)
3. need to pay more used stock basis (not taxed)
4. need more, it is a capital gain distribution ( taxed)

Example BD approved dividend payout of $250,000
Stock basis or return of capital is $60.

Current RE is 20,000 (taxed)
Accum RE is 130,000 (taxed)
Total 150,000 - less div payout 250,000 ==
100,000 need to be paid
less basis 60,000 ( not taxed)
40,000 need to be paid
less capital gain distribution 40,000 taxed.

Question 67

When investing in a corp and contrib cash of $50K, building adj basis $120, FMV $200K and a mortgage of $150K. What is the shareholders basis in corp.

Answer 67

This is a non tax trans to shareholder and corp. 50 cash + building at adj basis 120- mortgage 150= 20 basis. If it was building 120 and 150 mortgage, it would be 120-150 = 30 boot. sold should taxed at 30 and basis would be zero.

Question 68

If corp makes a distribution to shareholder would this be the same a dividend payout?

Answer 68

NO. Distribution are return of capital and not taxed just reduces basis .

Question 69

If a corp make a distribution to shareholder buy selling asset with bass of 2000 and FMV of 2500. what is the impact

Answer 69

from the 2500 proceeds , Corp get gain of 500 (2000-2500), gain is not used for dividend. the remaining 2000 is distribution to shareholder which lowers basis.

Question 70

Shareholder contribution asset to corp at adj basis 5000 and fmv 7000 what is new basis if current basis is 8000

Answer 70

used asset basis of 5000+ current basis 8000= new basis 13000

Question 71

If a corp give shareholder additional 50 share (had 100) with no option for cash dividend what is the impact, with basis of 1300

Answer 71

If there was an option for cash, then shareholder would have been taxed a
option of 50 shares to dividend.
Since no option, shareholder increase shares but no increase to basis so 13000/100+50= 86.66 per share. so decrease from 13000/100 = 130 to 86.66 reduced.

Question 72

A corp has accum RE of (45) , current RE 15 and distrib (12). What is accum re at y-e

Answer 72

(45)+ 15- 12= (42) accum RE y-e.

Question 73

A son inherited his parents 1244 small business corp stock. Parent basis was $20K and had a $25K fmv at time of their death. during the year, the Corp went into bankruptcy and stock was worthless. What amt would son deduct as ordinary loss.

Answer 73

Zero ordinary loss. Since son did not own 1244 stock but inherited,he can not claim the loss. Normally can claim up to $50K loss. However son could claim capital loss up to $25K.

Question 74

At the beg. of y 1, corp had accum re of $30K and current RE of 20K, It made two distribution at 40K each. what is the taxable div. income to shareholder

Answer 74

accum 30+ current 20= 50 - 40 1ts distr = 10 remaining = 40- 30 goes to return cap.
total 50 is div income

Question 75

when corp liquidate, and gave shareholders $2000 cash and land with a FMV of 10,500 and adj basis of 5000. The stock basis is 6500. what gain for stockholders on liquidation.

Answer 75

For liquidate the gain FMV of Land 10,500- stock basis 6500= 4000 tax gain. $2000 cash not taxed.

Question 76

Corp paid non liquidating property dividends with a FMV of 200. Accum re 125, current re was 60. stockholder basis was 500. what is taxable dividend

Answer 76

For property dividend, tax income is to the extent of property FMV. So 200 is taxed.

Question 77

how would the corp recognize a gain from a property dist

Answer 77

FVM property - Basis = gain

Question 78

For a type b corp, how does IRS define;

Answer 78

1. stock of the target corp is acquired solely for the voting stock of either the acquiring corp or its parent co.
2. acquiring corp. must have control of the target corp. immediately after the acquistion.

Question 79

In a liquidation of corp, stockholders would receive

Answer 79

G/L from FMV- Basis of property

Question 80

When there is a 80% or more liquidation of subsidary assets, what is the effect on the parent co.

Answer 80

Asset transfered to parent co. will have a carryover basis.

