Question

Upon formation of Stringcheez Corporation, an S corporation, Shareholder Z contributed $300 in exchange for 30...

Upon formation of Stringcheez Corporation, an S corporation, Shareholder Z contributed $300 in exchange for 30 shares. By end of Year 1, Stringcheez’s financial results reflect $500 of taxable income. During Year 1, Stringcheez takes out a loan for $200, which Z provides a personal guarantee. Stringcheez distributes $200 to shareholder Z in December of Year 1. Included in 2 the taxable income calculated is non-cash depreciation expenses of $120. At the end of Year 1, what is Z’s basis in her Stringcheez shares based on these activities.

a. $480 b. $800 c. $920 d. $600

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Amount $
Contributed Amount           300
Add: Year 1 taxable income           500
Less: Distribution received in year 1           200
Z's basis, at the end of year 1           600
Correct answer is option d. ( i.e. $ 600 )
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
QUESTION 21 Corporation Z distributes in kind its long held Apple stock with an adjusted basis...
QUESTION 21 Corporation Z distributes in kind its long held Apple stock with an adjusted basis of $480 and a fair market value of $200 to shareholder C. Corporation Z also distributes Apple stock with an adjusted basis of $120 at a fair market value of $200 to shareholder D. a. Corporation Z does not have loss on the distributions. b. The distributions to C will reduce E&P by $480 (but not create negative E&P). c. Corporation Z realizes gain...
Keith, Inc., becomes an S corporation on January 1, 20X1. Sally, the sole shareholder, has a...
Keith, Inc., becomes an S corporation on January 1, 20X1. Sally, the sole shareholder, has a stock basis of $20,000 at January 1, 20X1, an accumulated adjustments account (AAA) balance of $0, and an earning and profits account in the amount of $6,000. For the 20X1 taxable year, Keith, Inc., has the following:        Taxable income                       $30,000        Tax-exempt income                       $4,000        Capital gain              ...
X corporation (a Colorado C corporation), owns shareholder interests in the following companies: 25% of G...
X corporation (a Colorado C corporation), owns shareholder interests in the following companies: 25% of G Co. (a Colorado C corporation), 5% of H Co. (a Colorado C corporation), 100% of Z Co. (a Colorado limited liability limited partnership). At the end of Year 1, X receives the following distributions of current Earnings and Profits (“E&P”): $100 from G, $50 from H, $200 from Z. What is the dividends received deduction X may claim when filing its year 1 corporate...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange for stock, Marlene and Nancy contributed appreciated property, while Olive contributed services. The exchanges of Marlene and Nancy will be nontaxable if: Olive receives 30% of the stock Olive receives 80% of the stock Olive receives 15% of the stock Marlene and Nancy together receive 50% of the stock In June of 2018, Alice acquired her only machine for $30,000 to use in her...
QUESTION 1 C contributes to Z, a newly formed corporation, property worth $400 with a basis...
QUESTION 1 C contributes to Z, a newly formed corporation, property worth $400 with a basis of $300 in exchange for 100 shares. As a part of the same transaction, D (an employee of C) contributes to Z property worth $100 with a basis of $40 in exchange for 400 shares a. This is most likely not a good 351. C must recognize $100 of gain and D $50 of gain. b. This is not a good 351 because receipt...
Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $90,000. In addition,...
Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $90,000. In addition, Trail has a net capital loss of $30,000. Trail's taxable income is $50,000 $20,000 $140,000 $60,000 Burt and Tiffany form Owl Corporation. Burt transfers property (basis of $20,000 and fair market value of $130,000), while Tiffany agrees to serve as Owl’s manager for one year. Each receives 100 shares of Owl Corporation stock. The value of Tiffany’s services for one year is $130,000. Which...
our cousin Albus Dumbledore, who is 30 years old, single and a restaurant manager, heard that...
our cousin Albus Dumbledore, who is 30 years old, single and a restaurant manager, heard that you have enrolled in the Masters-of-Taxation program at State University. He has asked you for help in preparing her 2019 tax return and provides you with the following information: Salary $50,000 Alimony received (Pre-2019 agreement) 3,600 Interest on GMAC Bonds 800 Interest on city of New Orleans bonds 1,300 Interest on a bank savings account 600 Berlinco, Inc. (a foreign corporation) (nonqualified dividend) 100...
Sunland Corporation’s trial balance at December 31, 2021, is presented below. SUNLAND CORPORATION Trial Balance December...
Sunland Corporation’s trial balance at December 31, 2021, is presented below. SUNLAND CORPORATION Trial Balance December 31, 2021 Debit Credit Cash $ 48,000 Accounts receivable 51,000 Allowance for doubtful accounts $ 2,500 Merchandise inventory 22,700 Investment in associate 85,000 Investment at FVTOCI—equity 30,000 Land 90,000 Building 200,000 Accumulated depreciation—building 40,000 Equipment 40,000 Accumulated depreciation—equipment 15,000 Accounts payable 18,775 Income tax payable 4,500 Bonds payable (6%, due January 1, 2026) 126,025 Common shares, unlimited number of no par value shares authorized,...
Joe operates a business that locates and purchases specialized assets for clients, among other activities. Joe...
Joe operates a business that locates and purchases specialized assets for clients, among other activities. Joe uses the accrual method of accounting but he doesn’t keep any significant inventories of the specialized assets that he sells. Joe reported the following financial information for his business activities during year 0. Determine the effect of each of the following transactions on the taxable business income. (Select "No Effect" from the dropdown if no change in the taxable business income.) Required: Joe has...
Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant...
Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111). She also writes computer software programs for tax practitioners and has a part-time tax practice. Beth is single and has no dependents. Beth was born on July 4, 1972, and her Social Security number is 123-45-6789. She wants to contribute $3 to the Presidential Election Campaign Fund. The following information...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT