Denim Corporation declares a nontaxable dividend payable in rights to subscribe to common stock. One right and $60 entitle the holder to subscribe to one share of stock. One right is issued for every...

Lynn and Jack jointly own shares of stock of a corporation, have a joint bank account, and have purchased and own as tenants in common a piece of real estate. They share equally the dividends paid on...

Charles and Jack orally agreed to become partners in a tool and die business. Charles, who had experience in tool and die work, was to operate the business. Jack was to take no active part but was to...

By ordering unnecessary products at inflated prices, the purchasing manager of XYZ Company defrauded his employer of over $40,000 over a two-year period. How could you have detected this fraud?

Lyn writes a check for $900 to Mac, who indorses the check in blank and transfers it to Nan. She presents the check to Omega Bank, the drawee bank, for payment. Omega does not honor the check. Is Lyn...

Katie, a single taxpayer, invested $75,000 in the stock of Penguin Corporation, which recently declared bankruptcy. Although distressed over the loss of her investment, Katie is relieved that she can...

Harold, Jasmine, Caesar, and Yuan form Microhard.com, LLC, a limited liability company, to sell computer hardware and software over the Internet. Microhard.com, LLC, hires Heather, a recent graduate...

Pursuant to a complete liquidation, Carrot Corporation distributes to its share holders real estate held as an investment (basis of $650,000, fair market value of $880,000). a. Determine the gain or...

Eljay, LLP owns several apartment complexes and office buildings. The leasing and management of these buildings constitutes Eljays only business activity. During the current year Eljay incurred the...

Assume that Odin had signed a written employment contract at the time he was hired to work for Charter, but it was not completely integrated. Would a court allow Odin to present parol evidence of...

The client, Mr. David Keys, would like to know what state law provides concerning the removal of a director from the board of directors of a corporation. Prepare an information letter to Mr. Keys...

Green & Freedman Baking Company (Green & Freedman) was a family-owned Massachusetts corporation that produced and sold baked goods. The terms of a collective bargaining agreement required Green &...

The Eminem ad for Chrysler that ran during the Super Bowl in February 2011 was rated as one of the best ads for the game. In May 2011, Audi ran an ad at a German auto show that had the feel of the...

Seal Polymer Industries sold two freight containers of latex gloves to Med- Express, Inc., a company based in North Carolina. When Med- Express failed to pay the $ 104,000 owed for the gloves, Seal...

Cronin, an employee of Epicycle, cashed his final paycheck at Money Mart Check Cashing Center. Epicycle had issued a stop payment order on the check. Money Mart deposited the check through normal...

1. One of the advantages of the LLC is that its members enjoy limited personal liability for the companys obligations. In view of this fact, does the possibility that a court may hold an LLC member...

In 2015, Christian wants to transfer as much as possible to his four adult married children (including spouses) and eight minor grandchildren without using any unified transfer tax credit. a. How...

The Polozzi Trust will incur the following items in the next tax year, its first year of existence. Interest income .............. $ 25,000 Rent income ................. 100,000 Cost recovery...

Elizabeth made the following interest-free loans during the year. Assume that tax avoidance is not a principal purpose of any of the loans. Assume that the relevant Federal rate is 5% and that the...

Enron is a large energy trading company that allegedly committed massive fraud. Enrons primary method of committing fraud was to record liabilities in related partnerships, then known as special...

One evening, Andrea Filer and her daughter were riding their horses along Riley Hill Road, a public highway in the Town of Salem, New York. At the same time, Megan Adams was jogging along the same...

Robert provides much of the support for his daughter, Jane, and her two children. Jane earned $20,000. Robert, whose AGI is $350,000, paid the rent of $11,000 on Janes apartment and provided an...

Both Viacom and Paramount owned a diverse group of entertainment businesses. QVC was a televised shopping channel. The Paramount board of directors accepted a merger offer from Viacom at a price of...

Dubrow, a widower, was engaged to be married. In October, he placed a large order with a furniture store for delivery the following January. The order included rugs cut to special sizes for the...

Bart exchanges some real estate (basis of $800,000 and fair market value of $1 million) for other real estate owned by Roland (basis of $1.2 million and fair market value of $900,000) and $100,000 in...

