Business Taxation

What advantages are there from filing as a consolidated group? What disadvantages?

ACCOUNTING

Two years ago, Herbert, a widower, made a gift of marketable securities to his 35-year-old daughter, Sabrina, on which he paid a Federal gift tax of $3 million. Herbert dies in the current year and his estate is greatly reduced in value due to his having given away most of his assets over his lifetime. Herbert’s executor files an estate tax return showing a gross estate of slightly more than $3 million. The estate tax of $1 million that is attributable to the $3 million is not paid because the estate has no liquid assets. The IRS assesses the $1 million estate tax against Sabrina under the rules relating to transferee liability. Is Sabrina liable for the estate tax?

Recognition of gain in liquidation of a partner's interest

The Dec. 31, 2006, balance sheet of the BCD General Partnership reads as follows. Basis FMV Cash $180,000 $180,000 Receivables 0 0 Capital assets 42,000 63,000 Total $222,000 $333,000 Ben, capital $74,000 $111,000 Cassie, capital 74,000 111,000 Deidra, capital 74,000 ... click for more

Partnership Adjusted Basis

Paul and Pat are forming the P&P Partnership. Paul contributes $120,000 cash and Pat contributes nondepreciable property with an adjusted basis of $90,000 and a fair market value of $150,000. The property is subject to a $30,000 liability, which is also transferred into the partnership and is shared equally b the partners for basis purposes. Paul and Pat share in all partnership profits equally except for any precontribution gain, which must be allocated according to the statutory rules for built-in gain allocations. a. What is Pat's adjusted tax basis for her partnership interest immediately after the partnership is formed? b. What is the partnership's adjusted basis for the property c... click for more

9 true/ false questions

True / false 1. Marge has an outside basis of $100,000 in a partnership, at a time when the partnership makes a $120,000 nonliquidating cash distribution to her. Marge has a $20,000 capital gain from the distribution. 2. The IRS will usually challenge tax planning that shifts income between related parties. 3. Section 267 is the Internal Revenue Code section that specifically disallows a tax deduction for losses on the sale or exchange of property between related parties, as well as prohibiting a deduction for unpaid expenses until the related party payee recognizes income 4. Deferral of tax liability can be obtained by deferring tax deductions into later tax years. 5. For ... click for more