A non-stock corporation was created and operated by Ana, Bena, Carla, Dolly, and Erica. After 10 years of operation, Ana, Bena, Carla, and Dolly surrendered their shares to Erica. Erica became the sole owner of the Corporation. Erica wants to convert the Corporation into a ONE PERSON CORPORATION. Is Erica allowed by law to convert the corporation to ONE PERSON CORPORATION? Yes or No? Explain.
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A non-stock corporation was created and operated by Ana, Bena, Carla, Dolly,
and Erica. After 10 years of operation, Ana, Bena, Carla, and Dolly surrendered
their shares to Erica. Erica became the sole owner of the Corporation. Erica
wants to convert the Corporation into a ONE PERSON CORPORATION. Is Erica
allowed by law to convert the corporation to ONE PERSON CORPORATION?
Yes or No? Explain.
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- Bridget transferred a piece of land she held personally to her wholly owned corporation using the provisions of ITA 85. The land had an adjusted cost base of $150,000 and a fair market value of $250,000 at the time of transfer. The property was mortgaged for $50,000. As consideration for the transfer, Bridget received cash of $200,000 and preferred shares with a legal stated capital of $10,000. The corporation assumed the mortgage. Which one of the following is the elected transfer price (first) and the adjusted cost base of the preferred shares (second)? a. $150,000 and Nil b. $250,000 and $240,000 c. $250,000 and Nil d. $260,000 and $50,000 Clear my choiceFour individuals form Chicka Corporation under § 351. Two of these individuals, Jane and Walt, made the following contributions: Both Jane and Walt receive stock in Chicka Corporation equal to the value of their investments. Required: a. What is Jane’s recognized income/loss b. What is Walt’s recognized gain/lossDiscuss planning opportunities with organizing a corporation. Instructions Original Post Prompt: Sarah incorporates her small business but does not transfer the machinery and equipment the business uses to the corporation. Subsequently, the machinery and equipment are leased to the corporation for an annual rent. What tax reasons might Sarah have for not transferring the machinery and equipment to the corporation when the business was incorporated?
- María and Bob form Robin Corporation. María transfers property worth $100,000 with a basis of $35,000 for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $40,000 with a basis of $8,000 and legal services worth $4,000 in organizing the corporation. If there is no gain or loss, enter "0" for the amount. a. What gain or income, if any, will the parties recognize on the transfer? María recognizes María has a basis of $ b. What basis do María and Bob have in the Robin Corporation stock? of $ 1 Robin Corporation has a basis of $ Bob recognizes and Bob has a basis of $ c. What is Robin Corporation's basis in the property and services it received from María and Bob? in the property Bob transferred. in the stock. in the property María transferred and a basis of2. On March 5, 2022, the two 50% shareholders of a calendar year corporation decide to elect S status. Shareholder Mila purchased her stock from a previous shareholder (a nonresident alien) on January 18, 2022. Identify any potential problems for Mila and the corporation.María and Bob form Robin Corporation. María transfers property worth $130,000 (basis of $45,500) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $52,000 (basis of $10,400) and for legal services (worth $5,200) in organizing the corporation. If there is no gain or loss, enter "O" for the amount. a. What gain or income, if any, will the parties recognize on the transfer María recognizes no capital gain or loss of $............. Bob. recognizes ordinary income of $...? b. What basis do María and Bob have in the Robin Corporation stock? María has a basis of $....., and Bob has a basis of $..............the stock. c. What is Robin Corporation's basis in the property and services it received from María and Bob? Robin Corporation has a basis of $............ the property María transferred and a basis of $........ in the property Bob transferred.
- In a Section 351 transaction, Moustapha transfers property to a corporation with a fair market value of $100, a basis of $40, subject to a liability of $25, and receives only stock with a fair market value of $75. The liability was incurred 10 years ago when Moustapha purchased the property. The corporation assumes the liability and will use the property in its business. What is Moustapha's basis in the stock received? 65Jean Jones, Robert Martin, and Lee Brown decide to form a new business to be operated as a C corporation. All three plan to transfer property to JRL Inc. solely in exchange for newly issued common stock in the corporation. Robert and Lee plan to transfer legal title in their properties to the corporation on December 1, 20X2, at which time they will receive 800 and 700 shares of JRL stock, respectively. Jean Jones will be out of the country through January 20X3, and will wait to transfer title in her assets to JRL Inc. until February 5, 20X3, in exchange for 500 shares of stock. Required What will be the tax consequences of this February 5 exchange if Jean’s business properties have a FMV of $10,000 and a basis of $3,500 on the date she exchanges them for a 25% stock interest in JRL Inc.?María and Bob form Robin Corporation. María transfers property worth $420,000 with a basis of $150,000 for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $165,000 with a basis of $30,000 and legal services worth $15,000 in organizing the corporation. If there is no gain or loss, enter "0" for the amount. a. What gain or income, if any, will the parties recognize on the transfer? María recognizes no gain or loss Feedback of $ Bob recognizes ordinary income of $ Check My Work Section 351 is mandatory if a transaction satisfies the provision's requirements. The three requirements for nonrecognition of gain or loss under § 351 are that (1) property is transferred (2) in exchange for stock and (3) the property transferors are in control of the corporation after the exchange. b. What basis do María and Bob have in the Robin Corporation stock? María has a basis of $ Feedback Check My Work Incorrect , and Bob has a basis of $ 420,000 X in the stock. c. What is Robin…
- Karen, in forming a new corporation, transfers land to the corporation in exchange for 100 percent of the stock of the corporation. Karen's basis in the land is $1,680,000, and the corporation assumes a liability on the property in the amount of $1,848,000. The stock received by Karen has a fair market value of $3,360,000. If an amount is zero, enter "0". a. What is the amount of gain or loss that must be recognized by Karen on this transfer?$ b. What is the amount of Karen's basis in the corporation's stock?$ c. What is the amount of the corporation's basis in the land?$Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $165,000 (basis of $30,000) and for legal services (worth $15,000) in organizing the corporation. ations What gain or income, if any, will the parties recognize on the transfer? b. What basis do Ann and Bob have in the Robin Corporation stock? What is Robin Corporation's basis in the property and services it received from Ann and Bob? a. C.Joe and Sunny intend to enter into a business venture together and decided that a corporation would be a desirable entity choice for federal income tax purposes. The corporation is named JS Inc. (“JS”). For newly established JS, Joe intends to contribute Property A with a fair market value (“FMV”) of $800 and basis of $300, subject to debt of $200. Sunny intends to contribute cash of $800. JS is elected to be treated as an S corporation for federal income tax purposes. 1. Provide Joe’s basis in JS upon contribution (i.e., Year 0) of Property A. 2. Provide Sunny’s basis in JS upon contribution (i.e., Year 0) of cash. 3. Provide JS’s basis in Property A and cash immediately after the contribution. 4. Assuming Joe’s and Sunny’s basis in the JS stock remain the same after the contributions for Year 1, determine Joe’s and Sunny’s basis when JS distributes $400 of cash to Joe and Sunny. 5. Assume the following: 1) there are no AAA, OAA, and AEP; 2) the debt of $200 is still treated as a loan…