7. During 2020, Sienar Systems, Inc purchased Correalian Drives, Inc. (one of its suppliers) using the assets method. As a part of this business, it was determined the company purchased 1,200,000 of Goodwill. In 2022, it was determined the goodwill was impaired to the tune of about $200,000.

1. How much is the book to tax difference with this purchase in 2020 and is it temporary or permanent?

2. What is the book effect of the impairment in 2022?

3. What is the book to tax difference of the impairment? Is it temporary or permanent?

In2020, Bespin Gas Systems, Inc (a C-Corporation), made a charitable donation of $100,000 to the Wookie Relief Fund (a qualifying charity). For 2020, they reported net income of $550,000, which included the $100,000 donation, a $50,000 dividends received deduction and a $10,000 Net Operating Loss carryover, from the previous year.

1. What is the permitted charitable deduction allowed in 2020?

2. What is the effect of the remaining amount (both amount and time of the carryover).

8. in 2020, Geonosis Industries, Inc (GII). reported taxable income of $500,000 from operations this year. During the year the company made a distribution of land to its sole shareholder, Sly Tyranus. The Lands FMV as $75,000 and its E&P Basis to GII was $125,000. Sly assumed a mortgage attached to the land of $15,000. The company had accumulated E&P of $750,000.

1. Compute GIIs Taxable Income and income tax.

2. Computer Tigers Current E&P

3. Compute Tigers Accumulated E&P at the beginning of the year for 2021.

4. Compute the amount of dividend income Sly recognizes as a result of the distribution.

5. What is Slys tax basis in the land he received from GII?

9. Kevin, Gerald and Robb formed HyperTech Systems, LLC. No election was made as to the status of this entity, as they wanted to leave it as a partnership. Kevin and Robb contributed $245,000 to the partnership. Gerald contributed the following assets:

Asset	Basis	Fair Market Value
Cash	$15,000	$15,000
Land	$120,000	$440,000
	$135,000	$445,000

1. What is the tax basis of Kevin and Robb in the partnership?

2. Assume Gerald is asking for an equal part in the partnership in terms of capital? What will be the tax effects to Gerald?

3. Assume Gerald is asking for an equal share in the partnership in terms of profits and losses only. What are the tax effect to Kevin, Robb and Gerald?

10. Jack, Jill and James own a CPA firm (Smith, Smith, Bond and Co., LLC), which is taxed as a partnership, and where each work full-time. Each contributed cash of $100,000 to the firm in 2019 at its beginning. The firm in the first year made $40,000 in profit in its first year. Profits and losses are split three ways.

The partnership has the following forms of debt:

Nonrecourse: $30,000

Recourse: $150,000 (The recourse debt was secured 100% by James)

Qualified Nonrecourse Mortgage: $600,000

1. Calculate the total basis (including debt basis) for each partner.

2. Calculate the at-risk amount limitation

3. Calculate the passive loss limitation for each partner.

11. Kim, James and Paul own an accounting firm, but Kim is reaching retirement age after her ownership in the firm for more than 25 years. She decides to sell her interest in the partnership. She is a 1/3 member of the firm and as of the end of the year, these are the following stats for the firm:

Assets

• Accounts Receivable: $75,000
• Equipment: $150,000 ($400,000 in total and $250,000 in accumulated depreciation)

Kim had the following stats:

• Total basis in the partnership at the end of 2020: $350,000
• Recourse Debt to Kim: $130,000
• Nonrecourse debt: $0
• There is no qualified mortgage debt

James and Paul are not interested in acquiring more of the firm, but Alice, who is a manager in the company is interested in purchasing Kims interest. She is willing to purchase it for $500,000 (using a loan from her 401k and the bank to finance it).

