Test1problems (version 1)

Each problem worth 15 Points Show all your calculationsProblem #1 answer Mark Problem # 1Mark and Jain form X corporation with the following consideration:Amount Realized Basis Consideration TransferredRealized gain Basis toFMVNumber of SharesRecognized gain zero d TransferorReceived From MarkJonathan Cash40,00040,000Amount re Installment Obligation140,000360,00040Basis is zero Realized ga Recognized From Jonathan (Jain)?40,0004Because se Services Basis to Mark = Basis o Calculate Realized and recognizedgain/loss, basis to each shareholder.40,000 +14 Also calculate basis to X corporation for Installment Obligation.Basis to Jonathan = 0 Basis to X Corporation Problem # 2 Calculate DRD-ownership 15%DRD = Dividend received deducti Tentative DRD = Dividend x Perce GreenIncomedividend + sales CorporationTI= reveneues (income + dividend TI before DRD = above TI+ Tenta Income from Operation600,000Multiply above by 50% Expenses from operations750,000DRD lesser of tentative DRD or ab Qualifying Dividends300,000 Problem # 3 Zeta corporation have the following income and deductionsIncome for the current yearLess expenses Sales60,000Cost of sales Cost of sales40,000Other operating expen Other operating expenses40,000 Dividends (from 5% owned corporation)60,000TI (taxable income) Time 10% Zeta made charitable contribution of 60,000 to a qualified charity.Charitable deduction 4 Calculate Charitable deduction for the current year and carryover if any. Problem 4Net Income Net Income per books200,000Add Federal Income Taxes42,000 Life Insurance proceeds on key employee200,000 Tax Exempt interest23,000 Net Capital Loss3,000 Premium on life insurance5,000Less Life Insuran Calculate Taxable IncomeTax Exempt TI Problem 5Dick, a cash basis taxpayer, incorporates his sole proprietorship. He transferred the following itmes to newly created Orange corporation. Fair MarketFair Marke Mortgage Cash$40,000$40,000Value of sto Building100,000175,000 150,000150,000 Amount Re (b) Calculate Dick's basis in stock Basis © Calculate Orang's basis in assets received from Dick.Realized ga Recognized 150,000 -4 Basis in stockBasis to Dick = Basis of property transfereed + recognized gain - boot Problem 6Excusive of capital Transactions, X corporation had 150,000 taxable income Its capital gains and losses are as follows Short Term Capital Gain40000Short Term Short Term Capital Loss-75000 Short Term Long Term Capital Gain30000 Long Term Capital Loss-25000net short te a Calculate taxable incomeLong Term Capital loss is not deductable, carry back 3 years and carry forward 5 yearsLong Term Taxable income 150,000net long te net short te