Briefly, indicate the tax or legal issue presented by each of the following situations and the advice

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Question:

Briefly, indicate the tax or legal issue presented by each of the following situations and the advice you might give to the following taxpayers (each situation is independent):

(a) Marvin is part of a group that is forming a corporation. Each of the 5 investors in the corporation is contributing $200,000 in value for a 20 percent interest. Marvin has equipment that the corporation could sell for $200,000 (Marvin's basis is $250,000). He's planning to contribute the equipment in exchange for his stock.

(b) Mr. Lerner owns 50% of the stock of Nats Corporation, which operates a temporary employment business. Late last year, Mr. Lerner was short of cash in his personal checking account. Consequently, he paid several personal bills by writing checks on the corporate account and recorded the payments as miscellaneous expenses. Three months later he repaid the corporation in full.

(c) Martin is forming a C corporation that will own an antique car themed restaurant. He intends to decorate the restaurant with his extensive antique car collection. To form the corporation, he plans to contribute seed capital of $500,000 and his antique car collection, purchased five years ago (FMV $1,000,000; adjusted basis $100,000). (Note: Martin informs you that the antique car market is very hot and is expected to remain that way for many years). Hence, he expects the car displays to attract numerous customers.)

(d) Mr. and Mrs. Jetson own 100 percent of the stock in Jetson Inc., a small bookstore, which recently hired the couple's nephew at a $75,000 annual salary. The nephew, age 20, has been in several scrapes with the law and needs financial help, and the Jetson family agreed that a low-stress job with the family business is just what he needs for a year or two. The nephew will be responsible for restocking books that have been removed from the shelves by customers and were not purchased.

(e) Dr. P is a physician with his own medical practice. For the past several years, his marginal income tax rate has been 37 percent. Dr. P's daughter, who is a college student, has no taxable income. During the last two months of the year, Dr. P instructs some of his patients to remit their payments for his services directly to his daughter, who includes the income on her tax return.