BUS FPX 4065 Assessment 7 Problems

Student Name

Capella University

BUS-FPX4065 Income Tax Concepts and Strategies

Prof. Name

Date

Problem 1

Darrel, Sissy, and Carol established a partnership. Darrel contributed equipment, Sissy contributed a building, and Carol agreed to handle all accounting and office work in exchange for a 10% interest in the partnership.

a. Gain Recognition:

• Darrel’s equipment: No gain recognized.
• Sissy’s building: No gain recognized.
• Carol’s services: No gain recognized.

b. Basis for Each Partner:

• Darrel: $100,000
• Sissy: $50,000
• Carol: $30,000

c. Basis for Partnership Assets:

• Equipment: $100,000
• Building: $50,000

Problem 2

Wayne’s initial basis in a partnership was $46,000. His share of income and expenses for the year include ordinary income, guaranteed payment, long-term capital gain, §1231 gain, charitable contributions, §179 expense, and cash distribution.

a. Wayne’s Self-Employment Income: $74,000

b. Wayne’s Basis at Year End: $136,600

Problem 3

Karen, with a basis of $24,000 in her partnership interest, received a $12,000 cash distribution and equipment valued at $16,000 ($24,000 FMV).

a. Gain or Loss on Distribution: None recognized.

b. Karen’s Ending Partnership Basis: $0

c. Karen’s Basis in the Equipment: $12,000

Problem 4

Carrie bought a 40% partnership interest for $86,000 in February 2017. Her share of partnership income in subsequent years totaled $118,000. She sold her interest for $206,000 on December 18, 2019.

Gain or Loss on Sale: $2,000

Problem 5

Determining the basis of stock in various scenarios where the 80% rule is met.

a. Contribution of Property: Basis = $2,000

b. Contribution of Property with Cash: Basis = $6,000

c. Contribution of Property with Additional Property: Basis = $16,400

d. Contribution of Building with Mortgage: Basis = $50,000

e. Contribution of Building with Mortgage: Basis = $0

Problem 6

Calculating taxable income for a C corporation based on given book income and adjustments.

a. Taxable Income: $103,000

b. Taxable Income: $195,300

c. Taxable Income: $138,420

d. Taxable Income: $237,800

Problem 7

Determining taxable dividends, nontaxable distributions, and capital gains for various distributions.

a. Distribution: Taxable Dividend = $12,000

b. Distribution: Taxable Dividend = $13,000

c. Distribution: Taxable Dividend = $32,000, Nontaxable Distribution = $2,000

d. Distribution: Taxable Dividend = $28,000, Nontaxable Distribution = $22,000, Capital Gain = $2,000

BUS FPX 4065 Assessment 7 Problems