Your client, Edward Bolleni, CPA has recently left his Big Four position and is “out on hisown”. After preparing tax returns for the 2017 tax year, Mr. Bolleni has decided to operatehis own accounting firm. Mr. Bolleni wants limited liability protection in his operationsas an accountant, as well as, liability protection from any accidents or slip and falls thatwould occur in his accounting office. Mr. Bolleni has an accounts receivable worth $50,000for tax preparation fees for the 2017 tax year, as well as, an interest in a real estatepartnership that is used as collateral for a loan that Mr. Bolleni received from Bank ofAmerica so that he could have additional capital for his new business. The fair marketvalue of the real estate partnership interest is $500,000 and the loan is for $200,000. Mr.Bolleni comes to your office and asks you the following questions:
A. What type of entity, if any, did Mr. Bolleni operate in 2017? If you believe that Mr.Bolleni operated an entity in 2017, what tax forms does Mr. Bolleni have to file toreport the entity’s income, gains, losses, deductions, and credits?
B. Which type of legal entity would be best suited to provide the type of limitedliability protection the taxpayer is seeking?
C. Whether, for tax purposes, Mr. Bolleni can contribute his assets to either acorporation or partnership tax-free? If so, explain your answer. If not, explain youranswer.
D. If the taxpayer does contribute the assets to the corporation, the taxpayer wants toknow what tax impact if any, would happen if he immediately transferred 50% ofthe shares in the corporation to his wife as a gift.
E. If your answer to (D) above would be different if the taxpayer’s wife contributedservices to the corporation in return for her 50% shareholder interest.

Answer rating: 100% (QA)

A The type of entity Mr Chex operated in 2017 was either a private limited company or a one person c... View the full answer