22. Luzerne Corporation acquires equipment from a shareholder contributing property as part of a qualifying Section 351 exchange and that is the only property contributed by that shareholder. The equipment has a basis to the shareholder of $40,000 and an agreed fair value of $35,000. Which of the statements below reflect the proper treatment for this contribution?

options:

Luzerne Corporation will take a $35,000 basis in the equipment contributed by the shareholder unless the shareholder agrees to take a $35,000 basis in the stock.

Luzerne takes a $40,000 basis in the equipment

The shareholder must reduce stock basis to $35,000.

Question 23: Ann transferred land worth $200,000, with a tax basis of $40,000, to Brown Corporation for 100 shares of its stock. Brown Corporation was formed two years ago by Bill and Bob who each own 200 shares of Brown stock. As a result of this transfer -----

	Ann has no recognized gain and a $40,000 basis in her stock
	Brown Corporation has a basis of $40,000 in the land.
	Ann has a recognized gain and basis of $200,000 in her stock.

28. Barkley Company, a closely held corporation, listed the following accounting income shown below.

Revenues			Expenses
Sales	900,000		Business operating expenses	450,000
Dividends on stocks (<20% ownership)	50,000		Premiums on life insurance
Life insurance proceeds paid to			policies with corporation as
corporation by reason of shareholder's			Beneficiary	50,000
Death	400,000		Depreciation**	40,000
Total Revenues	1.35 mill		Federal income taxes paid	170,100
			Total Expenses	679,400
			Net income per books	639,900

** The company used MACRS depreciation for tax purposes and the total of that was $50,000.

Barkley taxable income for the year was:

Question 28 options:

	$425,000
	$450,000
	some other amount

31.Dauphin Corporation has taxable income of $600,000 in the current year. In the prior year, Dauphin took a Section 179 deduction for $100,000 but took no Section 179 deductions in the current year for tax purposes.

For tax purposes, regular depreciation was $30,000 in the current year but depreciation for book and E&P purposes was only $20,000. Dauphin had $20,000 of capital gains but $30,000 of capital losses in the current year. Finally, the company paid $126,000 of income taxes this year.

Dauphin starts the year with $400,000 in accumulated E&P and distributes $100,000 of cash dividends during the year. After all of these events, accumulated E&P equals:

Question 31 options:

	$764,000
	$880,000
	$754,000