Macadam Corp. was formed seven years ago and did not elect S-corporation status until January 1 of this year. It conducts a parking lotbusiness near UWM. Adam is its sole shareholder. Macadam Corp. hasneither Subchapter C accumulated E&P nor any NOLs. As of January 1, ofthis year, Macadam Corp. had the following assets:

Assets       Adj. Basis       FMV
Blackacre  $60,000      $40,000
Whiteacre  $20,000      $50,000
Greenacre $35,000       $65,000


All three parcels of land are non-depreciable gravel parking lots. What arethe shareholder and corporate level tax consequences of the followingalternate transactions?


a) This year, Macadam Corp. sold Whiteacre for $65,000; its taxableincome for this year if it were not an S corporation would have been$100,000.
b) This year, Macadam Corp. sold Whiteacre for $60,000; its taxableincome for the year if it were not an S corporation would have been$15,000.
c) This year, Macadam Corp. sold Blackacre for $30,000 and soldGreenacre for $60,000; its taxable income for this year if it werenot an S corporation would have been $90,000.
d) This year, Macadam Corp. sold Blackacre for $50,000 and soldGreenacre for $70,000; its taxable income for this year if it werenot an S corporation would have been $90,000.
e) This year, Macadam Corp. sold Whiteacre for $60,000 and soldGreenacre for $70,000; its taxable income for this year if it werenot an S corporation would have been $90,000. Macadam corp.had an unused NOL carryover from a prior C corporation year of$15,000.
f) Six years from now, Macadam Corp. sells Whiteacre for $95,000

Answer rating: 100% (QA)

a This year Macadam Corp sold Whiteacre for 65000 its taxable income for this year if it were not an S corporation would have been 100000 Shareholder Level Tax Consequences As an S corporation the tax... View the full answer