A C Corporation has a net operating loss (NOL) carryforward of $100,000 arising from Year 1 (post-TCJA). In Year 2, the corporation has taxable income of $80,000 before the NOL deduction. What is the maximum NOL deduction the corporation can claim in Year 2, and what is the carryforward to Year 3?
A C Corporation distributes land to its sole shareholder as a nonliquidating distribution. The land has a Fair Market Value (FMV) of $500,000 and an adjusted basis to the corporation of $300,000. The land is subject to a liability of $200,000 which the shareholder assumes. The corporation has ample Earnings & Profits (E&P). What is the recognized gain for the corporation?
Parent Corp owns 100% of Sub Corp. They file a consolidated return. In Year 1, Parent sells land to Sub for $500,000 (Parent's basis was $300,000). In Year 2, Sub sells the land to an unrelated third party for $600,000. What is the consolidated taxable income effect in Year 1 and Year 2 regarding this transaction?
A U.S. C Corporation owns 100% of a Foreign Subsidiary. The Foreign Subsidiary earns $100,000 of 'Subpart F income' (passive investment income) in Year 1. It distributes $0 to the U.S. parent. How is this taxed?
An S Corporation shareholder has a stock basis of $10,000 and a debt basis of $0 at the beginning of Year 1. In Year 1, the S Corp reports an ordinary loss of $15,000. In Year 2, the S Corp reports ordinary income of $8,000. What is the shareholder's stock basis at the end of Year 2?
An S Corporation was formerly a C Corporation and has Accumulated Earnings and Profits (AEP) of $20,000. It has an Accumulated Adjustments Account (AAA) of $10,000. In Year 1, the S Corp distributes $40,000 cash to its sole shareholder. The shareholder's stock basis before the distribution is $50,000. What is the tax treatment of the distribution?
Partner A contributes land to a partnership in exchange for a 50% interest. The land has a basis of $80,000 and an FMV of $100,000. The partnership assumes a $20,000 recourse mortgage on the land. Partner A bears 50% of the economic risk of loss for the debt. What is Partner A's initial basis in the partnership interest?
A partnership distributes cash of $10,000 and property with an adjusted basis of $20,000 (FMV $25,000) to a partner in a nonliquidating distribution. The partner's outside basis before the distribution is $22,000. What is the partner's basis in the received property?
Partner X sells their 1/3 interest in a partnership to Buyer Y for $100,000. The partnership has assets with a basis of $150,000 and FMV of $300,000. The partnership has a §754 election in effect. What is the amount of the §743(b) basis adjustment?
A complex trust has Distributable Net Income (DNI) of $40,000 (all taxable). The trust instrument requires a distribution of $10,000 to Beneficiary A. The trustee also uses discretion to distribute $40,000 to Beneficiary B. Total distributions = $50,000. How much income must Beneficiary A and Beneficiary B report?
A §501(c)(3) tax-exempt university operates a coffee shop open to the public. The shop generates $50,000 in net income. The university also earns $100,000 in dividends from its endowment portfolio. Which of these items constitutes Unrelated Business Taxable Income (UBTI)?
A C Corporation is considering liquidating. It has assets with a basis of $100,000 and FMV of $500,000. The sole shareholder has a stock basis of $50,000. If the corporation liquidates and distributes the assets to the shareholder, what is the total tax consequence (Corporate + Shareholder level)?
A C Corporation distributes a property dividend to a shareholder. The property has an FMV of $100,000 and a basis of $140,000. The corporation has sufficient E&P. What are the tax consequences to the corporation?
A partnership has a §754 election in effect. Partner A sells their interest to Partner B. The partnership's assets have a basis of $100,000 and FMV of $80,000 (Built-in Loss of $20,000). Partner B pays $80,000 for the interest (assume 100% ownership for simplicity of math). What is the impact of the §743(b) adjustment?
A C Corporation has current E&P of $10,000 and accumulated E&P of ($50,000) (deficit). It distributes $20,000 to its sole shareholder. What is the tax treatment?
A U.S. Corporation has a foreign branch. The branch earns $100,000 of income and pays $20,000 in foreign taxes. The U.S. tax rate is 21%. What is the net U.S. tax liability on this income after the Foreign Tax Credit (FTC)?
