3. Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for...
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3. Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares; Brad, land worth $20,000 (basis of $11,000) for 20 shares; and Ron, cattle worth $9,000 (basis of $6,000) for 9 shares and services worth $21,000 for 21 shares.
a.
These transfers are fully taxable and not subject to 351.
b.
Rons basis in his stock is $27,000.
c.
Rons basis in his stock is $6,000.
d.
Brads basis in his stock is $20,000.
4. Rose Corporation (a calendar year taxpayer) has taxable income of $300,000, and its financial records reflect the following for the year.
Federal income taxes paid
$110,000
Net operating loss carryforward deducted currently
70,000
Gain recognized this year on an installment sale from a prior year
44,000
Depreciation deducted on tax return (ADS depreciation would have been $10,000)
40,000
Interest income on Iowa state bonds
8,000
Rose Corporations current E & P is:
a.
$254,000.
b.
$214,000.
c.
$194,000.
d.
$104,000.
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