Question: Larry the sole shareholder of Brown Corporation sold his stock
Larry, the sole shareholder of Brown Corporation, sold his stock to Ed on July 30 for $270,000. Larry’s basis in the stock was $200,000 at the beginning of the year. Brown had accumulated E & P of $120,000 on January 1 and current E & P of $240,000. During the year, Brown made the following distributions: $450,000 cash to Larry on July 1 and $150,000 cash to Ed on December 30. How will Larry and Ed be taxed on the distributions? How much gain will Larry recognize on the sale of his stock to Ed?
Answer to relevant QuestionsIn each of the following independent situations, indicate the effect on taxable income and E & P, stating the amount of any increase (or decrease) in each as a result of the transaction. Assume that E & P has already been ...Phoebe and Parker are equal members of Phoenix Investors LLC. They are real estate investors who formed the entity several years ago with equal cash contributions. Phoenix then purchased a parcel of land. On January 1 of the ...Lee, Brad, and Rick form the LBR Partnership on January 1 of the current year. In return for a 25% interest, Lee transfers property (basis of $15,000, fair market value of $17,500) subject to a nonrecourse liability of ...Continue with the facts presented in Problem 24. Assume that Burgundy, Inc.'s annual guaranteed payment is increased to $120,000 starting on January 1, 2015, and the LLC's taxable income for 2014 and 2015 (after deducting ...Liz and John formed the equal LJ Partnership on January 1 of the current year. Liz contributed $80,000 of cash and land with a fair market value of $90,000 and an adjusted basis of $75,000. John contributed equipment with a ...
Post your question