Bristol Corp. was formed as a C corporation on January 1, 2003, and elected S corporation status on January 1, 2012. At the time of the election, Bristol had accumulated C corporation earnings and profits that have not been distributed. Bristol has had the same 25 shareholders throughout its existence. In 2015 Bristol's S election will terminate if it
a. Increases the number of shareholders to one hundred.
b. Adds a decedent's estate as a shareholder to the existing shareholders.
c. Take a charitable contribution deduction.
d. Has passive investment income exceeding 90% of gross receipts in each of the three consecutive years ending December 31, 2014.
Answer: D
Tax
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- Alex Burg, a cash-basis taxpayer, earned an annual salary of $80,000 at Ace Corp. In 2014, but elected to take only $50,000. Ace, which was financially able to pay Burg's full salary, credited the unpaid balance of $30,000 to Burg's account on the corporate books in 2014, and actually paid this $30,000 to Burg on January 30, 2015. How much of the salary is taxable to Burg in 2014?
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- Which of the following taxpayers may use the cash method of accounting?
- Royce Rentals, Inc., an accrual-basis taxpayer, reported rent receivable of $25,000 and $35,000 in its 2015 and 2014. balance sheets, respectively. During 2015, Royce received $50,000 in rent payments and $5,000 in nonrefundable rent deposits. In Royce's 2015 corporate income tax return, what amount should Royce include as rent revenue?
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- In 2015, Emil Gow won $5,000 in a state lottery. Also in 2015, Emil spent $400 for the purchase of lottery tickets. Emil elected the standard deduction on his 2015 income tax return. The amount of lottery winning that should be included in Emil's 2015 taxable income is
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- Mr. and Mrs. Alvin Charak took a foster child, Robert, into their home in 2015. A state welfare agency paid the Charaks $3,900 during the year for related expenses. Actual expenses incurred by the Charaks during 2015 in caring for Robert amounted to $3,000. The remaining $900 was spent by the Charaks in 2015 towards their own personal expenses. How much of the foster child payments is taxable income to the Charaks in 2015?
- Income in respect of a cash-basis decedent
- Ed and Ann Ross were divorced in January of the current year. In accordance with the divorce decree, Ed transferred the title in their home to Ann. The home, which had a fair market value of $150,000, was subject to a $50,000 mortgage that had twenty more years to run. Monthly mortgage payments amount to $1,000. Under the terms of settlement, Ed is obligated to make the mortgage payments on the home for the full remaining twenty-year term of the indebtedness, regardless of how long Ann lives. Ed made twelve mortgage payments during the current year. What amount is taxable as alimony in Ann's current year return?
- In 2010, Ross was granted an incentive stock option (ISO) by her employer as part of an executive compensation package. Ross exercised the ISO in 2013 and sold the stock in 2015 at a gain. Ross was subject to regular tax for the year in which the
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- In July 1996, Dan Farley leased a building to Robert Shelter for a period of fifteen years at a monthly rental of $1,000 with no option to renew. At that time the building had a remaining estimated useful life of twenty years. Prior to taking possession of the building, shelter made improvements at a cost of $18,000. These improvements had an estimated useful life of twenty years at the commencement of the lease period. The lease expired on June 30, 2015, at which point the improvement had a fair market value of $2,000. The amount that Farley, the landlord, should include in his gross income for 2015 is
- Daniel Kelly received interest income from the following sources during the current year - New York Port Authority Bonds : $1,000 - Puerto Rico Commonwealth bonds : $1,800 What portion of such interest is tax exempt?
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