Reference no: EM132437971

Part 1:

Question 1. What is the general rule for taxation of distributitons by a corporation in redemption of its stock?
b. identify the types of redemptions that will not be trated under the general rule

Question 2. What is required for a stock redemption to be considered "not essentially quivalient to a dividend?

Question 3. Abigail and Burton (unrelated individuals) own 50 shares each of the No exit corporation. There are no other outstanding shares. If Abigail redeems 25 shares, will the redemption qualify as a substantially disproportionate redemption?

Question 4. Explain the rationale of the rules for attribution of stock ownership

Question 5. What is the general rule regarding attribution of stock ownership to a redeemed shareholder from an entity in which the shareholder has an interest

Question 6. Describe the requirements for waiving the family attribution rules in the case of a complete redemption

Question 7. Claude, a 50 percent shareholder in the Monget Corporation, dies. The remaining stock in the corporation is owned by Claudes son, the sole beneficiary of Claudes estate. More than one half of the value of his adjusted gross estate consists of stock in the Longet corporation. The attribution rules would cause Claudes estate to have taxable dividend income in the event stock was redeemed to raise cash for payment of estate tax. Explain how Code Sec 303 mitigates this situation

Question  8. Explain how the accumulated earnings tax may apply to corporate money set aside to fund a Sec 303 redemption

Part 2:

Question 1. Descrie the classification system for the federal taxation of unincorporated businesses

Question 3. For what reasons may it be important to characterize an organization as a partnership

Question 5.Explain the tax consequences to the contributing partners upon formation of partnership

Question 7.What are the consequences to the partnership and the partners when contributed property is subject to indebtedness

Question 9. Explain how the individual partners of a partnership are taxed

Question 11. The Jomar partnership, owned equally by Joe and Marty, suffers a $50,000 loss this year. How will this loss be reported for tax purposes by
a. the partnership
b. the partners

Question 13. How will the IRS treat special allocations of income or loss among partners if the allocations do not have substantial economic affect

Question 15. Jessica and Beatrice form a partnership and plan to share profits and losses on a 60/40 basis. Their partnership agreement contains no specific provision that governs how distributive shares of each particular income item will be determined. Explain how Jessica will compute her distributive share.

Question 17. Explain the limitations on the deductibility of partnership losses by a partner

Question 19. John contributed $10,000 to form J&B partnership with Bobby as an equal partner. The partnership suffers $30,000 loss this year.
a. what is johns distributive share of the loss
b. Compute the amount of loss John may currently deduct on hos personal tax return, assuming John and Bobby are equal partners.

Question 21. John Decides to retire from the J& B Partnership, a retail drug store with inventory. If John sells his interest to Bobby at a gain, how will his gain on the sale be taxed

Question 23. Assume that the ABS partnership agreement requires that the partnership liquidate the interest and any decieased or retiring partner. ABC is a service partnership. Describe the income tax consequences to the retiring partner and to the remaining partners of
a. payments of the purchase price to the retiring partner for his or her interest in partnership property
b. additional payments that are part of the retiring partners distributive share

Question 25. Explain how limited partnerships and their partners are taxed

Question 27. What guidelines are used to test the reality of a partnership arrangement involving acquisition of a partnership interest by one family member from another when
a. capital is a material income producing factor
b. capital is not a material income producing factor