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Catherine is the sole stockholder of Cat Co . , a calendar - year C corporation. It is early 2 0 2 2 , and
Catherine is the sole stockholder of Cat Co a calendaryear C corporation. It is early 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 through August The fair market value of the land is $ Catherine's basis in the land is $ She has held the land as an investment since Catherine is considering the following three possible courses of action: She transfers the land to the corporation in exchange for stock of the corporation in a transfer on March and the corporation owns the land until August She leases the land to the corporation for its fair rental value of $ per month from March until August She sells the land to the corporation for its fair market value of $ on March and the corporation owns the land until August Whichever choice is made, the land will be sold to a third party on September by Catherine in option # or by the corporation in options # and # Catherine estimates that the proceeds from the sale of the land will be $ on September The corporation's taxable income, exclusive of rental payments andor gain or loss on land sale, will be $ in and Catherine's adjusted gross income, exclusive of rental income andor gain or loss on land sale, will be $ in and She is single with no dependents. She will not itemize her deductions. The individual tax rate schedules for and are available in the module on Brightspace labeled General Information Files. The pages with the tax rate schedules also show the standard deductions for and A spreadsheet with single individual ordinary income tax calculators is available in this module. A tenminute video in this module describes how to compute an individual's income tax when the taxpayer has both ordinary income and longterm capital gains. For single individuals in the threshold between the percent tax rate and the percent tax rate on longterm capital gains was $ The threshold between the percent and percent tax rate was $ The same thresholds for were $ and $ These are the thresholds used in the video demonstration. The corporate tax rate on all taxable income is a flat percent in both years. Required: Create an Excel spreadsheet that will compute the income taxes payable in and by Catherine and Cat Co Compute the total taxes payable under options and Based on your findings, what do you recommend to Catherine? tableTax Rate Schedule X
Catherine is the sole stockholder of Cat Co a calendaryear C corporation. It is early 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 through August The fair market value of the land is $
Catherine's basis in the land is $ She has held the land as an investment since
Catherine is considering the following three possible courses of action:
She transfers the land to the corporation in exchange for stock of the corporation in a
transfer on March and the corporation owns the land until August
She leases the land to the corporation for its fair rental value of $ per month from
March until August
She sells the land to the corporation for its fair market value of $ on March
and the corporation owns the land until August
Whichever choice is made, the land will be sold to a third party on September by
Catherine in option # or by the corporation in options # and # Catherine estimates that the
proceeds from the sale of the land will be $ on September
The corporation's taxable income, exclusive of rental payments andor gain or loss on land sale,
will be $ in and Catherine's adjusted gross income, exclusive of rental
income andor gain or loss on land sale, will be $ in and She is single with no
dependents. She will not itemize her deductions.
The individual tax rate schedules for and are available in the module on Brightspace
labeled General Information Files. The pages with the tax rate schedules also show the standard
deductions for and A spreadsheet with single individual ordinary income tax
calculators is available in this module. A tenminute video in this module describes how to
compute an individual's income tax when the taxpayer has both ordinary income and longterm
capital gains. For single individuals in the threshold between the percent tax rate and the
percent tax rate on longterm capital gains was $ The threshold between the percent
and percent tax rate was $ The same thresholds for were $ and $
These are the thresholds used in the video demonstration. The corporate tax rate on all taxable
income is a flat percent in both years.
Required:
Create an Excel spreadsheet that will compute the income taxes payable in and
by Catherine and Cat Co Compute the total taxes payable under options and
Based on your findings, what do you recommend to Catherine?
tableTax Rate Schedule X
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