TCP Flashcards
(47 cards)
At what time is a C Corporation that makes an S election exempt from the built-in gains tax?
5 Years after the S Election
When is the contribution of property to a Corporation a taxable event to the shareholder?
When the liabilities assumed by the corporation are more than the basis of the contributed property
How do you calculate the realized gain on contributed property for S Corporations?
FMV of property contributed - debt assumed by corporation= FMV of stock received + debt assumed by corporation= Amount Realized - adjusted basis of the contributed property=Gain Realized
A shareholder contribution is nontaxable if…
It is a contribution of property and not services, it is solely in exchange for stock, and if after the transfer the shareholder owns more than 80% if the corporation.
How do you calculate the shareholder’s stock basis after the contribution of property?
Adjusted basis of the contributed property - debt assumed by the corporation= Shareholder’s basis in the stock
How do you calculate the income that will be subject to the Built-In Gains Tax?
FMV of asset - Adjusted Basis= Built-in Gain (Loss)
The Corporation pays a Built-in Gains tax on the lesser of which 3 amounts?
- Net Unrealized built-in gain at the time of the S-Election
- Built-in gain recognized at the sale of the asset
- Corporation’s Year 5 taxable income
How do you calculate a shareholder’s share of the business income when they sell their stock?
Business Income x percentage in corporation x days owned the stock/365= shareholder’s share of business income
If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder…
Decreases the shareholder’s basis for the stock
How do you calculate income recognized to a shareholder for a nonliquidating distribution?
AAA balance before distribution- gain on property distributed= AAA balance after distribution.
FMV of distribution- AAA balance after distribution=income recognized by shareholder
How do you calculate the gain or loss recognized by a corporation for a nonliquidating distribution of property to a shareholder?
FMV of property-adjusted basis of property=gain or loss recognized by the corporation
How do you calculate a shareholder’s stock basis after a nonliquidating distribution?
Pre-distribution stock basis + Share of gain recognized - FMV of property distributed= Stock basis after the distribution
When receiving a nonliquidating distribution, what is the shareholder’s basis in the property distributed?
FMV of the property at the date of the distribution
How do you calculate a shareholder’s basis after a liquidating distribution from a corporation?
Shareholder’s beginning basis + share of corporation’s income + Gain on property= Ending Basis
How do you calculate a shareholder’s gain or loss realized from a liquidating distribution from a corporation?
Cash (Boot) distributed + FMV of property= Amount realized
How do you calculate a shareholder’s gain or loss recognized from a liquidating distribution from a corporation?
Amount realized - Ending basis in stock= Gain or loss recognized
How do you calculate initial partnership basis for partners who contribute property in exchange for their share in the partnership?
Adjusted basis of building contributed + share of partnership debt= Initial basis
If a partner provides services to a partnership, what type of income would they receive from the partnership?
Ordinary Income
When a partner receives partnership interest in exchange for services provided, the _________ of interest acquired represents __________ to the recipient and is the partner’s basis in the partnership interest acquired.
Blank 1: FMV
Blank 2: Ordinary Income
What income is used to determine the increase in a partner’s basis?
All income, including tax-free income
How do you calculate a partner’s basis in a property when receiving it through a complete liquidating distribution?
Beginning Basis - Cash Received = Partner’s Basis in Property
When a partner sells his partnership interest, a ________ gain or loss on the sale is recognized.
Capital
How to calculate a partner’s gain or loss on the sale of partnership interest?
cash received + relief of partnership debt - basis in the partnership interest = Capital Gain on the sale of partnership interest
What are two examples of a “Hot assets” of a partnership?
- Unrealized Receivables
- Appreciated Inventory
