Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part II. Problems (1 problems worth 15 points total) Stark Corporation is owned 85 percent by Sansa and 15 percent by Bran Corporation. Sansa has

image text in transcribed
Part II. Problems (1 problems worth 15 points total) Stark Corporation is owned 85 percent by Sansa and 15 percent by Bran Corporation. Sansa has a basis in her stock of $36,000 and Bran Corporation has a basis in its stock of $10.500. Stark Corporation has accumulated earnings and profits of $144,000 on January 1, 2019. Stark Corporation also has taxat income of $57,600 for 2019 before taking into account the distributions below to its shareholders. On December 31, 2019, Stark Corporation distributed: (1) Land to Sansa with a fair market value of $306 000. an adiusted basis to Stark Corporation of $171,000, and subject to a liability of $15,000 that Sansa assumed; and (2) Inventory to Bran Corporation with a fair market value of $51,353 and an adjusted basis of $72,000. Stark Corporation also has the following information for 2019: Tax-exempt interest income ...$7,200 - Excess charitable contributions not deductible in 2019..... .. ...36,000 - Net long-term capital loss.......... ..10,800 Dividends received deduction........... ... 14,400 Give the tax consequences of the above distributions to each shareholder and to Stark Corporation assuming that Stark Corporation's total federal income tax liability for 2019, including the tax on any gain due to the above distributions, is $40,446. Part II. Problems (1 problems worth 15 points total) Stark Corporation is owned 85 percent by Sansa and 15 percent by Bran Corporation. Sansa has a basis in her stock of $36,000 and Bran Corporation has a basis in its stock of $10.500. Stark Corporation has accumulated earnings and profits of $144,000 on January 1, 2019. Stark Corporation also has taxat income of $57,600 for 2019 before taking into account the distributions below to its shareholders. On December 31, 2019, Stark Corporation distributed: (1) Land to Sansa with a fair market value of $306 000. an adiusted basis to Stark Corporation of $171,000, and subject to a liability of $15,000 that Sansa assumed; and (2) Inventory to Bran Corporation with a fair market value of $51,353 and an adjusted basis of $72,000. Stark Corporation also has the following information for 2019: Tax-exempt interest income ...$7,200 - Excess charitable contributions not deductible in 2019..... .. ...36,000 - Net long-term capital loss.......... ..10,800 Dividends received deduction........... ... 14,400 Give the tax consequences of the above distributions to each shareholder and to Stark Corporation assuming that Stark Corporation's total federal income tax liability for 2019, including the tax on any gain due to the above distributions, is $40,446

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

Financial Accounting

Authors: Robert Libby, Patricia Libby, Frank Hodge

11th Edition

1264229739, 9781264229734

More Books

Students also viewed these Accounting questions

Question

Is financial support available for travel to conferences?

Answered: 1 week ago

Question

Values: What is important to me?

Answered: 1 week ago

Question

Purpose: What do we seek to achieve with our behaviour?

Answered: 1 week ago