Hoffman, W. H., Raabe, W. A., Smith, J. E., Maloney, D. M., & Young, J. C. (2016). South-western federal taxation2016: Corporations, partnerships, estates and trusts ( 39th ed.). Mason, OH: South-Western Cengage Learning.
WEEK 111 READING INCLUDES:
Read the following chapters from: South-Western Federal Taxation 2014: Corporations, Partnerships, Estates and Trusts:
Chapter 1: Understanding and Working with the Federal Tax Law
Chapter 2: Corporations: Introduction and Operating Rules
Chapter 4: Corporations: Organization and Capital Structure
- Explain the process for introduction, negotiation and final approval of federal income tax laws. Do you think the process is fair? Why or why not?
- Read the Forbes article: “Top 10 Reasons There Is No Corporate Tax Reform”. Based on the information presented in the article:
- Do you think any of these obstacles can be overcome? If so, which ones and how?
- How does the influence of special interest groups affect the country’s ability to pass comprehensive tax reform?
- If corporate tax reform involved lowering tax rates in exchange for reducing or eliminating certain deductions, what affect do you think this would have on large and small corporations?
- Characterizing the Distribution. Make up and answer your own question using the following information. Bob owns 100% of the stock of XYZ corporation. Bob’s tax basis in XYZ corporation as of January 1, 2015 is _______. As of December 31, 2014 XYZ had accumulated E&P of _______. During 2015, XYZ earns current E&P of ________. On _____ 2015, XYZ makes a distribution of _______ to Bob.
- How is the distribution characterized (i.e. how much is a dividend, how much is a return of capital, how much is a capital gain)?
- What is Bob’s tax basis in XYZ corporation after the distribution? Respond to at least two of your classmates’ posts. In responding to other student’s questions and answers for this topic, be sure to offer your views as to whether the student’s answer is correct and contrast the fact pattern and answer with those in your initial post to this topic.
- Taxes for Ownership. Tammy and Barry formed Pheasant Corporation several years ago in a transaction that qualified under § 351. Both shareholders serve as officers and on the board of directors of Pheasant. In the current year, Pheasant Corporation redeemed all of Barry’s shares in the corporation with a property distribution.
- What are the tax issues for Barry and Pheasant?
- What are some of the issues you think an accountant would deal with in evaluating and communicating the impact of these transactions to the owners?