QUESTION 9

1. C transfers $1,000 in uncollected customer accounts receivable from his cash basis service business to Z in exchange for half of Zs common stock plus Zs assumption of $500 of accounts payable attributable to the service business. C could have deducted the $500 upon payment in cash. D transfers $500 in cash to Z in exchange for the other half of Zs stock.

   	a.	The transaction is not covered by Section 351 because customer accounts receivable are not property.
   	b.	Section 351 applies. However, the $500 of accounts payable are not liabilities in excess of basis so that no gain must be recognized to that extent because of I.R.C. sec. 357(c)(3)(A(i).
   	c.	The transaction is covered by Section 351. There is no gain or loss to recognize. Cs stock basis is zero and Zs property basis is zero.
   	d.	b. and c.
   	e.	None of the above.

QUESTION 10

1. Regarding the corporate tax brackets, which of the following statements are true.

   	a.	In 2017, the highest marginal corporate tax rate is actually 39%.
   	b.	In 2017, personal service corporations are taxed at a flat 35%.
   	c.	In 2017, corporations with taxable income in excess of $335,000 are not necessarily taxed at a flat 34%.
   	d.	In 2020, C corporations will be taxed at a flat 21%.
   	e.	All of the above.

QUESTION 11

1. In 2020, the dividends received deduction (DRD) for corporations owning less than 10% of a foreign corporation is:

   	a.	50%
   	b.	65%
   	c.	100%
   	d.	0
   	e.	None of the above

QUESTION 12

1. Ziggy continues to earn only about $30,000 a year in royalties, etc. from licensing his father's image, music, etc. He asks you for tax advice regarding incorporating or not for the annual receipt of the $30,000.

   	a.	You recommend an LLC because theyre the hot ticket. He can enjoy limited liability and tax rates at the individual rate. Employment taxes and a possible passive tax are no problem.
   	b.	You recommend a C corporation in order to lock up income in the corporation at lower tax brackets. Double tax is no problem.
   	c.	You recommend that he just continue receiving royalties and report them on Form 1040. He may purchase insurance if he is worried about lawsuits.
   	d.	None of these is good advice.