1. Question 31 Short Answer Question - Sara is the sole owner of Yellow Corporation. Her basis in Yellow is $50,000. The value of her stock is $100,000. In addition, to compensate herself for services that she provides to Yellow, Sara pays herself an annual salary of $40,000. Because of recent downturn in business, she needs to put an additional $80,000 into her corporation to help meet short-term cash-flow needs (to pay for inventory costs, salaries, and administrative expenses). Should she do a capital contribution transfer of $80,000 or a loan? What is best for tax purposes? Explain your answer. 2. Question 56 A subsidiary corporation is liquidated under Sec 332. Pursuant to its liquidation, the subsidiary distributed property to a minority shareholder. With respect to this distribution, what are the tax consequences to the subsidiary corporation and to its minority shareholder? 3. Question 58 One shareholder of an S corporation takes a short-term unwritten cash advance of $9,000 during tax year. Would this arrangement create a second class of stock? Explain