Académique Documents
Professionnel Documents
Culture Documents
Session 11
Chapter 15 (A-F)
S Corporations
Text (Lind [6e]), pp. 682-720
Problems, pp. 690-691, 695-696, 709-710, 712-713, 719-720
Case, pp. 699-705[Harris]
by
Hugh Pforsich
11
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A. Introduction [682-684]
10
11
12
13
14
15
16
$
$
$
$
$
$
$
$
$
$
$
$
$
$
92,000
1,000
44,000
8,000
7,000
4,000
6,000
7,000
12,000
7,500
15,000
9,000
6,000
4,500
17
18
19
20
21
22
23
24
25
FMV
20,000
35,000
30,000
For purposes of this problem, disregard any cost recovery deductions that may be available to B. Consider the
shareholder and corporate level tax consequences of the following alternative transactions:
(a) B sells the building for $50,000 in 2005; its taxable income for 2005 if it were not an S corporation would be
$75,000.
(b) Same as (a), above, except that B's taxable income for 2005 if it were not an S corporation would be $20,000.
(c) Same as (a), above, except that B also sells the machinery for $40,000 in 2006, when it would have substantial
taxable income if it w ere not an S corporation.
(d) B trades the building for an apartment building in a tax-free 1031 exchange and then sells the apartment
building for $50,000 in 2005, when it would have substantial taxable income if it were not an S corporation.
(e) B sells the building for $90,000 in 2014.
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(a) Is S Corporation subject to the 1375 tax on passive investment income? If so, compute the amount of tax.
(b) Same as (a), above, except that S receives an additional $5,000 of tax-exempt interest.
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