TEST 1 PROBLEMSwith answers

School: University of Houston, Downtown - Course: ACC 4302 - Subject: Accounting

Problem # 1Mark and Jain form X corporation with the following consideration: Consideration Transferred Basis toFMVNumber of SharesAmt Realized400,000.0 TransferorReceivedBasis220,000.0 From MarkRealized gain180,000.0 Cash80,00080,000Recog Gain0.0 Installment Obligation140,000320,00040Basis to Mark220,000.0 Jonathan Amt Realized50,000.0 From Jonathan50,0005Basis0.0 ServicesRealized gain50,000.0 Recog Gain50,000.0 Calculate Realized and recognizedgain/loss, basis to each shareholder.Basis50,000.0 Also calculate basis to X corporation for Installment Obligation.Installment140,000.0 Problem # 2 Calculate DRD-ownership 15%tentative drd100,000 income1,000,000 Greenti100,000 Corporationti before tentative drd200,000 times 50% Income800,000100,000 Expenses800,000drd100,000 Dividends200,000 Problem # 3 Zeta corporation have the following income and deductionsincome140,000 `expenses Sales40,000Cost of sales60,000 Cost of sales60,000Other operating expenses40,000 Other operating expenses40,000ti40,000 Dividends (from 5% owned corporation)100,000times 10%4,000 Carrforward 66000 Zeta made charitable contribution of 70,000 to a qualified charity. Calculate Charitable deduction for the current year and carryover if any. Problem 4 Net Income per books100,000 Net Income per books100,000 Federal Income Taxes21,000 Add Life Insurance proceeds on key employee150,000 Fed Income tax21,000 Tax Exempt interest20,000 Net capital Loss3,000 Net Capital Loss5,000 Premium6,00030,000 Premium on life insurance6,000 Less: Net Capital Gain2,000 Life ins150,000 Calculate Taxable IncomeTax Exempt Int20,000170,000 TI-40,000 Problem 5 Dick, a cash basis taxpayer, incorporates his sole proprietorship. He transferred the following itmes to newly created Orange corporation.

Stock65,000 Debt170,000 Cash$60,00060,000235,000 Building100,000175,000 Basis160,000 170,000170,000 Realized gain75,000 Recg Gain10,000 Basis0 (b) Calculate Dick's basis in stockc160,000 © Calculate Orang's basis in assets received from Dick. Problem 6Excusive of capital Transactions, X corporation had 160,000 taxab1 b Its capital gains and losses are as follows2 c 3 a Short Term Capital Gain60,000 NSCl-15,0004 b Short Term Capital Loss-75,000 NLTCG22,0005 a Long Term Capital Gain 30,000 NLTCG7,0006 a Long Term Capital Loss-8,0007 c 8 b a Calculate taxable income167,0009 e Problem 7John and Mary acquired stock in 2009 in a small business corporation for $20000 10 c This year corporation declared bankrupcy and stock becme worthless. They file joint return. Their other income is $160,000. Calclate their AGI Amt Realized0 Basis 200,000 Loss-200,000 Other Income160,000 Ordinary Loss-100,000 Capital Loss -3,00057,000 Loss carryforward-97,000