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TCP2 Flashcards

1
Q

The shareholder’s basis in the property distributed from an S Corp is what?

A

The FMV at date of distribution

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2
Q

What entities are tax advantageous to flow through losses as long as the investor has basis and is actively involved?

A

S Corp and Partnership

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3
Q

3 requirements to file consolidated returns?

A

1- can’t be foreign Corp
2- each member had to give consent
3- each member must have same tax year as parent

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4
Q

Who files form 1120-F?

A

Foreign person must file to report income earned by foreign branch

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5
Q

What is not a component of global intangible low taxed income, or GILTI?

A

subpart F income

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6
Q

Are non-liquidating distributions from partnership taxable?

A

Gain is only recognized if cash exceeds partner’s basis in the partnership before distribution.

Basis in the property received is the same as the partner’s basis in the partnership if it exceeds the partner’s basis. Partner’s basis is reduced to $0 and no gain recognized.

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7
Q

How to calculate Q2 Corp estimated taxes?

A

Q1 x 12/3 x tax rate = annualized tax lib
X 50% is half of the year tax liability
Less PY tax x 25%
=required Q2 payment

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8
Q

C Corp dividends are paid to the extent of what?

A

Accumulated E&P and current earnings to the extent of FMV

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9
Q

What is the basis in the C Corp property distributed to the shareholder?

A

The FMV of the property to the c corp

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10
Q

What is the basis to the shareholder for property distributed from an S Corp?

A

The basis to the S Corp

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11
Q

When C Corp distributes property in nonliquidating distribution is it a gain?

A

Yes and FMV less basis is used to calculate but losses are not deductible

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12
Q

In a liquidating distribution from a partnership, how is basis in the asset distributed determined?

A

Adjusted basis in partnership less cash distributed. Then take basis of asset against that. If basis is negative after then use basis before asset distribution.

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13
Q

Is relief in liabilities for liquidation of partnership interest considered a gain?

A

It may result in a capital gain. It’s treated like a cash distribution.

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14
Q

If distributing inventory in liquidating partnership distribution, what happens?

A

Use the adjusted basis of the inventory to offset basis. Only gain can be recognized, not a loss.

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15
Q

What is a hot asset?

A

Unrealized receivable
Appreciated inventory
Gain on hot asset is ordinary

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16
Q

Complex trust vs simple trust. Who can distribute income?

A

Both but simple has to, complex doesn’t have to distribute income.

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17
Q

Complex vs simple trusts. Who can make charitable contributions?

A

Complex only.

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18
Q

Who manages trust property for the benefit of beneficiaries?

A

The trustee, not grantor

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19
Q

What is a revocable living trust?

A

Used instead of a will to show asset distribution after death. Is a grantor trust. Trust assets are still grantor’s assets. All income and deductions are passed thru to the grantor.

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20
Q

Capital and casualty gains and losses are allocated to what?

A

Corpus

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21
Q

What is the simple vs complex trust exemption?

A

Simple $300
Complex $100

22
Q

Gain on nontaxable disposition is the lesser of what?

A

Lesser of realized gain or boot (cash) received

23
Q

Holding period for new building in involuntary conversation is what?

A

Beginning date of old property purchased if new property is purchased within 2 years of conversion

24
Q

What qualifies for like-kind exchange?

A

Real estate

25
Q

How is basis of property in divorce settlement determined?

A

It’s the carryover basis of the former spouse if there was a divorce decree on or before the divorce

26
Q

What is taxable in the divorce?

A

Nothing as long as the transferred property was approved in a divorce decree

27
Q

What is the basis of new property received in a nontaxable disposition?

A

The FMV of the property rec’d
Less deferred gain
Plus deferred loss

28
Q

Who is a related party?

A

Brother
Sister
Spouse
Ancestor
Descendant
*treat as if they own what the other owns

29
Q

Are related party losses deductible?

A

No but you can use the loss to offset the gain to the unrelated party but not less than $0

30
Q

When is no gain or loss recognized in related party sale?

A

If the proceeds from the unrelated party are in between the 1st related party’s cost and 2nd related party’s proceeds.

Or when the sales price to the unrelated party is between the org cost and the related party purchase price.

31
Q

In a complete liquidation of partnership interest, a partner only recognizes gain to the extent that ______?

A

To the extent that money received exceeds the partner’s adjusted basis in the partnership interest before the distribution.

32
Q

Realized gain = ?

A

FMV of the property contributed
Less: shareholder basis of that property

33
Q

Recognized gain = ?

A

Realized gain (FMV less adjusted basis)
vs. boot or cash received
*lesser of boot received or gain realized
*if no boot received then no recognized gain

34
Q

Basis in shares = ?

A

Basis in property
Less debt assumed by Corp
Plus cash contributed
Less cash received
Plus gain recognized

35
Q

What does the Corp get on books for asset donated?

A

FMV is recorded on Corp books for asset contributed

36
Q

What is the basis in the asset to the Corp when shareholder contributed property?

A

Corp basis is the basis of the transferor plus cash received by the transferor

37
Q

At risk rules applicable to losses, with regard to S corps and their shareholders_______

A

Limit the ability to flow through losses from the S Corp to the shareholder

38
Q

Calculate gain realized for taxpayer

A

FMV of property received
Plus cash boot received
Plus net debt relief (debt relief less debt assumed by taxpayer)
Less adjusted basis of property given up
= gain realized
*recognized is lesser of boot received or gain realized

39
Q

What is not subject to US withholding tax requirements?

A

A customer payment for the sale of inventory within the US. This is considered business income which is taxed on a net basis and is not subject to withholding.

40
Q

What is the basis in the partnership on contribution of property to the contributing partner?

A

Basis of the property in the hands of the partner at contribution (so cash contributed plus cost of assets or adjusted basis of assets). If the FMV is greater, the unrealized gain is allocated to that partner upon sale of that contributed property.
*Generally no gain or loss is recognized at contribution to partnership.

41
Q

What is the basis in the asset to the Corp after shareholder contribution?

A

The corporation’s basis is the adjusted basis in the transferred assets carried over from the shareholder.

42
Q

What is the partnership’s basis in the contributed property?

A

The partnership’s basis in the contributed property is the carryover basis of the contributor. Not accounting for debt relief.

43
Q

On contribution of property to partnership, is there gain recognized?

A

Generally no gain recognized on contribution to partnership.

44
Q

What is the partner’s basis of contributed property to partnership?

A

Adjusted basis in the hands of the contributing partner

45
Q

What is not part of GILTI?

A

Subpart F is not part of GILTI

46
Q

How long is Built in gains tax exempt after S election is made?

A

5 years if nothing is sold

47
Q

Capital losses from consolidated group are treated how?

A

Carried back 3 years
Carried forward 5 years
Cannot offset ordinary income

48
Q

Can capital losses offset ordinary income in consolidated group?

A

No capital losses cannot offset ordinary income

49
Q

Is related party sale at a loss that is further sold for a loss to unrelated party deductible?

A

The first loss is not. The 2nd loss to unrelated is deductible.

50
Q

What is form 1120-F used for?

A

Foreign income earned by US branch

51
Q

If organized as a partnership can the partner avoid recognizing gain on contribution on appreciated property?

A

Yes a partner avoids recognizing gain in appreciated property at contribution.

52
Q

When corporations are distributing property in complete liquidation, does it recognize gain?

A

Yes the Corp will recognize gain in complete liquidation and so will the shareholders. Calculated as FMV less adjusted basis of the property.

TCP (3 decks)

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