III. Electing Corp. was organized as a C corporation on June 12, 199s. filed an election to be taxed as a Subchapter S corporation. At the time of its formation, Green acquired his stock in exchange for S3.000. On March 3, 2000 he sold 50% of his stock to Black for $25,000. During the period June 12, 1995 through December 31, 2011 Electing Corp accumulated $18,500 of earnings and profits. Electing Corp distributed $7,500 to both Green and Black on 12/31/13 and $10,000 to both of them on 12/31/14. For the years ending 2012 through 2014 it had the following items of income and loss: On January 7, 2012, it 2002 2003 2004 Income from operations Long-term Capital loss Tax-exempt bond interest $13,000 0 $6,000 4,000 3,000 $18,000 2,000 3,000 3,000 A. What are Green's and Black's basis in their Electing Corp stock as of 12/31/13, prio B. What is the balance in the corporation's accumulated adjustment account as of C. What is the amount and character of the 2013 distributions? to considering the 2003 distribution? 12/31/13, prior to considering the 2003 distribution? D. What are Green's and Black's basis in their Electing Corp stock as of 12/31/14, prior to considering the 2014 distribution? E. What is the balance in the corporation's accumulated adjustment account as of 12/31/14, prior to considering the 2014 distribution? F. What is the amount and character of the 2014 distributions? IV. Young Corp, a corporation that had been in existence since 2004, elected Subchapter S status on January 2, 2012, At the time of its election it had two assets. Asset #1 had been acquired in 2009 and had an adjusted basis of $600,000 and a FMV at the time of the Subchapter S election equal to $1,100,000. Asset #2 had been acquired in 2009 and had an adjusted basis equal to $450,000 and a FMV of$350,000 at the time of the Subchapter S election. If Young Corp were to sell Asset #1 on March 3, 2014 for $1,300,000, what are the consequences to Young Corp and its sole shareholder Smith? III. Electing Corp. was organized as a C corporation on June 12, 199s. filed an election to be taxed as a Subchapter S corporation. At the time of its formation, Green acquired his stock in exchange for S3.000. On March 3, 2000 he sold 50% of his stock to Black for $25,000. During the period June 12, 1995 through December 31, 2011 Electing Corp accumulated $18,500 of earnings and profits. Electing Corp distributed $7,500 to both Green and Black on 12/31/13 and $10,000 to both of them on 12/31/14. For the years ending 2012 through 2014 it had the following items of income and loss: On January 7, 2012, it 2002 2003 2004 Income from operations Long-term Capital loss Tax-exempt bond interest $13,000 0 $6,000 4,000 3,000 $18,000 2,000 3,000 3,000 A. What are Green's and Black's basis in their Electing Corp stock as of 12/31/13, prio B. What is the balance in the corporation's accumulated adjustment account as of C. What is the amount and character of the 2013 distributions? to considering the 2003 distribution? 12/31/13, prior to considering the 2003 distribution? D. What are Green's and Black's basis in their Electing Corp stock as of 12/31/14, prior to considering the 2014 distribution? E. What is the balance in the corporation's accumulated adjustment account as of 12/31/14, prior to considering the 2014 distribution? F. What is the amount and character of the 2014 distributions? IV. Young Corp, a corporation that had been in existence since 2004, elected Subchapter S status on January 2, 2012, At the time of its election it had two assets. Asset #1 had been acquired in 2009 and had an adjusted basis of $600,000 and a FMV at the time of the Subchapter S election equal to $1,100,000. Asset #2 had been acquired in 2009 and had an adjusted basis equal to $450,000 and a FMV of$350,000 at the time of the Subchapter S election. If Young Corp were to sell Asset #1 on March 3, 2014 for $1,300,000, what are the consequences to Young Corp and its sole shareholder Smith
