R3- C corps & S corps Flashcards
Formation of Corps
Corporation Basis in Assets Rec’d
Basis= greater (Sholder NBV + gain they recog) OR (liabs assumed)
NO g/l on their side
Formation of Corps
Shareholder Basis in Stock Rec’d
basis of stock = (CashorFMVprop) - COD + gain recog
no g/l recog if 80%control & NO BOOT recd
if liabs(COD) > basis -> gain of diff bet the 2. Gain but NO boot
Distributions of Corps
Shareholder taxable amount
Divs up to E&P amount
RetofCap up to basis
CapGain -> excess
acc&curr positive -> both used for divs
+curr&-acc-> divs up to curr amt
-curr& +acc -> NET & use netted amt
both neg -> NO divs
Distributions of Corps
Corporation taxable amount
NOT taxable. E&P decreases
taxable if APPRECIATED prop
– recog gain as if prop sold for FMV
– gain increases E&P
Stock redemption
Proportional -> div income
DISproportional -> cap G/L to sholder
— stock must be <50% of company
Complete Liquidation
2 option
1) sell assets & give $ to shareholders
- recog gain sale(sp-ab) & sholdrs recog gain if amt recd>basis
2) give assets to sholders
- recog gain on distrib (fmv -ab) and sholders recog if when they sell SP>AB
parent NO g/l when subsid liquidates
S Corp Distributions taxability
NONtax up to AAA
div inc up to E&P
RetofCap up to BASIS
excess -> capG
if not E&P then nontax up to basis. excess->cagG
S Corp basis calculation
+income items INCL taxfree stuff
- addtil invmts in company
- distribs
- loss/exp items
Interest taxability
deductible EXCEPT if incurred to buy taxFREE stuff
Charitable Contributions
10% GI limit
BEFORE DRD, NOL & Caploss carrybacks
casualty
no floor and no limit
full destruction -> loss =AB
semi destruction -> loss = lesser of decrease of FMV or AB
Orgexps &Start Up costs
research costs
5k deduction and the rest atmzd 180 mths
reduced by amount of excess over 50k
research just amtzd over 60 mths
life ins prems paid
benef= corp -> NONdecuc but proceeds when dead NOT includible benef= person -> deduc but proceeds also includible
state& city taxes
deductible just federal taxes NOT deduc
Cap Loss & NOL
cap loss - 3B &5fwd
NOL- 2B &20 fwd. cant use char cont to calc
- DRD you use the option that CAUSES NOL
Inventory
FIFO most common
LIFO ok to use but must also use for gaap
Gen Bus Credit
combination of arious
1back 10 fwd
cannot exceed NEt inc tax - greater of (25%excess of tax liab over 25k OR tent min tax)
DRD
0-20=70%deduc
20-80= 90%
80-100 = 100%
Lesser of %divs recd OR % taxinc w/o DRD
cant be used by personal stuff (S corp, PHC, PSC)
Depreciation MACRS
NOT real estate
MACRS for stuff used in business 5 yrs - computer, ans, copiers, cars 7r- furniture, fixtures, equip 10 15 20
No SV
HALFYEAR convention - during = midpoint
MidQ convention - >40% prop in last Q
Depreciation MACRS
REALestate
residential 27.5
NON residential 39
midMONTH convention- HALF moth depr taken when placed and when disposed off
stline
179 expense
only depr prop NOT RE
fixed amount allowed to expense instead of depr
up to the cost of the asset
‘12 limits- 125k expense reduced by excess over 500k
‘13 limits - 25k expense reduced by excess over 200
S1231
S1245
S1250
S12331 - Gains = CapG (1245 or 1250)
- losses = ordinary
1245= personal prop = ord inc LESSER of AccDepr OR gain recog . (leftover gain if AD used is CapG)
1250 = real prop = ord income of EXCESS depr taken OVER stline. Remaining gain is taxed @25%
AMT components
Adjustments-> LIE
preferences -> PPP
ACE adj-> MIND
exemption
rate 20%
carryfwd Forever
when paid -> credit against future ref tax
AMT exemption
40k reduced by AMTI exess over 150k
