At the beginning of the current year, Sandy Brewer had a zero basis in her 38 shares of stock in Lindlee, an S corporation, a zero basis in a $5,000 note from Lindlee, and a $7,400 carryforward of a prior year ordinary loss from Lindlee that she was un-able to deduct because of the basis limitation. Early in February of the current year, Sandy was notified by Lindlee’s attorney that the corporation was bankrupt. Consequently, Lindlee was defaulting on its $5,000 debt to Sandy, and Sandy’s 38 shares of stock were worthless. Describe the consequences to Sandy of the worthlessness of her Lindlee investments.
Answer to relevant QuestionsMr. and Mrs. Janus operate a restaurant business as a sole proprietorship. The couple has decided to purchase $85,000 of new kitchen equipment for the restaurant. They also want to buy two new automobiles—one for their ...The corporate form of business is characterized by free transferability of equity interests. Describe this characteristic as it applies to publicly held corporations and closely held corporations. EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s financial records reveal the following information: ...Raise Corporation’s regular taxable income is $3,590,000, and it has positive AMT adjustments totaling $980,000 and AMT tax preferences totaling $315,000. Compute Raise’s AMT (if any). This year, Napa Corporation received the following dividends: KLP Inc. (a taxable Delaware corporation in which Napa holds an 8% stock interest) ……………… $ 55,000 Gamma Inc. (a taxable Florida corporation in which ...
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