King Corporation is a profitable manufacturing concern with

$$800,000$ of E&P$.$ It is owned in equal shares by Harry and Wilma, husband and wife.

Both individuals are actively involved in the business. Determine the tax consequences of

the following independent events:

a$.$ In reviewing a prior year tax return for King, the IRS determines that the $$500,000$ of

salary and bonuses paid to Wilma is unreasonable and that reasonable compensation

is $$280,000.$

b$.$ King loaned Harry $$400,000$ over the past three years. None of the money has been

repaid. Harry does not pay interest on the loans.

c$.$ King sells a building to Wilma for $$150,000$ in cash. The property has an adjusted

basis of $$90,000$ and is subject to a $$60,000$ mortgage, which Wilma assumes. The

FMV of the building is $$350,000.$

d$.$ Harry leases a warehouse to King for $$50,000$ per year. According to an IRS auditor,

similar warehouses can be leased for $$35,000$ per year.

e$.$ Wilma sells to King for $$250,000$ land on which King intends to build a factory.

According to a recent appraisal, the FMV of the land is $$185,000.$

f$.$ The corporation owns an airplane that it uses to fly executives to business meetings.

When the airplane is not being used for business, Harry and Wilma use it to travel to

their ranch in Idaho for short vacations. The approxim