16. A transfers property basis $100,000 (FMV $50,000) to Y Corp. in exchange for all the issued shares

Is any loss recognized? ________________ (Yes/No)

Code Section for a? ________________

What is Y Corps basis in property $________________

Specific Code Section for c above ________________

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17. 2022 Corp Z Cash Method Taxpayer (Corp. Aggregate Receipts < $27 Mil.)

100% Owned by Shareholder A Business Income - Business Expenses - NYS Bond Interest -

Dividend received from 75% owned Corporation - Reasonable Compensation - Compensation of Family Members Not Active in the Company - Capital Loss

Interest Expense paid to Bank - 179 Depreciation Tractor - Bonus Depreciation Heavy Truck -

Questions:

a. What is taxable income? _______________ Show calculations.

$1,200,000 $160,000 $2,000 $8,000 $550,000 $150,000

< $5,000> $250,000

$25,000 $50,000

Define earnings and profits (2 or 3 sentences) ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

Give Code Section for Part b _______________

What is 2022 E&P before distribution? _______________ Show calculation. (Yes/No)

Does shareholder A receive any dividend? _______________

If yes to e, how much? _______________

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18. If aggregate receipts in 17 above > $27 million

Compute taxable income $________________ Show calculations.

What Code Section applies? _______________

19. If Corp. Z above is an S Corporation, business expenses increase to $1,160,000 and 45% of business losses for 2022 are allocated to passive shareholders:

Is Corp. Z permitted to retain cash method? _______________ (Yes/No)

Why? (Yes or No, 1 sentence & Code Section)

 ___________________________________________________________________________ 

 ___________________________________________________________________________ 

c. Describe any elections available (Max 2 sentences)

 ___________________________________________________________________________ ___________________________________________________________________________ 

Give Regulation Section for c above _______________

Can Passive Activity losses offset shareholder wages? _______________

Give Code Section to Part e _______________

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20. Y Corp., a C Corp. has gross business income of $1,000,000 business expenses $500,000; Bank interest of $10,000 ; NYS bond interest of $5,000 ; and Y Corp. also received key person insurance proceeds of $200,000 and paid C Corp. income tax of $100,000

Compute E & P $________________

If Y Corp. is an S Corp. compute AAA $________________