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Yes, stock the has become worthless is deemed to have been sold
for $0
on the December 31, the last day of year of worthlessness
The total amount of the loss is $54,000 ($6 x 9,000 = $54,000)
The character of loss is long-term capital loss
Solution to Exercise 1, Part B Assuming Section 1244 stock, what is
the character of the loss and how much is deductible this year
Since this is Sec. 1244 stock, Mark can deduct up to $50,000 as an ordinary
deduction. The balance of the loss is $4,000 ($54,000 - $50,000) and is
considered
a long-term capital loss, of which $3,000 can be deducted in the current year.
Thus, a total of $53,000 can be deducted in the year of worthlessness.
Exercise 2. Sam is a 60% partner the ST partnership. The STs balance
sheet is as follows:. Required. What is Sams basis in his partnership
interest?
Assets
Current Assets
Noncurrent Assets
Total Assets
Solution to Exercise 2
Start:
Less:
Equals:
60,000
180,000
$240,000
Carl
Redman
BC
Corporation
Part A. What are BC corporation tax accounting journal entries to record this
formation transaction?
BC corps TAX journal entry for Betty is:
Adjusted Basis
carryover
30,000
25,000
5,000
Adjusted Basis
carryover
25,000
15,000
10,000
Part B. What is Bettys and Carls gain realized, gain recognized, and gain
deferred?
Betty
$50,000
25,000
$75,000
Carl
$50,000
15,000
$65,000
(30,000)
$45,000
(25,000)
$40,000
$None
$None
Betty
Carl
Gain Realized
Gain Recognized
Gain Deferred
$45,000
($None)
$45,000
$40,000
($None)
$40,000
Betty
$50,000
45,000
$ 5,000
Carl
$50,000
40,000
$10,000
Paula
Purple
B&P
Partner
ship
Part A. What are B&P partnerships tax accounting journal entries to record
this formation transaction?
B&P partnerships
Brianna is:
TAX
journal
entry
for
TAX
journal
Adjusted Basis
carryover
20,000
5,000
15,000
entry
for
Adjusted Basis
carryover
66,000
60,000
6,000
Part B. What is Briannas and Paulas gain realized, gain recognized, and
gain deferred?
Brianna
$20,000
5,000
$25,000
Paula
$30,000
60,000
$90,000
(20,000)
$5,000
(66,000)
$24,000
$None
$None
Brianna
Paula
Gain Realized
Gain Recognized
Gain Deferred
$5,000
($None)
$5,000
$24,000
($None)
$24,000
Brianna
65,000
40%
26,000
Paula
65,000
60%
39,000
Brianna
$20,000
(5,000)
$15,000
Paula
$30,000
(24,000)
$6,000
26,000
$41,000
39,000
$45,000