Adv Federal Taxation ACC 317

Adv Federal Taxation ACC 317


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32. On September 30, Silver Corporation, a calendar year taxpayer, sold a parcel of land (basis of $400,000) for a $1 million note. The note is payable on five installments, with the first payment due next year. Because Silver did not elect out of the installment method, none of the $600,000 gain is taxed this year.
silver corp. had a $300,000 deficit in accumulated E&P at the beginning if the year. Before considering the effect if the land sale, Silver had a deficit in current E&P of $50,000.
sam, the sole shareholder of Silver, has a basis of the $200,000 in his stock. If silver distributes $900,000 to sam on December 31, how much income must he report for tax purposes.

42. cerulean corporation has two equal shareholders, Eloise and Olivia. Eloise acquired her Cerulean stock three years ago by transferring property worth $700,000 basis of $300,000, for 70 shares of the stock. Olivia acquired 70 shares in cerulean corporation two year ago by transferring property worth $660,000, basis of $110,000. Cerulean corporation’s accumulated E&P as of January 1 of the current year is $350,000. on march 1 of current year, the corporation distributed to Eloise property worth $120,000, basis to cerulean of $50,000. it distributed cash of $220,000 to Olivia. on July 1 of the current year, Olivia sold her stock to Magnus for $820,000. on December 1 of the current year, cerulean distributed cash of $90,000 each to Magnus and Eloise. what are the tax issues?


51. Robert and Lori (Roberts sister) own all of the stock in swan corporation (e & p of $1 million). Each owns 500 shares and has a basis of $85,000 in the shares. Robert wants to sell his stock for $600,000,  the fair market value, but he will continue to be employed as an officer of Swan Corporation after the sale. Lori would like to purchase Robert’s shares and , thus become the sole shareholder of Swan, but lori is short of funds. What are the tax consequences to Robert, Lori and Swan Corporation under the following circumstances?
a. Swan Corp distributes cash of $600,000 to lori, and she uses the cash to purchase Roberts shares.
b. Swan corporation redeems all of Roberts shares for $600,000.