'Balance Sheet and Tax Basis\r'

' week 5 Problem Solution Set explanation/547 October 5th, 2012 Chapter 15, #83 a) Significant appraise issues or concerns that whitethorn disaccord across entity types are: * The business complex body part’s flexibility * Protection of the liability * The period and cost of organizing the entity Significant non-tax issues or concerns that whitethorn differ across entity types are: * Lowering of self-employment and FICA taxes * Flexibility of finicky allocations * Adding wise owners b) My recommendation for forming CCS is LLC.I chose LLC because the organizing business members may tighten their individual tax liabilities by operating as a LLC. CCS should be concerned about FICA and self-employment taxes. LLCs essential pay self-employment taxes. As the business grows past 3-4 years, I recommend CCS to look at the possibility of permutation to and S Corporation. At this point, compensation needs may have reduced and the members would wish to fully gain ground from se lf-employment tax removal. Chapter 19, #39 A. What amount of gain or loss does Zhang realize on the absent of the situation to her confederation?Loss Realized = FMV(Stock Received)+mortgage fictitiousâ€AdjustedTax derriere = $300,000 + $100,000 †$410,000 Loss Realized= ($10,000) B. What amount of gain or loss does Zhang recognize on the transfer of the place to corporation. No loss is recognized on this transfer because of the requirements of Section 351. C. What is Zhang’s tax foundation garment in the stock she receives in the exchange? Tax nates = Substituted al-Qaida of the Assets Transferred †Assumed mortgage = $410,000 †$100,000 Tax Basis= $310,000 D. What is the corporation’s tax-adjusted basis in separately of the assets received in the exchange?The corporation’s carryover basis is $400,000; the value of assets received minus the conglobation loss on the assets transferred applied to land. Inventory = $10,000, construct = $10 0,000, and Land = $290,000. Assume the corporation assumed a mortgage of $500,000 attached to the building and land. Assume the bonny food market value of the building is now $250,000 and the plumb market value of the land is $530,000. The fair market value of the stock remains $300,000. E. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?Realized recognize: $300K Stock FMV + $500K Mortgage †$410K Aggregate Tax Basis = $390,000 Realized Gain Tax Basis of airplane propeller: $500K †$410K = $90,000 Zhang would recognize a gain of $90,000 on the transfer under the new conditions since the assumed liability is greater than the total tax basis of the transferred property. F. What is Zhang’s tax basis in the stock she receives in the exchange? Tax Basis of Stock Received = Tax Adjusted Property Basis Transferred + Exchange Gain Recognized †Mortgage Assumed $410,000 + $90,000 †$500,000 = 0, Zhang can defer recog nition of the $300,000 in stock. G. What is the corporation’s tax-adjusted basis in each of the assets received in the exchange? Inventory = $10,000 + ($20,000/$800,000 x $90,000) = $12,250 Building = $100,000 + ($250,000 / $800,000 x $90,000)= $128,125 Land= $300,000 + ($530,000 / $800,000 x $90,000) = $359,625 sum total= Inventory + Building + Land = $12,250 + $128,125 + $359,625 Total = $500,000 The corporation’s total tax basis is the $410,000 carryover basis plus the gain recognized on the exchange.\r\n'