During the current year, Troy sells land to Berry Corporation for $165,000. Troy purchased the land for

Question:

During the current year, Troy sells land to Berry Corporation for $165,000. Troy purchased the land for investment in 2002 for $170,000. Berry Corporation is owned as follows:

Owner Percentage Ownership

Tom (Troy’s son) ……………………………….20%

Jimmy (Troy’s cousin) ………………………..15%

Jimmy’s father (Troy’s uncle) ……………..30%

Angie (Troy’s wife) ……………………………..10%

Nicole (Angie’s Sister) …………………………25%

Troy and Jimmy are equal partners in a separate entity, TJ Partnership.
a. What is Troy’s constructive ownership in Berry Corporation?
b. What is the amount of loss Troy may recognize?
c. How would your answers to Parts a and b change if TJ Partnership owned 25%, instead of Nicole?

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... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...

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