LO.6 The stock of Grouse Corporation (a C corporation) is owned equally by a sister and two brothers: Mary, Rex, and Orson. During the year, the following transactions occur:

a. Mary sells property to Grouse Corporation.

b. Orson buys property from Grouse Corporation.

c. Rex leases property from Grouse Corporation.

d. Grouse Corporation pays for Orson’s medical bills.

e. All shareholders use an airplane owned by Grouse Corporation.

f. Orson borrows money from Grouse Corporation.

g. All shareholders are paid salaries by Grouse Corporation.

h. All shareholders finance Grouse Corporation’s capital acquisitions (e.g., machinery, equipment, land, and buildings) through the use of long-term debt.

Discuss any potential tax problems that these transactions might present.