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Cerulean Corporation has two equal shareholders, Eloise and Olivia. Eloise acquired her Cerulean stock three years ago by transferring property worth $700,000, basis of $300,000, for 70 shares of the stock. Olivia acquired 70 shares in Cerulean Corporation two years...

Swallow Company is a large real estate construction company that has made a Subchapter S election. The company reports its income using the percentage of completion method. In 2013, the company completed a contract at a total cost of $4.8 million. The contract price...

Your client supplies water to a housing development. The company requires new customers to pay for the extension of the water lines to the customer’s home. The water lines are the company’s property. The company has consistently treated the amounts received from its...

In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has significant income from other sources and is...

Benton Company (BC) has one owner, who is in the 35% Federal income tax bracket. BC’s gross income is $295,000, and its ordinary trade or business deductions are $135,000. Compute the tax liability on BC’s income for 2012 under the following assumptions: a. BC is...

During 2012, Gorilla Corporation has net short term capital gains of $70,000, net long term capital losses of $195,000, and taxable income from other sources of $620,000. Prior years’ transactions included the following: 2008 net short term capital gains $30,000 2009...

Apply the controlled and affiliated group rules to determine whether a parent subsidiary controlled group or an affiliated group exists in each of the following independent situations. Circle Y for yes and N for no.   Situation Parent SubsidiaryControlled Group?...

Swan Corporation, a calendar year C corporation, had the following information for 2012: Net income per books (after tax) $174,700 Taxable income 195,000 Federal income tax per books 59,300 Cash dividend distributions 35,000 Unappropriated retained earnings, as of...

Ron and Gail form Maple Corporation with the following consideration: Consideration Transferred   Basis toTransferor Fair MarketValue Number ofShares Issued From Ron—       Cash $ 50,000 $ 50,000   Installment obligation 140,000 250,000 30...