28. Corp. Z has accumulated E&P of $100,000 and current year results as follows:

Shareholder Basis in Stock - $10,000 Income - $1,000,000 General Expenses - $300,000 Cost of Goods Sold - $600,000 Officer Salary - $300,000 ($200,000 reasonable) Excessive Lease Payment to Shareholder - $50,000 (included in General Expenses) Interest from Corporate Loan to Shareholder - $10,000 below statutory benchmark

Current Loss is $__________

Total distribution amount is $__________

Total distribution from current E&P $__________

Dividend from accumulated E&P $__________

How is remainder of distribution taxed? Give Code Sections. _____________________

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29. X Corp. (a C corporation) distributes Whiteacre to shareholders all of whom have held their shares for several years. Cost $250,000 ; FMV $1,000,000. There are no current earnings for 2022. Accumulated E&P is 0. Basis of stock is $50,000.

Is X Corp. taxed? __________

Compute tax. $___________

Give Code Section __________

30. In Question 29 above, what is the shareholder income show computations.

Are the shareholders taxed? __________

Give Code Sections with Subsections __________

Character and amount of Distribution - Show computations and all income classes.

 ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 

Maximum tax bracket to shareholder before any surtax.

Surtax amount if threshold is exceeded. ____________

If the FMV were $200,000 is there any gain or loss to Corp. X? (If yes give amount and indicate if gain/loss) _______________

Give code section to Part f above __________

31. Corp. X has 400 common shares outstanding. A, B, C, & D all unrelated each own 100 shares. X redeems 55 shares from A; 25 from B; 20 from C.

How is A taxed on the distribution? (1 3 words) _______________________________

Give specific Code Section. __________

How is B taxed on the distribution (1 3 words) _______________________________

Give Code Section(s). ____________

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If D is As son how is A taxed? (1-3 words) _______________________________

Give Code Section(s). __________

32. Father, mother, son and daughter are each 25% shareholders and father and mother wish to be redeemed in a complete redemption of their shares.

a. What Code Section(s) apply? Give 3 most applicable. ____________

b. Briefly (one sentence each) list the 3 requirements for father and mothers most desirable tax treatment.

______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 

_______ 33. A purchaser of a business will generally prefer which of the following?

An asset purchase to receive new basis for depreciation

A stock purchase because the seller will receive capital gains

Utilizing a 338(g) election

If the selling entity is an S Corporation making a joint 338(h)(10) election

All of the above

A,C,&D

What form is required to report the allocation of the purchase price? ____________