A C Corporation has a Net Capital Loss of $10,000 in Year 4. In Years 1, 2, and 3, it had Net Capital Gains of $2,000, $3,000, and $1,000 respectively. How is the Year 4 loss utilized?
A partnership makes a liquidating distribution to Partner J. Partner J's outside basis is $50,000. J receives $10,000 cash and inventory with a basis of $20,000 (FMV $25,000). No other assets are received. What is the result?
A partnership distributes a 'hot asset' (unrealized receivable with Basis $0, FMV $10,000) to a partner in liquidation of their interest. The partner's outside basis is $15,000. What is the partner's basis in the receivable?
An S Corporation distributes appreciated property (FMV $100,000, Basis $20,000) to its sole shareholder. The shareholder's stock basis is $150,000. What is the shareholder's basis in the distributed property?
A taxpayer is the grantor of a trust. The trust generates $10,000 of income. The trustee retains the income in the trust. Who pays the tax?
A partnership has 3 partners. Partner A (50%), Partner B (25%), Partner C (25%). Partner A uses a calendar year. Partners B and C use a fiscal year ending June 30. What tax year must the partnership adopt?
A C Corporation has $100,000 of taxable income. It owns 25% of another domestic corporation and receives a $10,000 dividend. What is the Dividends Received Deduction (DRD)?
A partnership pays a guaranteed payment of $20,000 to a partner for services. The partnership has $50,000 of ordinary income before the payment. What is the partner's total income from the partnership?
A taxpayer has $5,000 of foreign source income and $95,000 of U.S. source income. Total Taxable Income = $100,000. U.S. Tax Liability = $20,000. Foreign taxes paid = $1,500. What is the Foreign Tax Credit?
Shareholder A contributes property (Basis $20,000, FMV $50,000) to a C Corporation in exchange for 100% of the stock and $5,000 cash. What is Shareholder A's recognized gain and basis in the stock?
A C Corporation distributes land to a shareholder as a nonliquidating distribution. The land has a basis of $40,000 and an FMV of $90,000. The corporation has ample E&P. What are the tax consequences to the corporation?
A C Corporation liquidates. It distributes asset X (Basis $100,000, FMV $80,000) to Shareholder A. What is the tax consequence to the corporation?
LossCo, a C Corporation, has a $1,000,000 NOL carryforward. On January 1, Year 1, ProfitCo acquires 100% of LossCo's stock. The long-term tax-exempt rate is 3%. The value of LossCo's stock at acquisition is $2,000,000. LossCo has no net unrealized built-in gains. What is the maximum amount of the NOL that can be utilized in Year 1?
Parent Co. and Sub Co. file a consolidated return. In Year 1, Parent sells land to Sub for $500,000 (Parent's basis $300,000). In Year 3, Sub sells the land to an unrelated party for $600,000. What is the consolidated gain reported in Year 3?
A U.S. corporation manufactures inventory in the U.S. and sells it in Japan with title passing in Japan. Under general sourcing rules (IRC §863(b) as amended by TCJA), how is the income sourced?
US Co owns 100% of Foreign Co (a CFC). Foreign Co earns $100,000 of interest income (Subpart F income) and has no other income. Foreign Co distributes nothing. What is the tax consequence to US Co?
An S Corporation shareholder has a stock basis of $10,000 at the beginning of Year 1. In Year 1, the S Corp reports:<br/>- Ordinary Income: $5,000<br/>- Tax-Exempt Interest: $2,000<br/>- Cash Distribution: $8,000<br/>What is the shareholder's stock basis at the end of Year 1?
An S Corp shareholder has Stock Basis $0 and Debt Basis $10,000 (loan to corp). In Year 1, the S Corp has an Ordinary Loss of $5,000. In Year 2, the S Corp has Ordinary Income of $3,000 and pays back $4,000 of the loan principal to the shareholder. What is the tax consequence of the loan repayment in Year 2?
An S Corporation (formerly a C Corp) has Accumulated E&P (AEP) of $20,000. At year-end, its Accumulated Adjustments Account (AAA) is $15,000. The corporation distributes $40,000 cash to its sole shareholder. The shareholder's stock basis (before distribution) is $100,000. How is the distribution taxed?
