R5

Question 1

how does shareholders basis change in an S corp based on net income & tax free income

Answer 1

both net income and tax free income will increase a shareholders basis in an S corp.

Question 2

partners BASE FORMULA

Answer 2

Beg Capital Acct
Add+ % of all income
Subtract WithDrawls
E: ending cap acct
\+ % of ALL lab
=YE basis

Question 3

if basis of property in non-cash transaction is greater than partners basis

Answer 3

use the max amount to get the parternship to zero

so if receives property of $6K basis and his initial basis is $5k, since the property > basis before transaction, the property basis would be 5K

Question 4

Foreign income taxes paid by a domestic corporation may be claimed either as:

Answer 4

a deduction or as a credit, at the option of the corporation.

Question 5

substantial presence test

Answer 5

foreign person will not meet if they are not present in the U.S. for at least 31 days during the current year and at least 183 days for a three-year period.

Question 6

what report on Form 1120-F U.S. Income Tax Return of a Foreign Corporation.

Answer 6

Income earned by a U.S. branch is reported on Form 1120-F U.S. Income Tax Return of a Foreign Corporation.

Question 7

losses from a controlling partner

Answer 7

DISALLOWED.

ex: you own >50% of partnership, and you buy a building with FMV of 10K and partners basis of 20K, you cannot recognize the 10K loss.

so if you own 60%, and the NI is 100k ordinary - 10K loss on building, you need to ADD BACK the 10K loss.
your share as a controlling partner would be 110K60%. everyone else would just be 100K their %