16, Helen owns 45% of the stock in a C corporation that had a profit of $200,000

Question

16, Helen owns 45% of the stock in a C corporation that had a profit of $200,000 in 2010, Henry owns a 45% interest in a partnership that had a profit of $200,000 during the year. The corporation distributed $20,000 to Helen, and the partnership distributed $20,000 to Henry. Which of the following statements relating to 2010 is correct? a. Henry must report $20,000 of income from the partnership. b. The partnership must pay tax on $200,000 of income. c. Henry must report $90,000 of income from partnership. d. The partnership is subject to a Federal entity-level income tax. e. None of the above. 17. Five years ago, Evan transferred property he had used in his sole proprietorship to White Corporation for 2,000 shares of white Corporation in a transaction that qualified under § 351, Evan is not the only shareholder of White. The assets had a tax basis to him of $400,000 and a fair market value of $550,000 on the date of the transfer. In the current year, White Corporation (E & P of $800,000) redeems 500 shares from Evan for $320,000 in a transaction that qualifies for sale or exchange treatment. With respect to the redemption, Evan will have a: a. $220,000 capital gain. b. $320,000 dividend. c. $220,000 dividend. d. $320,000 capital gain. e. None of the above.

Explanation / Answer

Ans-16 (b) the partnership must pay tax on $200000 of income.

Ans-17 (a) $220000 capital gain.

Ans-18 (d) Sam can deduct the $3000 capital loss against ordinary income in 2010

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