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Flashcards in REG 17 Deck (17):

What are salaries paid to partners.

A form of guaranteed payment. Must be subtracted from income to arrive at distribution.


UCC Remedies available to seller in breach

1. Withhold delivery
2. Prevent Baille from delivering
3. Resale and recovery of damages
4. Recover of damages for nonacceptance
5. Cancellation


What is the statute of limitations under UCC as far as contracts and can this be changed by agreement.

4 years from the date of delivery for sale of goods. Parties may reduce the period but. not to less than a year. Delivery means when tendered.

When it's not delivery? If you have to have specific performance to find out and then it starts to accrue then.

And I have no idea WTF question 2325 is saying.


Under what conditions may a buyer recover goods from an insolvent seller?

1. Goods identified in contract
2. Became insolvent within 10 days of receipt of first installment payment
3. Tender of any unpaid portion of the price is made and kept open (what does that mean)


What does tender mean. UCC has payment and goods.

Goods I think is deliver them so they can be inspected

Payment - not sure,


Distributed property of a corporation.

Must recognize gain realized as if the property were sold.


Related Party Transactions - Sold stock at a loss to your brother who then sold it to an outside party what happens

Losses are not allowed between related parties and the basis transfers to the new related party owner


Related Party Transactions: OK now you sold it at a loss to a relative and then they sold the stock in between your cost and WHAT YOU originally sold it to them for - what happens.

0 recognized loss and 0 recognized gain,


When you sell depreciable property how is the profit tax after the depreciation is recaptured as ordinary income. What section is this called

This is called section 1245 property which says that the depreciation recapture is ordinary income and anything above that is a long term capital gain.

1245 Depreciable Personal Property
1231 Property - Not sure what the difference is, but this is the part that says the gain is long term


Business owner has capital gain on sale of stock 16,000 and loss on sale of land -10000 and a gain on a different piece of land 4,000. The land is used in the business and was held over 1 year. What is the net capital gain form the sale or exchange of capital assets.

Need to know definition of net capital gain - is it just the net from the land or is it only the gain.

Net Capital Gain - Excess of the net long-term capital gain over Net short-term capital Loss. So it's only 16,000

The other assets could be 1231, 1245 or 1250 property which result in ordinary gain loss and capital gain or just an ordinary loss.

Land is 1231 of but its not depreciable property so the sale is just treated as an ordiany net loss of $6,000.


When does someone transferring assets to a corporation for stock recognize a gain. What is the basis to the corporation of the land.

Got stock worth 20K and cash of $20K, for land with a MVU of 50K, basis of 15K, subject to 10K mortgage which corp assumed,

This is a 351 exchange which is about when person is in control of corp or other business entity.

GAin is generally the boot (cash) received.
What you got value of 20+20+10=50
Less Basis 15
Equals Gain of 35
The boot is less so this is the gain


Section 351 - What does this section do?

Tells you when people setting up a corporation don't have to recognize gain when transferring property .


If control after transfer of assets to corporation what does this mean and what IRC section

No recognition of gain or loss.
Section 351


If there are assets and liabilities transferred to corporation is there a gain or loss.

If the liabilities don't exceed the aggregate basis in the assets transferred then no gain.


What is basis for someone who transfers assets of $300 subject to liabil of $50K to corp.



What constitutes control under section 368 regarding section 351 where you don't have to recognize gain on transfer of assets to corp.

Control is at least 80% of the voting power and 80% of total number of shares from all classes.

When they say 80% they mean by one or more persons collectively at the same time.

but if the corp gives you cash back, that is taxable as a gain


What if you transfer property that has fallen in value or depreciated to corporation?

It's always the adjusted basis.