What income-gain or loss does recognize

Reference no: EM132091374

Question: On January 1 of Year one Ant and Bee formed X Corporation. On that date Ant contributed land with a FMV of $10,000 and an adjusted basis to A of $3,500. B contributed two capital assets: CA #1 (FMV $6,000, AB $8,000), and CA#2, FMV $6,000, AB $5,000), B also contributed a liability (which had a legitimate business purpose) of $1,000 which was assumed by X. A received 100 shares in exchange and B received 100 shares and $1,000 cash in the exchange.

DURING YEAR 1

• X received $5,000 revenue from operations

• On July 1 X distributed $1,000 cash to A and $1,000 cash to B.

• On October 15 X received $2,000 of dividends from Y corp. (X owns

DURING YEAR 2

• On January 1, In an unrelated transaction, X received a capital asset from W ("CAW") with a FMV of $15,000 and an adjusted basis of $12,000 to and issues 100 shares of X stock which it gave to W.

• Also on January 1 X purchased a Section 179 asset for $1,000

• On April 1 X sold CAW for $16,000

• On July 1 X distributed $5,000 cash to each of A, B and C ($15,000 total).

• X received $4,000 revenue from operations

• X paid $1,000 in federal tax.

DURING YEAR 3

• X receives $1,000 revenue from operations

• X distributed $333.33 to each of A, B and W

1. What is X' taxable income in Years 1, 2 and 3?

2. What income, gain or loss does A recognize in Year 1?

3. What income, gain or loss does B recognize in Year 2?

4. What is X' Accumulated E&P at the beginning of Year 3?

5. What income, gain or loss does W recognize in Year 2?

6. What income, gain or loss does W recognize in Year 3?

Reference no: EM132091374

Questions Cloud

What is the adjusted balance on the bank reconciliation : Set up two columns: one for the company cash account section and the other for the bank balance section. Determine the effect of the data on each column.

Inject balance into analysis and avoid emotional rhetoric : Try to inject balance into your analysis and to avoid emotional rhetoric.

What is tyler corporation''s after tax cost of debt : Tyler Corporation issued a 30-year, 7 percent semiannual bond 7 years ago. What is Tyler Corporation's after tax cost of debt

Calculate gbatts wacc : Calculate GBATT's WACC. Using the WACC and the above cash flows, calculate the NPV of each project.

What income-gain or loss does recognize : On January 1 of Year one Ant and Bee formed X Corporation. On that date Ant contributed land with a FMV of $10,000 and an adjusted basis to A of $3,500.

Prepare the journal entries to record the interest payments : Prepare the journal entries to record the interest payments on June 30, 2010 and December 31, 2010, using both methods

Working knowledge of perception and attribution : Why is it important for managers to have a working knowledge of perception and attribution?

Identify three characteristics of entrepreneurs : Define entrepreneurship. Identify three characteristics of entrepreneurs.

Why do capital expenditures increase assets : Testing Why do capital expenditures increase assets (PP&E), while other cash outflows, like paying salary, taxes, etc., do not create any asset.

User Account

All Pages