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JS Corporation elected to be treated as an S corporation for federal income tax purposes. For Year 2, JS Corporation distributed Equipment A with FMV
JS Corporation elected to be treated as an S corporation for federal income tax purposes. For Year 2, JS Corporation distributed Equipment A with FMV of $100 and basis of $400 to one of its 50% shareholders, Sunny at the end of year. Immediately prior to the distribution, Sunnys basis in the corporation was $300. JS Corporations income or losses for the year was $0.
- Provide Sunnys outside basis in JS Corporation and inside basis in Equipment A immediately after the distribution.
- Assuming that JS Corporation was a C corporation for federal income tax purposes, provide Sunnys outside basis in JS Corporation and inside basis in Equipment A immediately after the distribution. Assume that JS Corporation is subject to 21% federal income tax rate and no historical E&P was generated.
- Assuming that JS Corporation was a partnership for federal income tax purposes, provide Sunnys outside basis in JS partnership and inside basis in Equipment A immediately after the distribution.
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