a. c. 3-27 Disguised Distributions. SDF Corporation, a home developer, is owned equally by F and S, father and son. Briefly discuss the tax consequences arising from the following situations: A review of the corporation's books reveals an account entitled "F Suspense." Closer examination discloses that the corporation debits this account for checks made payable to F. Most of these checks are cash advances to F made during the current year. The average balance of this account during the current year exceeded $20,000. b. One of the checks charged to a suspense account maintained for S was for $6,000. The payment was for a garage that was added on to S's home to house the company car that he drives. S drives a car that was purchased by the corporation and is titled in the cor- poration's name. S uses a credit card issued to the corporation (also in the corporation's name) by a major oil producer to purchase all of his gas and pay for miscellaneous repairs on the company car. The corporation routinely pays the credit card bill, which for this year was $3,000. d. During the year, the corporation paid S's daughter, D, $12,000 to empty the trash and vacuum the corporate offices (about 2,000 square feet of office space) once a week. The corporation added a screened-in porch to F's home at a cost of $3,500. The corporation normally charges cost plus 30% on projects of this type but charged F only $3,500. f. F sold land to the corporation for $100,000. The corporation plans to develop a subdivision on the property. Similar land was available for $75,000. e. a. c. 3-27 Disguised Distributions. SDF Corporation, a home developer, is owned equally by F and S, father and son. Briefly discuss the tax consequences arising from the following situations: A review of the corporation's books reveals an account entitled "F Suspense." Closer examination discloses that the corporation debits this account for checks made payable to F. Most of these checks are cash advances to F made during the current year. The average balance of this account during the current year exceeded $20,000. b. One of the checks charged to a suspense account maintained for S was for $6,000. The payment was for a garage that was added on to S's home to house the company car that he drives. S drives a car that was purchased by the corporation and is titled in the cor- poration's name. S uses a credit card issued to the corporation (also in the corporation's name) by a major oil producer to purchase all of his gas and pay for miscellaneous repairs on the company car. The corporation routinely pays the credit card bill, which for this year was $3,000. d. During the year, the corporation paid S's daughter, D, $12,000 to empty the trash and vacuum the corporate offices (about 2,000 square feet of office space) once a week. The corporation added a screened-in porch to F's home at a cost of $3,500. The corporation normally charges cost plus 30% on projects of this type but charged F only $3,500. f. F sold land to the corporation for $100,000. The corporation plans to develop a subdivision on the property. Similar land was available for $75,000. e