1. Calculate the total realized gain to Kim, when she sells it.

2. Calculate the following types of gains/losses:
   1. Ordinary Gains/Loss
   2. Capital Gains/Loss
   3. Character of the gains/losses

7. During 2020, Sienar Systems, Inc purchased Correalian Drives, Inc. (one of its suppliers) using the assets method. As a part of this business, it was determined the company purchased 1,200,000 of Goodwill. In 2022, it was determined the goodwill was impaired to the tune of about $200,000.

1. How much is the book to tax difference with this purchase in 2020 and is it temporary or permanent?

2. What is the book effect of the impairment in 2022?

3. What is the book to tax difference of the impairment? Is it temporary or permanent?

In2020, Bespin Gas Systems, Inc (a C-Corporation), made a charitable donation of $100,000 to the Wookie Relief Fund (a qualifying charity). For 2020, they reported net income of $550,000, which included the $100,000 donation, a $50,000 dividends received deduction and a $10,000 Net Operating Loss carryover, from the previous year.

1. What is the permitted charitable deduction allowed in 2020?

2. What is the effect of the remaining amount (both amount and time of the carryover).

8. in 2020, Geonosis Industries, Inc (GII). reported taxable income of $500,000 from operations this year. During the year the company made a distribution of land to its sole shareholder, Sly Tyranus. The Lands FMV as $75,000 and its E&P Basis to GII was $125,000. Sly assumed a mortgage attached to the land of $15,000. The company had accumulated E&P of $750,000.

1. Compute GIIs Taxable Income and income tax.

2. Computer Tigers Current E&P

3. Compute Tigers Accumulated E&P at the beginning of the year for 2021.

4. Compute the amount of dividend income Sly recognizes as a result of the distribution.

5. What is Slys tax basis in the land he received from GII?

9. Kevin, Gerald and Robb formed HyperTech Systems, LLC. No election was made as to the status of this entity, as they wanted to leave it as a partnership. Kevin and Robb contributed $245,000 to the partnership. Gerald contributed the following assets:

Asset	Basis	Fair Market Value
Cash	$15,000	$15,000
Land	$120,000	$440,000
	$135,000	$445,000

1. What is the tax basis of Kevin and Robb in the partnership?

2. Assume Gerald is asking for an equal part in the partnership in terms of capital? What will be the tax effects to Gerald?

3. Assume Gerald is asking for an equal share in the partnership in terms of profits and losses only. What are the tax effect to Kevin, Robb and Gerald?

10. Jack, Jill and James own a CPA firm (Smith, Smith, Bond and Co., LLC), which is taxed as a partnership, and where each work full-time. Each contributed cash of $100,000 to the firm in 2019 at its beginning. The firm in the first year made $40,000 in profit in its first year. Profits and losses are split three ways.

The partnership has the following forms of debt:

Nonrecourse: $30,000

Recourse: $150,000 (The recourse debt was secured 100% by James)

Qualified Nonrecourse Mortgage: $600,000

1. Calculate the total basis (including debt basis) for each partner.

2. Calculate the at-risk amount limitation

3. Calculate the passive loss limitation for each partner.

11. Kim, James and Paul own an accounting firm, but Kim is reaching retirement age after her ownership in the firm for more than 25 years. She decides to sell her interest in the partnership. She is a 1/3 member of the firm and as of the end of the year, these are the following stats for the firm:

Assets

• Accounts Receivable: $75,000
• Equipment: $150,000 ($400,000 in total and $250,000 in accumulated depreciation)

Kim had the following stats:

• Total basis in the partnership at the end of 2020: $350,000
• Recourse Debt to Kim: $130,000
• Nonrecourse debt: $0
• There is no qualified mortgage debt

James and Paul are not interested in acquiring more of the firm, but Alice, who is a manager in the company is interested in purchasing Kims interest. She is willing to purchase it for $500,000 (using a loan from her 401k and the bank to finance it).

1. Calculate the total realized gain to Kim, when she sells it.

2. Calculate the following types of gains/losses:
   1. Ordinary Gains/Loss
   2. Capital Gains/Loss
   3. Character of the gains/losses