21. Corporation X is an S Corporation

Shareholder A had a stock basis of $100,000 and loan basis of $50,000. 2022 results included a distribution to A of $175,000 and a Corporate loss reported on As K-1 of $35,000. There is no E&P.

What is As ending stock basis ______________

What is As ending loan basis ______________

Does A recognize any income yes/no ______________

If yes, how much ______________

How much of the loss is deductible if any ______________

If the loss were $65,000, how much if any would be deductible ______________

22. A & B contribute marketable securities to Corp. Z in exchange for all the issued stock. The securities have appreciated.

What Code Section governs? _______________

If their contributions were not identical what word best describes any prohibitive result

Do A & B recognize gain in b above _______________ (Yes/No)

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23. Creditor A (Not shareholder) loaned $100,000 to Corp. X Corp. is worthless and insolvent, A contributes her debt for 10% of Corporation X stock

Any gain recognized by A (Yes/No) _____________

Any taxable income recognized by Corp. X (Yes/No) _____________

What Code Section for Part b. above _______________

24. In 23 above, assume A is a shareholder and Corp. X is solvent. A contributes the loan to capital and receives stock in Corp. X worth less than the loan

Any gain recognized by A (Yes/No) _____________

Any taxable income recognized by Corp. X (Yes/No) _____________

What Code Section for Part b. above _______________

25. Shareholder loans $150,000 to his controlled corporation not evidenced by a note.

a. b. c. d.

e.

f.

Does the shareholder report interest income (Yes/No) _______________ What Code Section _______________ What if anything does Corp. X report (2-3 words) _______________________________ How is interest computed (4 10 Words) ______________________________________

Code Section for Part d above _______________ What is the name for this type of debt _________________

g. interest (3 words) _________________________

For loans over 9 years in duration the interest rate is compounded based on what rate of

26. Shareholder A loans $200,000 to Corp X and Corp X fails to repay regarding the nature of any deduction:

What Code Section will the IRS likely assert ____________

In Part a above, what is the tax result (2 to 5 words) _____________________________

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c. What Code Section will A try to assert ____________

Will A be likely to succeed? (Yes / No) ____________

Why in d above? (2 4 sentences)

 ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 

27. In question 26 above, if the funds were the total assets invested in Corp. X stock at inception

What Code Section describes a possible deduction to A? ____________

If A is married filing a joint return what is the maximum deduction available under a.

above? ____________

How is the deduction classified? ____________