(SOLVED) Indigo Inc a personal service corporation has

the following types

Indigo, Inc., a personal service corporation, has the following types of income and losses. Active
income …………. $325,000 Portfolio income ………… 49,000 Passive activity loss ………. 333,000 a.
Calculate Indigo’s taxable income. b. Assume that instead of being a personal service
corporation, Indigo is a closely held corporation. Calculate Indigo’s […]

The Coffee Company engages in the following transactions during the taxable year. • Sells
stock held for three years as an investment for $30,000 (adjusted basis of $20,000). • Sells land
used in the business for $65,000. The land has been used as a parking lot and originally cost
$40,000. […]

ListCo reports the following income for the current tax year. Operations …………. $92,000 Tax-
exempt interest income …… 19,000 Long-term capital gain ……… 60,000 ListCo holds earnings and
profits (AAA for an S corporation) of $900,000 at the beginning of the year. Then ListCo
distributes $200,000 in total to the owners. […]

Eloise contributes $40,000 to MeldCo in exchange for a 30% ownership interest. During the first
year of operations, MeldCo earns a profit of $200,000. At the end of that year, MeldCo holds
liabilities of $75,000. a. Calculate Eloise’s basis for her stock if MeldCo is a C corporation. b.
Calculate […]

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Oscar created Lavender Corporation four years ago. The C corporation has paid Oscar as
president a salary of $200,000 each year. Annual earnings after taxes approximate $700,000
each year. Lavender has not paid any dividends, nor does it intend to do so in the future.
Instead, Oscar wants his heirs […]

Since Garnet Corporation was formed five years ago, its stock has been held as follows: 525
shares by Frank and 175 shares by Grace. Their basis in the stock is $350,000 for Frank and
$150,000 for Grace. As part of a stock redemption, Garnet redeems 125 of Frank’s shares for
[…]

Flower, Inc., a C corporation, reports taxable income of $800,000 for 2014. Flower has been in
business for many years and long ago used up its accumulated earnings credit. Flower has no
additional “reasonable needs of the business” for the current tax year. a. Determine Flower’s
total potential tax liability […]

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