During the current year, Delta Corporation distributes the assets listed below to its sole shareholder, Jessica....

 

Transcribed Image Text:

During the current year, Delta Corporation distributes the assets listed below to its sole shareholder, Jessica. i (Click the icon to view the list of distributed assets.) Assume that Delta has an E&P balance exceeding the amount distributed and is subject to a 21% tax rate. Unless stated otherwise, adjusted bases for taxable income and E&P purposes are the same. Read the requirement. Begin by completing the table for distributions a, b, and c. (Abbreviations used: Inc = Increase, dec = decrease.) Jessica Delta Corporation a. Amount of distribution Character of distribution Requirement Basis Amount of gain or loss Print For each asset listed, determine the gross income recognized by Jessica, her basis in the asset, the amount of gain or loss recognized by Delta, and the effect of the distribution on Delta's E&P. Character of gain or loss Done Inc or dec to E&P - х Amount of E&P change More Info a. A parcel of land used in Delta's business that has a $450,000 FMV and a $340,000 adjusted basis. b. Assume the same facts as in Part a except that the land is subject to a $150,000 mortgage. c. FIFO inventory having a $26,000 FMV and a $14,000 adjusted basis. d. A building used in Delta's business having an original cost of $180,000, a $500,000 FMV, and a $125,000 adjusted basis for taxable income purposes. Delta has claimed $55,000 of depreciation for taxable income purposes under the straight-line method. Depreciation for E&P purposes is $48,000. e. An automobile used in Delta's business having an original cost of $16,000, a $14,000 FMV, and a $7,680 adjusted basis. For taxable income purposes, Delta has claimed $8,320 of MACRS depreciation on the automobile. For E&P purposes, depreciation is $6,900. - f. Installment obligations having a $51,000 face amount (and FMV) and a $38,500 adjusted basis. The obligations were created when Delta sold a Sec. 1231 asset. Print Done X During the current year, Delta Corporation distributes the assets listed below to its sole shareholder, Jessica. i (Click the icon to view the list of distributed assets.) Assume that Delta has an E&P balance exceeding the amount distributed and is subject to a 21% tax rate. Unless stated otherwise, adjusted bases for taxable income and E&P purposes are the same. Read the requirement. Begin by completing the table for distributions a, b, and c. (Abbreviations used: Inc = Increase, dec = decrease.) Jessica Delta Corporation a. Amount of distribution Character of distribution Requirement Basis Amount of gain or loss Print For each asset listed, determine the gross income recognized by Jessica, her basis in the asset, the amount of gain or loss recognized by Delta, and the effect of the distribution on Delta's E&P. Character of gain or loss Done Inc or dec to E&P - х Amount of E&P change More Info a. A parcel of land used in Delta's business that has a $450,000 FMV and a $340,000 adjusted basis. b. Assume the same facts as in Part a except that the land is subject to a $150,000 mortgage. c. FIFO inventory having a $26,000 FMV and a $14,000 adjusted basis. d. A building used in Delta's business having an original cost of $180,000, a $500,000 FMV, and a $125,000 adjusted basis for taxable income purposes. Delta has claimed $55,000 of depreciation for taxable income purposes under the straight-line method. Depreciation for E&P purposes is $48,000. e. An automobile used in Delta's business having an original cost of $16,000, a $14,000 FMV, and a $7,680 adjusted basis. For taxable income purposes, Delta has claimed $8,320 of MACRS depreciation on the automobile. For E&P purposes, depreciation is $6,900. - f. Installment obligations having a $51,000 face amount (and FMV) and a $38,500 adjusted basis. The obligations were created when Delta sold a Sec. 1231 asset. Print Done X

Answer rating: 100% (QA)

a Jessica Amount of Distribution 450000 Character of Distribution Ordinary Income Delta Corporation Basis 340000 Gain or Loss 110000 Ordinary income E... View the full answer