Ames, Bell, and Cole were equal partners in the ABC Construction Company. Their written partnership agreement provided that the partnership would dissolve upon the death of any partner. Cole died on...

Doris subscribed for two hundred shares of 12 percent cumulative, participating, redeemable, convertible, preferred shares of the Ritz Hotel Company with a par value of $100 per share. The...

(Multiple Choice) 1. In order to negotiate bearer paper, one must: A. Indorse the paper B. Indorse and deliver the paper with consideration C. Deliver the paper D. Deliver and indorse the paper 2....

Gail drove her automobile after having had dinner and several drinks. She fell asleep at the wheel and ran over and killed a pedestrian. Prosecuted for manslaughter, she raised the defense that she...

Larketta Randolph purchased a mobile home from Better Cents Home Builders, Inc., and financed her purchase through Green Tree Financial Corporation. Ms. Randolph signed a standard form contract that...

Martin Acampora purchased a shotgun at a garage sale years ago, never used the weapon, and did not know of any defects in it. His 31-year-old son Marty borrowed the shotgun to go duck hunting. As...

Mostek Corp., a Texas corporation, made a contract to sell computer-related products to North American Foreign Trading Corp., a New York corporation. North American used its own purchase order form,...

(Multiple Choice) 1. Predication of fraud is defined as: a. Reasonable belief that fraud has occurred. b. Irrefutable evidence that fraud has been committed. c. Motivation for committing fraud. d....

Misty Cumbie worked as a waitress at the Vita Caf in Portland, Oregon. The caf was owned and operated by Woody Woo, Inc. Woody Woo paid its servers an hourly wage that was higher than the states...

1. Would registration with the SEC be required for Dakota Gasworks securities? Why or why not? 2. Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5? Why or...

Ames, seeking business for his lawn maintenance firm, posted the following notice in the meeting room of the Antlers, a local lodge: To the members of the AntlersSpecial this month. I will resod your...

Angela Brock borrowed $ 544,000 and signed a note payable to Amerifund Mortgage Services, LLC, to buy a house in Silver Spring, Maryland. The note was indorsed in blank and transferred several times...

Tyra has a zero basis in her partnership interest and a share in partnership liabilities, which are quite large. Explain how these facts will affect the taxation of her departure from the partnership...

In the 1990s, Pfizer, Inc., developed a new antibiotic called Trovan (trovafloxacin mesylate). Tests showed that in animals Trovan had life-threatening side effects, including joint disease, abnormal...

Alpha Corporation has been in business for two years. It incurred the following items last year (Year 1): Gross profits on sales .. $240,000 Operating expenses . 100,000 Long-term capital gain 8,000...

Target Corporation holds assets with a fair market value of $4 million (adjusted basis of $2.2 million) and liabilities of $1.5 million. It transfers assets worth $3.7 million to Acquiring...

RTY is a calendar year corporation. On December 12, RTY billed a client $17,800 for services rendered during October and November. It had not received payment by December 31. On December 10, RTY...

Turner Corporation uses the calendar year as its tax year. It purchases and places into service $1.97 million of property during 2016 to use in its business: * $80,000 of the cost pertains to the...

Bombardier Capital, Inc., provides financing to boat and recreational vehicle dealers. Bombardiers credit policy requires dealers to forward immediately to Bombardier the proceeds of boat sales. When...

The English publisher of a book called Cambridge gave a New York publisher permission to sell that book any place in the world except in England. The New York publisher made several bulk sales of the...

Mason and Phyllis Ledbetter operated a business in Northbrook, Illinois, as a partnership called Ledbetters Nurseries that specialized in the sale of garden lilies. The grounds of the nurseries were...

David Abacus uses the Internet to place an order to license software for his computer from Inet. License, Inc. (Inet), through Inets electronic website ordering system. Inets Web page order form asks...

Colin, a self-employed consultant, uses a room of his home as a business office. This room represents 10 percent of the homes square footage. This year, Colin incurred the following expenses in...

Nelson Ovalles worked as a cable installer for Cox Rhode Island Telecom, LLC, under an agreement with a third party, M&M Communications, Inc. -e agreement stated that no employer-employee...

Youre in line at the movie theater when you overhear a stranger say: The FDA has just approved Hernstroms new painkiller. When the announcement is made on Monday, Hernstrom stock will take off. What...

