What amount of loss does julian recognize

Assignment Help Taxation

Reference no: EM132581835

Advanced Federal Taxation:

The excess loss limitations apply to owners of all of the following entities except which of the following?
• A. C corporations.
• B. Entities taxed as partnerships.
• C. S corporations.
• D. Single member LLCs (owned by an individual taxpayer).

If individual taxpayers are the shareholders of PST Corporation and PST corporation is a shareholder of MNO Corporation, how many levels of tax is MNO's pre-tax income potentially exposed to?
• A. Double taxation.
• B. No taxation.
• C. Single taxation.
• D. Triple taxation.

Which of the following is not required to allow an accrual-method corporation to deduct charitable contributions before actually paying the contribution to charity?
• A. Approval from the IRS prior to making the contribution.
• B. Payment made within three and one-half months of the tax year-end.
• C. Approval of the payment from the board of directors.
• D. All of the choices are necessary.

If you were seeking an entity with the most favorable tax treatment regarding (1) the number of owners allowed, (2) the flexibility to select your accounting period, and (3) the availability of preferential capital gains rates when selling your ownership interest, which entity should you decide to use?
• A. C corporation.
• B. Sole proprietorship.
• C. Partnership.
• D. S corporation.
Coop Inc. owns 40% of Chicken Inc., both Coop and Chicken are corporations. Chicken pays Coop a dividend of $10,000 in the current year. Chicken also reports financial accounting earnings of $20,000 for that year. Assume Coop follows the general rule of accounting for investment in Chicken. What is the amount and nature of the book-tax difference to Coop associated with the dividend distribution (ignoring the dividends received deduction)?
• A. $2,000 unfavorable.
• B. $10,000 unfavorable.
• C. $10,000 favorable.
• D. $2,000 favorable.
• E. None of the choices are correct.

If C corporations retain their after-tax earnings, when will their shareholders who are individuals be taxed on the retained earnings?
• A. Shareholders will be taxed on undistributed retained earnings in the year the corporation files its tax return.
• B. Shareholders will be taxed when they sell their shares at a gain.
• C. Shareholders will be taxed in the year they elect to be taxed on undistributed retained earnings.
• D. None of the choices are correct.

Julian transferred 100 percent of his stock in Lemon Company to Apricot Corporation in a Type B stock-for stock exchange. In exchange, he received stock in Apricot with a fair market value of $200,000. Julian's tax basis in the Lemon stock was $400,000. What amount of loss does Julian recognize in the exchange and what is his basis in the Apricot stock he receives?
Multiple Choice
• $200,000 loss recognized and a basis in Apricot stock of $200,000.
• No loss recognized and a basis in Apricot stock of $400,000.
• $200,000 loss recognized and a basis in Apricot stock of $400,000.
• No loss recognized and a basis in Apricot stock of $200,000.

Reference no: EM132581835

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