Entities

Question 1

Corporation NOL rules

Answer 1

Before 2018: back 2, forward 20
2018-2020: back 5, forward indef.
After 2020: not back, forward indef.

Question 1

NOL limitation for Corps starting in 2018

Answer 1

can only offset 80% of taxable income

Question 2

Corporations capitol loss rule

Answer 2

Can only offset capital losses to extent of capital gains - excess can go back three and forward five

Question 3

Formation of a corp

Answer 3

No gain or loss recognized

Question 4

Corps basis in property contributed for formation of C Corp

Answer 4

greater of the shareholders basis in the property or the debt assumed - shareholders adjusted basis in property

Question 5

Shareholders Basis in stock in formation of C Corp

Answer 5

total cash contributed plus adjusted basis of property transferred (reduced by any debt) plus the FMV of any services provided plus any gain recognized

Question 6

Distributions from corporations

Answer 6

treated as dividends to extent of current EP and accum. EP - excess is capital gain (dividend amount is cash received or FMV)

Question 7

Distribution of appreciated property

Answer 7

Corp recognizes a gain as if property has been sold (FMV of property - adjusted basis)

Question 8

Stock redemption for c corp

Answer 8

when a corp buys back stock from shareholders - if it qualifies for sales or exchange treatment, then gain or loss is rec by shareholder. If NOT, treated as dividend to extent of EP

Question 9

Corporate Liquidation - Corp sells assets and dist cash to shareholders (Corp side)

Answer 9

recognizes gain or loss on sale of assets

Question 10

Corporate Liquidation - Corp sells assets and dist cash to shareholders (shareholder side)

Answer 10

recognize gain or loss (proceeds - stock basis)

Question 11

Corporate Liquidation - Corp distributes assets to shareholders (corp side)

Answer 11

recognize gain or loss as if sold at FMV (FMV - basis)

Question 12

Corporate Liquidation - Corp distributes assets to shareholders (shareholder side)

Answer 12

recognize gain or loss of FMV - stock basis

Question 13

Any corp with greater than $500 tax liability owe in 4 estimated taxes - equal in 25% of annual required payment in lowest of:

Answer 13

100% of current year liability or 100% of tax liability from prior year

Question 14

Property Contributions to S Corps

Answer 14

nontaxable if it is a contribution of property, solely in exchange for stock, and after the transfer shareholder has control of corp of 80%

Question 15

three taxes imposed on S corp if previously taxed as C Corp

Answer 15

LIFO recapture tax, built in gains tax, and tax on passive investment income

Question 16

limiations on pass through of losses

Answer 16

tax basis, at risk, passive activity loss, and excess business loss

Question 17

nonliquidating property dist for S Corps

Answer 17

uses the FMV of property at date of distribution - S Corp recognizes a gain not a loss and is flowed through to individuals.. S Corp AAA is reduced by the FMV of property distributed

Question 18

liquidation of S corp (same as C corp)

Answer 18

corp recognizes gain or loss as if sold at FMV

Question 19

distributions from an S corp in complete liquidation for shareholders

Answer 19

treated as payments in exchange to stock -

Question 20

Who can qualify as 503C organ in relation to sports

Answer 20

cannot provide athletic facilites or athletic equipment

Question 21

rents from property when personal services is also provided - like motel or hotel

Answer 21

excluded from UBI income

Question 22

three requirements of simple trust

Answer 22

1. distribute all income to beneficiaries annually
2. cannot make distributions form trust principal (corpus)
3. cannot make distributions to charitable organizations

Question 23

Shareholder of an S corp contributed equipment - find gain amount

Answer 23

generally nontaxable, but if liabilities assumed are greater than basis of property contributed - difference is a gain that must be recognized

Question 24

S corp recognizes a gain on appreciated property that was distributed to its shareholder

Answer 24

FMV - adjusted basis = gain … gain is flowed through to S Corp shareholders and allocated based on their stock ownership %

Question 25

what increases AAA for an S corp

Question 26

what decreases AAA for an S corp

Question 27

formation of partnership

Answer 27

partners contribution to formation for partnership interest - no gain or loss is recognized

Question 28

best entity type for property contributions

Answer 28

partnerships or sole prop

Question 29

best entity type for business losses

Answer 29

any of the flow through entities, to stay away from double tax

Question 30

best entity type for compensation of owners

Answer 30

C or S corp

Question 31

best entity for nonliquidating distributions to owners

Answer 31

partnership - esp for appreciated property

Question 32

best entity for liquidating distributions to owners

Answer 32

partnerships if appreciated property - or corporations if it is depreciated property

Question 33

going from flow through to C corp

Answer 33

easy, just change on return

Question 34

going from C corp to S corp

Answer 34

make s election and meet requirements

Question 35

C corp to partnership or sole prop.

Answer 35

liquidate C corp and recognize gain or loss between FMV and adjusted basis….shareholder recognize capital gain or loss on difference between FMV and basis in stock

Question 36

trust accounting income

Answer 36

book income of the trust, used to determine amount required to be distributed to beneficiaries each year

Question 37

goes to trust corpus (principal)

Answer 37

capital gains and losses and casualty gains and losses are allcoated to corpus

Question 38

goes to accounting income (TAI)

Answer 38

most income and expense items - operating, taxable and tax exempt interest, dividends, rents, royalties, etc

Question 39

how are trust admin expenses allocated

Answer 39

between principal and corpus - ex trustee fees

Question 40

trust taxable income before distribution deduction

Answer 40

trust taxable income (includes cap gains) - deductible trust expenses = adjusted total income - expemption amount = answer

Question 41

simple trust exemption

Answer 41

300

Question 42

complex trust exemption

Answer 42

100

Question 43

nondeductible trust admin expenses

Answer 43

total admin expenses x (nontaxable income / trust accounting income)

Question 44

distributable net income for trust

Answer 44

trust taxable income + exemption - cap gains + capital losses + tax exempt interest - expenses allocated to tax exempt interest = DII

Question 45

if disposing of a partnership, in the year of disposal you can use what to offset any kind of income

Answer 45

passive activity loss carryovers

Question 46

how much can a married individual deduct for 1244 section loss

Answer 46

100,000 against ordinary income + the 3,000 capital loss portion

Question 48

rule for liquidating distributions for C corps

Answer 48

gain is recognized for the fair market - adjusted basis

Question 49

shareholders basis in property recieved in liquidating distribution

Answer 49

FMV (difference in FMV and basis of stock surrendered = capital gain or loss)

Question 50

shareholder contributing property in exchange for stock in corp

Answer 50

amount realized - adjusted basis = realized gain ** but limited to what you recieve in boot