The accounting firm of Goldman, Walters, Johnson & Co. prepared financial statements for Lucys Fashions, Inc. After reviewing the various financial statements, Happy days State Bank agreed to loan...

1. Esposito hired Excel Construction Company to repair a porch roof for $ 625 while she was out of town on vacation. All terms of the agreement were specified in a written contract, but the agreement...

Agatha is planning to start a new business venture and must decide whether to operate as a sole proprietorship or incorporate. She projects that the business will generate annual cash flow and...

R-P Packaging manufactured cellophane wrapping material that was used by Kerns Bakery in packaging its product. Kerns decided to change its system for packaging cookies from a tied bread bag to a...

ABCDE Technologies, Inc., designs, manufactures, and markets an extensive line of PC cards. The company sells its PC cards primarily to original equipment manufacturers (OEMs) for industrial and...

Arbitrators As a client of a brokerage firm, Howsam invested in four limited partnerships. These investments were made between 1986 and 1994. The client agreement signed by Howsam required all...

a) Chase said he would "take care of" Baer and pay him "in a manner commensurate with the true value of his services." Don't those statements show Chase's intent to compensate Baer? b) Then why does...

David A. Vise, a Pulitzer Prize winner and a reporter for the Washington Post, wrote the book The Bureau and the Mole. When the book hit the market, Mr. Vise purchased 20,000 copies via Barnes &...

Parent and Child Corporations have filed on a consolidated basis since the mid-1970s. The group reports the following amounts for the current tax year. What is the Parent groups net operating loss...

Corporation P owns 93 percent of the outstanding stock of Corporation T. This year, the corporations records provide the following information: a. Compute each corporations taxable income if they...

Diana and Ryan Workman were married on January 1 of last year. Diana has an eight-year-old son, Jorge, from her previous marriage. Ryan works as a computer programmer at Datafile Inc. (DI) earning a...

In the documentary movie, Expelled: No Intelligence Allowed, there is a 15-second clip of Imagine, a song by John Lennon. His wife and sons, who held the copyright, sued to block this use of the...

Suppose that Chickasaws articles of incorporation failed to describe the corporations purpose or management structure as required by state law. Would the court be likely to rule that Sharp is...

Joanne is a seventy-five-year-old widow who survives on her husbands small pension. Joanne has become increasingly forgetful, and her family worries that she may have Alzheimers disease (a brain...

Upon hearing that you are enrolled in a fraud class, a manager of a local business asks, I dont understand what is happening with all these major scandals such as the Bernie Madoff scandal, the...

(Multiple Choice) 1. Why does fraud seem to be increasing at such an alarming rate? a. Computers, the Internet, and technology make fraud easier to commit. b. Most frauds today are detected, whereas...

At a point when Robin Corporation has been in existence for six years, share holder Ted transfers real estate (adjusted basis of $20,000 and fair market value of $100,000) to the corporation for...

Your clients, Lisa and Matthew, are planning to form Lima Corporation. Lisa will contribute $50,000 cash to Lima for 50 shares of its stock. Matthew will contribute land having a $35,000 adjusted...

Multiple-Choice Questions 1. For which of the following activities can a foreign sovereign be sued? (a) Operating a factory dangerously (b) Issuing a law that discriminates against a certain group...

Jeanne Eenkhoorn worked as a supervisor at a business office for the New York Telephone Co. While at work, she invented a process for terminating the telephone services of delinquent subscribers. The...

Damon owns a 20% interest as a general partner in the Vermillion Partnership, which provides consulting services. The partnership distributes $60,000 cash to Damon in complete liquidation of his...

Match the following terms with their defi nitions: ___ A. Term agreement ___ B. Apparent authority ___ C. Agency at will ___ D. A duty of an agent ___ E. Implied authority 1. When two parties make no...

Jamies basis in her partnership interest is $52,000. In a proportionate distribution in liquidation of the partnership, Jamie receives $2,000 cash and two parcels of land with bases of $10,000 and...

A college student, Austin Keynes, wished to purchase a new entertainment system from Friedman Electronics, Inc. Because Keynes did not have the cash to pay for the entertainment system, he offered to...

Leonard Kranzler loaned Lewis Saltzman $ 100,000. Saltzman made fifteen payments on the loan, but this did not repay the entire amount. More than ten years after the date of the loan, but less than...

