Catherine is the sole stockholder of Cat Co$.,$ a calendar$-$year C corporation. It is early $2022,$ and Catherine has determined that the corporation has a business need for a tract of land that Catherine owns personally. Her plan is for the corporation to use the land for eighteen months from March $1,2022$ through August $31,2023.$ The fair market value of the land is $$500,000.$ Catherine$$s basis in the land is $$100,000.$ She has held the land as an investment since $2017.$

Catherine is considering the following three possible courses of action:

$1.$ She transfers the land to the corporation in exchange for stock of the corporation in a $351$ transfer on March $1,2022$ and the corporation owns the land until August $31,2023.$

$2.$ She leases the land to the corporation for its fair rental value of $$3,000$ per month from March $1,2022$ until August $31,2023.$

$3.$ She sells the land to the corporation for its fair market value of $$500,000$ on March $1,2022$ and the corporation owns the land until August $31,2023.$

Whichever choice is made, the land will be sold to a third party on September $1,2023$ by Catherine in option #$2$ or by the corporation in options #$1$ and #$3.$ Catherine estimates that the proceeds from the sale of the land will be $$500,000$ on September $1,2023.$

The corporation$$s taxable income, exclusive of rental payments and$/$or gain or loss on land sale, will be $$150,000$ in $2022$ and $2023.$ Catherine$$s adjusted gross income, exclusive of rental income and$/$or gain or loss on land sale, will be $$200,000$ in $2022$ and $2023.$ She is single with no dependents. She will not itemize her deductions.

The individual tax rate schedules for $2022$ and $2023$ are available in the module on Brightspace labeled General Information Files. The pages with the tax rate schedules also show the standard deductions for $2022$ and $2023.$ A spreadsheet with single individual ordinary income tax calculators is available in this module. A ten$-$minute video in this module describes how to compute an individual$$s income tax when the taxpayer has both ordinary income and long$-$term capital gains. For single individuals in $2022,$ the threshold between the $0$ percent tax rate and the $15$ percent tax rate on long$-$term capital gains was $$41,675.$ The threshold between the $15$ percent and $20$ percent tax rate was $$459,750.$ The same thresholds for $2023$ were $$44,625$ and $$492,300.$ These are the thresholds used in the video demonstration. The corporate tax rate on all taxable income is a flat $21$ percent in both years.