An S Corporation has $365,000 of non-separately stated income for Year 1. Shareholder A owned 100% of the stock from Jan 1 to June 30 (181 days). On July 1, Shareholder A sold 50% of their stock to Shareholder B. How much income is allocated to Shareholder A for Year 1 (using the per-day allocation method)?
A partner contributes property (Basis $30,000, FMV $100,000) subject to a $40,000 recourse liability to a partnership for a 50% interest. The other 50% partner contributes $60,000 cash. What is the contributing partner's basis in the partnership interest immediately after formation?
A partner with an outside basis of $50,000 receives a nonliquidating distribution of $20,000 cash and land (Basis to partnership $40,000, FMV $60,000). What is the partner's basis in the land received?
A partner receives a liquidating distribution consisting of $10,000 cash and inventory (Basis $5,000, FMV $8,000). The partner's outside basis was $20,000. What is the tax consequence?
Partner A sells their 1/3 interest in a partnership to Buyer B for $100,000. The partnership has assets with a basis of $150,000 and FMV of $300,000. A Section 754 election is in effect. What is the amount of the Section 743(b) basis adjustment allocated to Buyer B?
A partner performs services for a partnership and receives a Guaranteed Payment of $20,000. The partnership has $50,000 of ordinary income before the guaranteed payment. What is the partner's total ordinary income inclusion if they own a 50% interest?
Partner A sells their partnership interest for $50,000. Their outside basis is $30,000. The partnership holds inventory with a basis of $10,000 and FMV of $20,000. How is the gain characterized?
A trust has the following items in Year 1:<br/>- Interest Income: $10,000<br/>- Dividends: $5,000<br/>- Long-Term Capital Gain (allocable to corpus): $8,000<br/>- Trustee Fees (allocable to income): $2,000<br/>What is the Distributable Net Income (DNI)?
Which of the following requires a trust to be classified as a 'Complex Trust' for a given tax year?
A grantor establishes a trust, retaining the power to revoke it. The trust earns $5,000 in interest and $10,000 in dividends. Who pays the tax on this income?
A tax-exempt university operates a coffee shop open to the public. It generates $50,000 profit. It also earns $20,000 in dividends from investments. Which amount is Unrelated Business Taxable Income (UBTI)?
Which of the following activities could jeopardize a §501(c)(3) organization's tax-exempt status?
A C Corporation owns 15% of Domestic Corp. It receives a $10,000 dividend. The C Corp's taxable income before the DRD is $8,000. What is the Dividends Received Deduction (DRD)?
A C Corporation has a Net Operating Loss (NOL) carryforward of $100,000 arising from Year 1 (post-TCJA). In Year 2, the corporation has taxable income of $80,000 before the NOL deduction. What is the corporation's taxable income for Year 2 after the NOL deduction?
Shareholder A contributes property (Basis $40,000, FMV $100,000) to a C Corporation in exchange for 100% of the stock. The corporation assumes a liability of $55,000 attached to the property. What is Shareholder A's recognized gain and basis in the stock?
A C Corporation distributes land to its sole shareholder as a nonliquidating distribution. The land has a basis of $20,000 and an FMV of $50,000. The corporation has ample E&P. What are the tax consequences to the corporation?
Parent Corp owns 100% of Sub Corp. In Year 1, Sub Corp sells land to Parent Corp for $500,000 (Sub's basis was $300,000). In Year 2, Parent Corp sells the land to an unrelated party for $600,000. They file a consolidated return. What is the consolidated gain reported in Year 1 and Year 2?
A U.S. C Corporation owns 100% of a Foreign Corporation. The Foreign Corporation earns $500,000 of Subpart F income (passive investment income) in Year 1. It distributes $0 to the U.S. parent. What is the U.S. tax consequence?
A U.S. Corporation is determining the source of its income. It manufactures inventory in the U.S. and sells it to customers in France with title passing in France. How is the income sourced?