Carl made the following transfers during the current year. Transferred $900,000 in cash and securities to a revocable trust, life estate to him- self and remainder interest to his three adult...

Douglas Hansen, Leo Borrell, and Bobby Lawrence were three psychiatrists who recognized the need for an inpatient treatment facility for adolescents and children in their community. They became...

For 2015, Apple Corporation (a calendar year integrated oil company) had the following transactions: Taxable income $3,600,000 Regular tax depreciation on realty in excess of ADS (placed in service...

A revocable trust created by Amir realizes $30,000 of rental income and a $5,000 capital loss. It distributes $22,000 to Ali, its beneficiary. How much income is taxed to the trust, the grantor, and...

Would a bank be liable to a customer who indorsed a check For deposit only into account #071698570 if that check were deposited into the wrong account? What if the customers indorsement was For...

Kayla, a student at Learnwell University, owes $20,000 in unpaid tuition. If Kayla does not pay the tuition, Learnwell will not allow her to graduate. To obtain the funds to pay the debt, she sends...

Petrel Corporation has accumulated E & P of $85,000 at the beginning of the year. Its current-year taxable income is $320,000. On December 31, Petrel distributed business property (worth $140,000,...

Ptarmigan Investment Company (Ptarmigan), a partnership, entered into a contract with Gundersons, Inc. (Gundersons), a South Dakota corporation in the business of golf course construction. The...

TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000...

The franchise agreement of Domino's Pizza, L.L.C., sets out operational standards, including safety requirements, for a franchisee to follow but provides that the franchisee is an independent...

Zenith Steel Company operates a prosperous business. In January, Zeniths chief executive officer (CEO) and president, Roe, who is also a member of the board, was voted a $1 million bonus by the board...

(Multiple choice) 1. What is the best defense against consumer fraud? a. Signing up with the national do not call registry. b. Purchasing credit card insurance. c. Educating yourself about credit...

WHAT IF THE FACTS WERE DIFFERENT? Suppose that instead of offering to pay for a transcript, Kuehn had tried to obtain one on credit. Would the universitys refusal to provide one on that basis have...

Answer the following questions based upon this citation: United Draperies, Inc. v. Comm., 340 F.2d 936 (CA7, 1964), affg 41 T.C. 457 (1963), cert. denied 382 U.S. 813 (1965). a. In which court did...

If APC takes an equity interest, the restaurant will need a new legal organizational form. What form would you recommend? Why? APC, Inc., is a venture capital firm that invests in new businesses to...

Determine whether the source of income in each of the following situations is U.S. or foreign. a. USCo sells depreciable personal property that it has been using in its foreign branch operations. The...

Rank the following six transactions from lowest to highest transaction costs. Explain your ranking by reference to the costs of search, bargaining, and enforcement. a. Getting married. b. Buying an...

Della Janich was employed as a matron at the Yellowstone County Jail in Montana. The duties of the position of matron resemble those of a parallel male position of jailer. Both employees have the...

Paul Parrino purchased from Daves Professional Wheelchair Service a wheelchair manufactured by 21st Century Scientific, Inc. The sales brochure from 21st Century Scientific stated that the wheelchair...

A friend notices that you are reading the Internal Revenue Code of 1986. Your friend inquires why you are consulting a 1986 publication, especially when tax laws change so frequently. What is your...

Geographic Expeditions, Inc. (GeoEx), which guided climbs up Mount Kilimanjaro, required climbers to sign a release to participate in an expedition. The form mandated the arbitration of any dispute...

Adrian rents a bicycle from Barbara. The bicycle rental contract Adrian signed provides that Barbara is not liable for any injury to the renter caused by any defect in the bicycle or the negligence...

Ronald Sadler, a California resident, owned a helicopter distribution company in West Germany, Delta Avia. This company distributed U.S.-made Hughes civilian helicopters in western Europe. Sadlers...

Think about the following questions from the point of view of violation of public policy or breach of a covenant of good faith and fair dealing, and see what the outcome would be. a. An employee was...

Kweisi incurs the following employment-related expenses during the year: Airfare ...... $2,000 Lodging ..... 1,500 Meals ...... 1,200 Entertainment ... 800 Incidentals ..... 500 His employer...