Assume that the land has a fair market value of 28000 and

Assignment Help Accounting Basics

Reference no: EM13597397

Kathryn, an individual, own all of the outstanding stock in Copper Corporation. Kathryn purchased her stock in Copper 11 years ago, and her basis is $18,000. At the beginning of this year, the corporation has $38,000 of accumulated E &P and no current E&P (before considering the effect of the distributions. What are the tax consequences to Kathryn (amount and type of income and basis in property received) and Copper Corporation (gain or loss and effect on E&P)in each of the following situations?

a. Copper distributions land to Kathryn. The land was held as an investment and haas a fair market value of $28,000 and an adjusted basis of $21,000>

b. Assume that Copper Corporation has no current or accumulated E&P prior to the distribution. How would you answer to (a) change?

c. Assume that the land distributed in (a) is subject to a $23,000 mortgage (which Kathryn assumes). How would your answer change?

d. Assume that the land has a fair market value of $28,000 and an adjusted basis of $31,000 on the date of the distribution. How would your answer to (a) change?

e. Instead of distributing land, assume that Copper decides to distribute furniture used in its business. The furniture has a $7,000 fair market value, a $600 adjusted basis for income tax purposes, and a $2,600 adjusted basis for E&P purposes. when the furniture was purchased four years ago, its original fair market value was $9,000.

Reference no: EM13597397

Questions Cloud

New rich company was incorporated at the beginning of this : new rich company was incorporated at the beginning of this calendar year. its articles of incorporation authorized

The net income reported on the income statement for the : the net income reported on the income statement for the current year was 275000. depreciation recorded on fixed

Powerdrive co issued 2000 shares of its rm10 par value : powerdrive co. issued 2000 shares of its rm10 par value common stock for rm70 000. powerdrive also incurred rm1500 of

In november of the current year sapphire corporation : in november of the current year sapphire corporation declared a dividend of 2 per share the shareholder record date is

Assume that the land has a fair market value of 28000 and : kathryn an individual own all of the outstanding stock in copper corporation. kathryn purchased her stock in copper 11

Assuming the under- or overapplied overhead for the year is : renteria company applies manufacturing overhead to jobs on the basis of machine hours used. overhead costs are expected

Medisecure inc produces clear plastic containers for : medisecure inc. produces clear plastic containers for pharmacies in a process that starts in the molding department.

A company owns a building with a net asset value of 120000 : a company owns a building with a net asset value of 120000 at december 31 2011. the building had a five-year remaining

Scribners corporation produces fine papers in three : scribners corporation produces fine papers in three production departments-pulping drying and finishing. in the pulping

User Account

All Pages