Question

Turnip, Inc,. an S corporation, distributes a tract of land held as an investment (FMV=$82,000, basis=$22,000)...

Turnip, Inc,. an S corporation, distributes a tract of land held as an investment (FMV=$82,000, basis=$22,000) to chang, its sole shareholder. An AAA bypass election was not made. Turnip, Inc. has an AAA balance of $10,000 an OAA balance of $15,000, a PTI balance of $5,000 and an AEP balanc eof $20,000. CHang's basis in his Turnip's stock is $20,000, has and individual marginal tax rate of 33% and a capital gains tax rate of 15%.

What is Turnip's recognized gain on the distribution?

What is the amount of CHang's distribution?

What is turnips ending AAA balance?

What is turnip's ending PTI balance?

What is Turnip's ending AEP balance?

What is Turnip's ending OAA balance?

WHat is the tax impact of the distribution to Chang?

What is Changs basis in the land

What is changs basis in his turnip stock?

Turnip, Inc,. an S corporation, distributes a tract of land held as an investment (FMV=$82,000, basis=$62,000) to chang, its sole shareholder. An AAA bypass election was not made. Turnip, Inc. has an AAA balance of $10,000 an OAA balance of $1,000, a PTI balance of $5,000 and an AEP balanc eof $2,000. CHang's basis in his Turnip's stock is $20,000, has and individual marginal tax rate of 33% and a capital gains tax rate of 15%.

What is Turnip's recognized gain on the distribution?

What is the amount of CHang's distribution?

What is turnips ending AAA balance?

What is turnip's ending PTI balance?

What is Turnip's ending AEP balance?

What is Turnip's ending OAA balance?

How much of the distribution is a return of capital?

How much of the distribution is an excess distribution?

WHat is the tax impact of the distribution to Chang?

What is Changs basis in the land

What is Changs basis in his turnip stock?

Turnip, Inc,. an S corporation, distributes a tract of land held as an investment (FMV=$82,000, basis=$62,000) to chang, its sole shareholder. An AAA bypass election was not made. Turnip, Inc. has an AAA balance of $10,000 an OAA balance of $1,000, a PTI balance of $5,000 and an AEP balanc eof $2,000. CHang's basis in his Turnip's stock is $20,000, has and individual marginal tax rate of 33% and a capital gains tax rate of 15%.

What is Turnip's recognized gain on the distribution?

What is the amount of CHang's distribution?

What is turnips ending AAA balance?

What is turnip's ending PTI balance?

What is Turnip's ending AEP balance?

What is Turnip's ending OAA balance?

How much of the distribution is a return of capital?

How much of the distribution is an excess distribution?

WHat is the tax impact of the distribution to Chang?

What is Changs basis in the land

What is Changs basis in his turnip stock?

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Answer #1

Turnip's recognized gain on the distribution –

$(82000-22000) =$60000

Amount of CHang's distribution -$82000

turnips ending AAA balance –                  

tax impact of the distribution to Chang-

Capital Gain Tax =15%of $60000

Changs basis in the land- Land received will increase its investment value in turnip stock

changs basis in his turnip stock- It will hve no impact as regards to its stock as chang is a sole shareholder of turnip stock.

Note – Unable to understand the terms AAA, PTI, AEP & OAA

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