Chaz transfers cash of $60,000 to a newly formed corporation for 100% of the stock. In its initial year, the
a. How do Chaz and the corporation treat the $5,000 distribution?
b. Assume, instead, that Chaz transfers to the corporation cash of $30,000 for stock and cash of $30,000 for a note of the same amount. The note is payable in equal annual installments of $3,000 each (beginning at the end of the corporation's initial year of operations) and bears interest at the rate of 6%. At the end of the year, the corporation pays an amount to meet this obligation.
Determine the total amount of the payment and its tax treatment to Chaz and the corporation.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Question Posted: September 09, 2015 06:40:31