How much gain does Bill recognize on his exchange? What is the basis to Bill of his 100 shares? $3,000 - $1,000 = $2,000. Bill’s basis is $1,000. c. What gain or loss is recognized by the corporation when it issues its shares to Sam?
14-52 Sam Rogers forms a corporation. Sam transfers to the corporation property having a basis to him of $15,000 and a fair market value of $27,000 for 900 shares of the $10 par stock of the corporation. A year later, Bill Morrison, who is not related to Sam, transfers property having a basis to him of $1,000 and a fair market value of $3,000 for 100 shares of the corporate stock. The corporation issued no other stock. * a.
Week 5 Assignment Questions 14-24 What is the purpose of the dividends-received deduction? What corporations are entitled to claim this deduction? What dividends qualify for this deduction? The purpose of the dividends received deduction is so that corporations would not be taxed at a corporate level a shareholder level or if when dividends or a recipient corporation. The dividends qualifying for the dividends-received deduction are those dividends paid by domestic corporations subject to the corporate income tax.
Corporate taxpayers may use capital losses against capital gains; however losses can be carried back. Individuals can use net capital losses to reduce ordinary income and against capital gains. 14-52 Sam Rogers forms a corporation. Sam transfers to the corporation property having a basis to him of $15,000 and a fair market value of $27,000 for 900 shares of the $10 par stock
The computer system cost $12,000 and is normally sold by Shabbona for $15,200. Shabbona uses a perpetual inventory system. 4. Truck #4 has a list price of $14,000. It is acquired in exchange for 1,000 shares of common stock in Shabbona Corporation.
Answer AR= 20x20000=400,000 3-2 Debt Ratio Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Answer Equity multiplier Asset /equity = 2.5/1 A=L+E 2.5=1.5=+1 Debt/asset = 1.5/2.5 = .6 3-3 Market/Book Ratio Winston Washers’s stock price is $75 per share. Winston has $10 billion in total as- sets.
What is ROE Answer ROE= profit margin x asset turnover x equity multiplier =3% asset turnover = sales/asset = 50/100= 2 equity multiplier=2 ROE= 3% x2 x2= 12% 3-6 Du Pont Analysis Donaldson & Son has an ROA of 10%, a 2% profit margin, and a return on equity equal to 15%. What is the
Then it will show the calculations that will show the gains that Mason Machining, Inc. will get from this transaction. Next, will be an explanation of how Mason will recognize the gains. Next, the tax liability that will be incurred by Mason Machining, Inc. from this transaction will be explained. The next process will be to calculate the amount of gain the shareholder’s from Mason Machining, Inc. will be able to realize and recognize from the transfer of stocks and assets between the two corporations. The next process will be to explain how much tax liability the shareholder’s will incur from the transfer of stocks between the corporations.
If Dawn, Lind, and Mike were to select this type of entity they would each pay another tax on the corporation’s distribution of corporate earnings and profits when dispersed as dividends. However, contrary to C corporations, an S corporation is not a separate taxable entity for most federal and state income tax purposes. Dawn, Lind, and Mike will need to determine the best entity type that will
What is its ROE? ROE= profit margin*asset turnover*equity multiplier Asset turnover 3%= sales $100 million/$50 assets=2 equity multiplier=2 3%*2*2=12 3-6 Du Pont Analysis Donaldson & Son has and ROA of 10%, a 2% profit margin, and a return on equity equal to 15%. What is the company’s total assets turnover? What is the firm’s equity multiplier? ROA= 10%; Profit Margin =2%; ROE= 15% 10/2= S/TA=5 15/10=