(SOLVED) Ballou Corporation distributes 200 000 in cash to

its sharehold
Ballou Corporation distributes $200,000 in cash to its shareholders during the current year.
Accumulated earnings and profits at the beginning of the year are $45,000, and current year
earnings and profits are $105,000. Buddy owns 80% of Ballou and has a basis of $60,000 at the
beginning of the year.Identify […]

Charlene owns a 70% interest in Maupin Mopeds, which is organized as a partnership. She
wants to open another business and needs office space for it. She has Maupin distribute a
building worth $150,000 to her in lieu of her normal cash distribution. Maupin’s basis in the
building is $55,000. […]

Milena owns a 25% interest in Davis Company, an S corporation. Her basis in the Davis stock is
$40,000. Davis reports an operating loss of $200,000 in the current year. Davis owes Milena
$25,000 on a loan she made to the company several years ago.Identify the tax issue(s) posed
by […]

Kummell Corporation reports a $200,000 taxable income in the current year. Included in the
taxable income calculation are $20,000 in dividends received from less-than-20%-owned
corporations, and $30,000 in charitable contributions.Identify the tax issue(s) posed by the facts
presented. Determine the possible tax consequences of each issue that you identify.

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LMC, Inc., is equally owned by Larry, Maurice, and Charles. The owners are sports agents.
LMC’s income consists solely of fees from the owners’ clients. During the current year, LMC’s
net income from operations is $380,000, and it receives $20,000 in interest income. The
corporation owns an interest in a […]

Powell owns a 20% interest in Cooke Partnership. At the beginning of 2010, Powell’s basis is
$22,000. Cooke reports a $90,000 operating loss in 2010, and Powell withdraws $10,000 from
the partnership. Cooke’s 2011 operating income is $70,000, and Powell withdraws $10,000
from the partnership.Identify the tax issue(s) posed by […]

Irene contributes land to Micro Development Partnership for a 30% interest. The land’s basis is
$20,000, and it has a fair market value of $80,000. Micro reports a net operating loss of
$100,000 for the year. Irene devotes at least 12 hours a week to managing the partnership
operations.Identify the […]

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