An S Corporation shareholder has a stock basis of $10,000 and a debt basis (direct loan to S Corp) of $5,000 at the beginning of Year 1. In Year 1, the S Corp reports an ordinary loss of $20,000. What is the shareholder's suspended loss and remaining basis at the end of Year 1?
An S Corporation distributes property (Basis $20,000, FMV $50,000) to its sole shareholder. The shareholder has a stock basis of $100,000 prior to the distribution. What is the shareholder's basis in the stock AFTER the distribution?
An S Corporation is liquidated. It distributes its only asset (Basis $100,000, FMV $150,000) to its sole shareholder. The shareholder's stock basis is $80,000. What is the shareholder's total recognized gain?
Shareholder A sells their 50% interest in an S Corporation on June 30, Year 1 (exactly halfway through the year). The S Corporation has a non-separately stated loss of $100,000 for the full Year 1. No election is made to close the books. What is Shareholder A's share of the loss?
Partner A contributes property (Basis $30,000, FMV $100,000) to a partnership for a 50% interest. The property is subject to a $40,000 recourse liability, which the partnership assumes. Partner A bears the economic risk of loss for 50% of this liability. What is Partner A's basis in the partnership interest immediately after contribution?
A partnership distributes cash of $20,000 and property (Basis $15,000, FMV $25,000) to a partner in a nonliquidating distribution. The partner's outside basis before the distribution is $30,000. What is the partner's basis in the received property?
Partner A receives a guaranteed payment of $40,000 for services rendered to the partnership. The partnership has $100,000 of ordinary income before the guaranteed payment. Partner A has a 50% profit share. What is Partner A's total ordinary income from the partnership?
A partnership has a §754 election in effect. Partner A sells their 25% interest to Buyer B for $200,000. At the time of sale, the partnership's inside basis in its assets is $600,000 (FMV $800,000). Buyer B's share of inside basis is $150,000 (25% of $600k). What is the amount of the §743(b) basis adjustment?
A partner receives a liquidating distribution consisting of Cash ($10,000) and Inventory (Basis $20,000, FMV $25,000). The partner's outside basis is $40,000. What is the partner's recognized loss?
A Simple Trust has $10,000 of interest income and $20,000 of capital gains allocable to corpus in Year 1. The trust instrument requires all income to be distributed currently. What is the Trust's Distributable Net Income (DNI)?
A Complex Trust has DNI of $15,000. It distributes $20,000 to the sole beneficiary. $5,000 of the DNI is tax-exempt interest. What is the amount of the Income Distribution Deduction allowed to the trust?
Which of the following powers, if retained by the grantor, will cause a trust to be treated as a Grantor Trust for income tax purposes?
A trust has $50,000 of DNI. The trustee is required to distribute $30,000 to Beneficiary A and has discretion to distribute remaining income to Beneficiary B. The trustee distributes $30,000 to A and $40,000 to B. How much income does Beneficiary B report?
A §501(c)(3) tax-exempt hospital operates a gift shop (staffed by volunteers) and a public cafeteria (staffed by paid employees). Which activity generates Unrelated Business Income (UBI)?
A tax-exempt organization has $5,000 of UBI from advertising and $2,000 of directly connected deductions. It also has $1,000 of interest income. The specific deduction for UBI is $1,000. What is the Unrelated Business Taxable Income (UBTI)?
A C Corporation has a Net Operating Loss (NOL) of $100,000 generated in Year 2. In Year 3, the corporation has taxable income of $80,000 before the NOL deduction. The applicable NOL limitation is 80% of taxable income. What is the corporation's taxable income in Year 3 and the NOL carryforward to Year 4?
A C Corporation distributes land to its sole shareholder as a nonliquidating distribution. The land has a basis of $40,000 and a fair market value (FMV) of $90,000. The land is subject to a liability of $30,000 which the shareholder assumes. The corporation has ample Earnings & Profits (E&P). What are the tax consequences to the C Corporation?
Parent Corp owns 100% of Sub Corp. They file a consolidated return. In Year 1, Parent sells land to Sub for $150,000 (Parent's basis was $100,000). In Year 3, Sub sells the land to an unrelated third party for $180,000. What is the consolidated gain reported in Year 1 and Year 3?
