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Taxes: What is the tax impact to a C or S corporation

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9- Beth's business purchased only one asset during the current year. It placed in service machinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring Section 179 or bonus expensing)

10- Ilene rents her second home. During 2009, Ilene reported a net loss of $15,000 from the rental. If Ilene is an active participant in the rental and her AGI is $140,000, how much of the loss can she deduct against ordinary income in 2009?

11- What is the tax impact to a taxable corporation or an S corporation when it makes a property distribution to a shareholder?

12- What item(s) affect the tax basis of a shareholder in a taxable corporation?

13- Roberta transfers property with a tax basis of $400 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $350 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $150 on the property transferred. What is the amount realized by Roberta in the exchange?

14- Camille transfers property with a tax basis of $800 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $850 and $350 in a transaction that qualifies for deferral under Section 351. Camille also incurred selling expenses of $100. What is the amount realized by Camille in the exchange

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9. If 40% or more of the total assets purchased during the year occurred in the last quarter, then the depreciation is limited to 1/4 of the amount that would normally be allowable. 7 year MACRS property would be 14.29% but the fourth quarter amount is only 3.57% x 50000 = $1785.

Refer to depreciation tables for fourth quarter percentages.

10. Assuming she is a single person and not a married filing separately, and meets all the other rules under passive loss limitation: the AGI limitation for deduction of rental losses is $150,000 less 50% of the excess for AGI over $100,000. The calculation then is $150,000 - 140,000 x 50%) = $5,000. The allowable amount of passive activity loss would be $5,000 and the remaining $10,000 would carryover to a year in which it can be used.

See Part II of the form linked here: http://www.irs.gov/pub/irs-pdf/f8582.pdf
Hopefully it remembered my input.

11. The property distributed from a C Corporation in the ...

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Taxes: What is the tax impact to a taxable corporation or an S corporation when it makes a property distribution to a shareholder? and more....

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Emerging Issues Task Force

Issue No. 13-C, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists." The settlement of a liability for an unrecognized tax benefit may be reduced by a net operating loss (NOL) carryforward or a tax credit carryforward as required by U.S. tax law. The IRS does not require a disallowed uncertain tax position to be settled in cash if sufficient NOL carryforwards are available to eliminate the additional taxable income, but a taxpayer is required to use NOL carryforwards in the first year taxable income arises.

Topic 740, Income Taxes, does not include explicit guidance on whether and when an entity should present an unrecognized tax benefit as a liability or as a reduction of NOL carryforwards or other related tax credits. In practice, the presentation of the liability for an unrecognized tax benefit depends on the relationship with the NOL carryforwards. If the liability for an unrecognized tax benefit is directly associated with a tax position taken in a tax year that results in or that resulted in the recognition of an NOL carryforward for that year (and the NOL carryforward has not yet been utilized), the unrecognized tax benefit should be presented as a reduction to the NOL; otherwise, it should be presented as a liability.

The issue is how an entity should present a liability for an unrecognized tax benefit in the statement of financial position when nonrecognition of the tax benefit would otherwise reduce a deferred tax asset related to an NOL or tax credit carryforward under the provisions of the tax law.

Required:
1. Evaluate the key areas being addressed by the EITF
2. Assess how a company's accounting and financial reporting is likely to be impacted by the work being done by the EITF on this issue.

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