Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Entity was formed several years ago. At the beginning of this year, Chris acquired a 15% interest in the Entity by transferring property worth $65,000

image text in transcribed
Entity was formed several years ago. At the beginning of this year, Chris acquired a 15% interest in the Entity by transferring property worth $65,000 in which she had basis of $50,000. At the beginning of this year, the Entity had recourse debt of $200,000. This year, Chris loaned $20,000 (bona fide debt) to the Entity. The Entity's results for the year are as follows: . Loss from operations LTCG Municipal bond interest income Charitable contributions Interest expense related to muni bond ($520,000) 40,000 32,000 4,000 8,000 In addition, during the year, Chris received a distribution of $48,000. If the entity is a C corporation, assume that the distribution is a dividend. The C corporation charitable contribution limitation is 10%. At the end of this year, the Entity's balance sheet shows recourse debt balance of $100,000. The Chris Loan balance remains unchanged. - Required (a, b and c): a) Assume Entity is a General Partnership - Compute Chris's outside basis. b) Assume Entity is an S corporation - Compute Chris's outside basis. c) Assume Entity is a C corporation - Compute Chris's outside basis. Entity was formed several years ago. At the beginning of this year, Chris acquired a 15% interest in the Entity by transferring property worth $65,000 in which she had basis of $50,000. At the beginning of this year, the Entity had recourse debt of $200,000. This year, Chris loaned $20,000 (bona fide debt) to the Entity. The Entity's results for the year are as follows: . Loss from operations LTCG Municipal bond interest income Charitable contributions Interest expense related to muni bond ($520,000) 40,000 32,000 4,000 8,000 In addition, during the year, Chris received a distribution of $48,000. If the entity is a C corporation, assume that the distribution is a dividend. The C corporation charitable contribution limitation is 10%. At the end of this year, the Entity's balance sheet shows recourse debt balance of $100,000. The Chris Loan balance remains unchanged. - Required (a, b and c): a) Assume Entity is a General Partnership - Compute Chris's outside basis. b) Assume Entity is an S corporation - Compute Chris's outside basis. c) Assume Entity is a C corporation - Compute Chris's outside basis

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Corporate Finance

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

5th Edition

1119795435, 978-1119795438

More Books

Students also viewed these Finance questions

Question

The key to productive meetings is careful planning of

Answered: 1 week ago

Question

Describe the major barriers to the use of positive reinforcement.

Answered: 1 week ago