Reference no: EM131808886
Q1. Tiny and Tim each own half of the 100 outstanding shares of Flower Corporation. This year, Flower reported taxable income of $6,000 and was subject to a 25 percent tax rate. In addition, Flower received $20,000 of life insurance proceeds due to the death of an employee (Flower paid $500 in life insurance premiums this year). Flower had $5,000 of accumulated E&P at the beginning of the year.
a) What is Flower's current E&P?
b) Flower distributed $6,000 on February 15 and $30,000 on August 1. What total amount of dividends will Tiny and Tim report?
c) What amount of capital gain (if any) would Tiny and Tim report on the distributions in part (b) if their stock basis is $2,000 and $10,000, respectively?
d) What form would Flower use to report nondividend distributions?
e) On what form (line) would Tiny and Tim report nondividend distributions?
Q2. Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 60 shares with a basis of $3,000, and Clyde owns the remaining 40 shares with a basis of $12,000. At year-end, Getaway is considering differ- ent alternatives for redeeming some shares of stock. Evaluate whether each of the following stock redemption transactions will qualify for sale and ex- change treatment.
a) Getaway redeems 10 of Bonnie's shares for $2,000. Getaway has $20,000 of E&P at year-end and Bonnie is unrelated to Clyde.
b) Getaway redeems 25 of Bonnie's shares for $4,000. Getaway has $20,000 of E&P at year-end and Bonnie is unrelated to Clyde.
|
Activities are designed to ensure nothing significant
: These activities are designed to ensure nothing significant has occurred between the completion of your fieldwork and the issuing of the audit report
|
|
Proportion of variation in sales from one agent to another
: What proportion of the variation in sales from one agent to another is attributable to territory size? What proportion is due to other factors?
|
|
Compute the unit product cost for year one
: Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.)
|
|
What is the present worth of the savings
: Assume that the savings are continuous throughout the year and that i = 6%. What is the present worth of the savings?
|
|
Discuss what is flowers current e&p
: What form would Flower use to report nondividend distributions,
|
|
What is the present worth of the construction costs
: The costs are evenly distributed within each year, and the interest rate is 10%. What is the present worth of the construction costs?
|
|
What is the pw
: Costs are $10M, $50M, $80M, and $50M for years 1 to 4. Costs are continuous within each year, and i is 15%. What is the PW?
|
|
Evenly distributed within each year
: If the interest rate for the 27-year period is 6% and cash flows are evenly distributed within each year, what is the PW? (Answer: $26.64M)
|
|
Calculate the amount to record as the cost
: Kern Company purchased bonds with a face amount of $400,000 between interest payment dates. The amount to record as cost of this long-term investment in bonds
|