Early in the year, Charles, Lane, and Tami form the Harrier Corporation for the express purpose of developing a shopping center. All parties are experienced contractors, and they transfer various business assets (e.g., building materials, land) to Harrier in exchange for all of its stock. Three months after it is formed, Harrier purchases two cranes from Lane for their fair market value of $400,000 by issuing four annual installment notes of $100,000 each. Because the adjusted basis of the cranes is $550,000, Lane plans to recognize a § 1231 loss of $150,000 in the year of the sale. Does Lane have any potential income tax problem with this plan? Explain.
Answer to relevant QuestionsAlice and Jane form Osprey Corporation. Alice transfers property, basis of $25,000 and fair market value of $200,000, for 50 shares in Osprey Corporation. Jane transfers property, basis of $50,000 and fair market value of ...In each of the following independent situations, determine the dividends received deduction. Assume that none of the corporate shareholders owns 20% or more of the stock in the corporations paying the dividends. The following information for 2014 relates to Sparrow Corporation, a calendar year, accrual method taxpayer. Net income per books (after-tax) ........ $174,100 Federal income tax per books............ 86,600 Tax-exempt ...Seth, Pete, Cara, and Jen form Kingfisher Corporation with the following consideration: *Seth receives $6,000 in cash in addition to the 30 shares. **Pete receives $9,000 in cash in addition to the 30 shares. Assume that the ...Black Corporation and Tom each own 50% of Tan Corporation’s common stock. On January 1, Tan holds a deficit in accumulated E & P of $200,000. Its current E & P is $90,000. During the year, Tan makes cash distributions of ...
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