Temporary Book to tax difference for prepayment of rent income.

True or False. If an accrual basis taxpayer receives a prepayment of rent income, the receipt results in an unfavorable temporary book/tax difference.

Economic Incidence of tax; prepayment of interest

True and False 1. The person who pays a tax directly to the government bears the economic incidence of the tax. 2. A cash basis taxpayer must account for any prepayment of interest expense under the accrual method.

Tax issues: S Corporation vs C Corporation including advantages or disadvantages, distributions, tax exempt income, character of tax on dividends and distributions

1 Is there any advantage to having a C Corporation instead of an S Corporation? The S Corp. appears to have the tax advantage on its side. 2 Why aren't life insurance proceeds taxable? Second, if tax-exempt income is not reportable on a tax return, can a taxpayer claim de ...continues

Passive Loss

Define what is the passive loss and what is the tax treatment for the passive loss. Why is the passive loss rule important

Retirement Plans

Discuss the Retirement Plans, including advantages and disadvantages of each plan.

Corporate Nonliquidating Distributions

Parking Space Inc. distributed $18,000 to Speedways Inc., a 15 percent shareholder. Parking Space's E&P applicable to Speedways' distribution is $5,000 and Speedways had a basis in its stock of $7,000. a. How much dividend income does Speedways have? b. How much and what kind of taxable income does Speedways have because o ...continues

Corporate Nonliquidating Distributions (Karl Stick and Stock Company)

Karl Stick is president of Stock Company. He also owns 100 percent of its stock. Karl's salary is $120,000. At the end of the year, Karl was paid a bonus of $100,000 because the firm had a good year. Stock Company deducted $220,000 as compensation expense for the year. Upon audit, $80,000 of the deduction was disallowed. How cou ...continues

Corporate Distributions in Complete Liquidations

Corporation A owns 100 percent of the stock of Corporation B, and also owns B Corporation debentures with a face amount (and basis) of $200,000. A plan of liquidation is adopted and Corporation B is liquidated under Code Sec.332. Pursuant to the liquidation, Corporation B inventory with a FMV of $200,000 and a basis of $140,0 ...continues

Corporate Distributions in Corporate Liquidations: What gains are recognized by the liquidating corporation on the distributions in complete liquidation?

A cash method corporation adopts a plan of complete liquidation and distributes the following assets to its shareholders: - A truck that was purchased for $25,000, is worth $18,000, and has a basis of $11,000. - An installment note receivable with a remaining face amount of $20,000, resulting from a sale of a warehouse f ...continues

Corporate Distributions in Complete Liquidations

Black Castle Inc. adopts a plan of complete liquidation and distributes a truck worth $15,000 with an original basis of $25,000 and an adjusted basis of $7,000 to a 40 percent shareholder with a stock basis of $3,000. The shareholder subsequently claims $4,000 of depreciation on the truck, and later sells it for $13,000. a. ...continues