An S Corporation distributes property with a fair market value of $50,000 and an adjusted basis of $70,000 to its sole shareholder. What is the tax treatment for the S Corporation regarding this distribution?
A shareholder of an S Corporation has a stock basis of $10,000 and a debt basis of $5,000 (from a direct loan to the corp) at the beginning of Year 1. In Year 1, the S Corp reports an ordinary loss of $20,000. In Year 2, the S Corp reports ordinary income of $8,000. No distributions are made. What is the shareholder's debt basis at the end of Year 2?
Partner A contributes land with a basis of $60,000 and FMV of $100,000 to a partnership for a 50% interest. The land is subject to a $20,000 recourse liability which the partnership assumes. Partner A bears the economic risk of loss for 50% of this liability. What is Partner A's initial outside basis in the partnership interest?
A partnership distributes cash of $10,000 and property (Basis $15,000, FMV $20,000) to a partner in a nonliquidating distribution. The partner's outside basis before the distribution is $22,000. What is the partner's basis in the received property and the remaining outside basis?
Partner X sells their 1/3 interest in a partnership to Buyer Y for $100,000. The partnership has assets with a basis of $150,000 and FMV of $300,000. The partnership has a §754 election in effect. What is the amount of the §743(b) basis adjustment allocated to Buyer Y?
A complex trust has Distributable Net Income (DNI) of $40,000 (all ordinary income). The trust instrument requires a distribution of $10,000 to Beneficiary A. The trustee also makes a discretionary distribution of $40,000 to Beneficiary B. What is the taxable income reportable by Beneficiary B?
A tax-exempt organization (501(c)(3)) operates a gift shop. The shop sells items related to its exempt purpose (books, educational toys) and items unrelated (souvenirs, clothing). The unrelated sales generate $50,000 gross income. Direct expenses for unrelated sales are $30,000. The organization also has $5,000 of dividend income from investments. The specific deduction is $1,000. What is the Unrelated Business Taxable Income (UBTI)?
A partnership makes a guaranteed payment of $50,000 to a partner for services. The partnership has $100,000 of ordinary income before the guaranteed payment. What is the partnership's ordinary income after the payment and the partner's total income inclusion (assuming 50% share of profits)?
A C Corporation owns 80% of a foreign subsidiary. The subsidiary pays a dividend of $100,000 to the US parent. The subsidiary paid $20,000 in foreign taxes on the income. The US parent elects to take the 100% Dividends Received Deduction (DRD) under §245A. What is the US tax impact?
A partnership distributes a marketable security (Basis $20,000, FMV $35,000) to a partner in a nonliquidating distribution. The partner's basis in the partnership is $50,000. The partner holds the security for 2 years and sells it for $40,000. What is the partner's basis in the security upon receipt?
A taxpayer contributes property with a basis of $100,000 and FMV of $150,000 to a C Corporation for 100% of the stock. The corporation assumes a liability of $120,000 on the property. What is the taxpayer's recognized gain?
An S Corporation distributes appreciated property (Basis $10,000, FMV $100,000) to its sole shareholder in a liquidating distribution. The shareholder's stock basis is $50,000. What are the tax consequences?
A C Corporation distributes cash of $50,000 to a shareholder. The corporation has Current E&P of $10,000 and Accumulated E&P of ($40,000) deficit. What is the amount of the dividend?
A C Corporation has current year E&P of $50,000 and accumulated E&P of $20,000. It distributes land (Basis $10,000, FMV $40,000) to a shareholder. What is the amount of the dividend to the shareholder?
A taxpayer is the beneficiary of a simple trust. The trust has $10,000 of ordinary income and $5,000 of long-term capital gains (allocable to corpus). The trust distributes $12,000 to the beneficiary. What is the beneficiary's taxable income from the trust?
A C Corporation has $100,000 of taxable income. It makes a charitable contribution of $20,000. What is the allowable deduction?
A C Corporation has a net capital loss of $20,000 in Year 4. In Years 1, 2, and 3, it had capital gains of $5,000, $8,000, and $2,000 respectively. What is the carryback/carryforward?
A partnership distributes cash of $30,000 to a partner in liquidation of their interest. The partner's basis was $20,000. What is the gain/loss?
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