Sabrina is going to contribute an SUV to her wholly owned business. Shepur chased the SUV three years ago for $58,000 and used it exclusively for personal purposes during this period. The fair market value of the SUV is $40,000. Are the tax consequences different if Sabrina contributes the SUV to an S corporation in which she is a 100% shareholder rather than a C corporation in which she is a 100% shareholder? If the business is a sole proprietorship? Explain.
Answer to relevant QuestionsAnswer the following questions: a. How are the nonrecognition rules for contributions of property to a partnership by a partner similar to those for contributions of property to a corporation by a share holder? b. How, if at ...Distributions of earnings by a C corporation are taxed at the shareholder level as dividend income. Why are the earnings of an S corporation that are distributed to shareholders not similarly treated? Mira and Lemma are equal owners of an entity. Each contributed $25,000 cash to the entity. In addition, the entity obtains a loan of $100,000. The profits for the year are $30,000. Determine Mira and Lemma's basis at the end ...A business entity's taxable income before the cost of certain fringe benefits paid to owners and other employees is $400,000. The amounts paid for these fringe benefits are as follows: The business entity is equally owned by ...Which of the following are subject either directly or indirectly to the AMT? • Sole proprietorship. • Partnership. • C corporation. • S corporation.
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