Question 81

A single and MFJ taxpayers have 1244 stock losses of $157K each how of loss can they deduct

Answer 81

Single up to $50K and MFJ $100K as ordinary loss and $3K for both as capital loss

Question 82

for non liquidating trans. to stcokholders.

a corp had 75 gain and a 100 loss. what is procedure to recognize

Answer 82

they would recognize gain 75 and not loss of 100.

Question 83

a distribution from a c corp to a shareholder can not be treated as a capital loss?

Answer 83

Correct.

Question 84

In a distribution of property to shareholder with a basis of 20. a FMv of 60 and a nonrecourse laib of 70. what is the corp recognized gain

Answer 84

when liab higher than FMV, use liab - basis

70-20 = 50 gain.

Question 85

Parent co, that owned 100% in both parent and sub received a 200K lump sum distribution of liquidating of property as result of redemption of stock. what is gain

Answer 85

no gain.when over 80% owned.

Question 86

Ron @ 40% contribute land with fmv $70K, and adj basis of20 corp assum 30K mortgage, David 40% conrib land fmv 40 adj basis 15 and cash of 10. Mary contribute services @ $20. what is mary basis

Answer 86

Mary basis is 20. her 20% does not count toward 80% due to services. She gets taxable gain form Corp of $20K

Question 87

Ron @ 40% contribute land with fmv $70K, and adj basis of20 corp assum 30K mortgage, David 40% conrib land fmv 40 adj basis 15 and cash of 10. Mary contribute services @ $20. what is David basis

Answer 87

David basis is 15. he along with ron met 80% test. do not include cash in basis.

Question 88

Angie contrib 60% with 120 cash. Brad 40% asset with FMV 90 and adj basis of 30 along with cash 10. what is corp basis.

Answer 88

Corp basis 40 ( 30 + cash boot of 10) . Angie did not contribute asset along with cash no boot.

Question 89

Can PHC take DRD

Answer 89

No. not available.

Question 90

Jane a sole sharehold of Buttons. Button had Accu RE 65 + current re of 35. Butto pay property distribution of $150 fmv and basis of 120 what is the taxable dididend

Answer 90

taxable dividend is the extent of Accu re and current re.

and property gain.to distribution. Property distribution 150- 120 gain = 20 + 65+35 = 100.

Question 91

In a tax free reorganization, is basis of stock recieved by shareholders is the basis of stock given up and its book fmv?

Answer 91

yes

Question 92

With 1244 stock that are worthless can the original basis be written off and by how much

Answer 92

Yes. MFJ 100 single $50

Question 93

What are the requirements and non requirements for 1244 small business stock

Answer 93

Requirements:
must be a C corp
as of date of issuance, capital must be less than $50M
Stock must be issued after 8/10/1993
If indv deducting losses, must have been orginal owners and limitation MFJ $100K =, single $50K
Not a requirement: Stockholder does not have to be an original owner to have stock in 1244.

Question 94

ABC corp paid two cash distribution in y5. 1 @ $42K and second @ $33K. Accum re $80 and current re $$30K. How will the 1st alloc. between current and accum be distrib.

Answer 94

Step 1 add distr 42+33=75. Step 2 div 1st to total 42/75 = 56%
Step 3 take current er * %.30*56%= 16.8
total distr 1 42- 16.8 curr and 25.2 accum

Question 95

ABC corp paid two cash distribution in y5. 1 @ $42K and second @ $33K. Accum re $10 and current re $30K. How will the 1st alloc. between current and accum be distrib.

Answer 95

Step 1 add distr 42+33=75. Step 2 div 1st to total 42/75 = 56%
Step 3 take current er * %.30*56%= 16.8
total distr 1 42- 16.8 curr and 10 accum ( because only 10 in accum re

Question 96

SCopr Scot conrtrib equip with FMV 20, basis of 6 subject liab of 12. what is gain recognized by Scot

Answer 96

Gain will the different between liabl assumed by corp 12- adj basis 6 = 6 gain.