What is ocean taxable income

Assignment Help Accounting Basics

Reference no: EM132218472

Question: Assumptions: Use a flat corporate tax rate of 21% for all problems. Assume a tax rate of 15% for all dividends and capital gains.

Assume there is no Alternative Minimum Tax for these problems.

Assume that all entities are US domestic corporations, taxed under Subchapter C of the IRC unless otherwise noted the internal revenue code.

1. Ocean Corporation has two equal shareholders - Moana and Maui. At January 1 2018 Moana and Maui each have a basis in the corporation of $100,000. During 2018 Ocean Corporation had the following items of income (before considering any distributions):

Gross Receipts 200,000

Non-deductible expenses (30,000)

Other operating expenses (100,000) (Assume all deductible)

Book Income 70,000

On March 1, Ocean Corporation distributed cash of $50,000 to each Moana and Maui (total distributions of $100,000). On June 1 Moana sold all her stock in Ocean Corporation to Pua for $200,000. On September 1 Maui Corporation made another cash distribution of $50,000 to Pua and distributed property to Maui with a fair market value (FMV) of $50,000, and a basis of $40,000 (total FMV of all September 1 distributions was $100,000).

At January 1, 2018, Ocean corporation had $100,000 in accumulated earnings and profits.

A. What is Ocean's taxable income for 2018?

B. What is Ocean's current earnings and profits for 2018?

C. What are the tax consequences to Moana as a result of the March 1 distribution?

D. What are the tax consequences to Moana as a result of the June 1 sale?

E. What are the tax consequences to Maui as a result of the September 1 distribution?

F. What are the tax consequences to Pua as a result of the September 1 distribution?

G. What is Ocean's accumulated earnings and profits at January 1, 2019?

Reference no: EM132218472

Questions Cloud

Calculate the data rate required for robot to remote : MITS5003: Prime Living is a real estate company based in Victoria and you work form them as a consultant network engineer.

Discuss revenue recognition under frs : Discuss revenue recognition under FRS 115 Revenues from contracts with customers in view of its application to construction contracts.

Discuss about the valuation allowance : Tomorrow Publication $115 million, and $105 million, respectively. The 2016 income statement does not include $20 million of magazine subscriptions received.

Computing the monthly mortgage payment : The Bhatts purchased a new home for $245 comma 000 with a down payment of $45 comma 000. They obtained a 25-year adjustable rate mortgage with the following.

What is ocean taxable income : Assume that all entities are US domestic corporations, taxed under Subchapter C of the IRC unless otherwise noted the internal revenue code.

Prepare a report focusing on what the problem was : MITS 5004: Prepare a report focusing on what the problem was, how and why it occurred and what are the possible solutions.

Calculate the average size of a motel of high-quality : Calculate the average size (how many units) of a motel of high-quality (3/4) based on the R.S. Means Cost data. In other words, you may infer the average size.

What would be the amount for early withdrawal : Acertificate of deposit will often result in a penalty for withdraing funds before the maturity date. if the penalty involves two months of interest what would.

A code to display the 7-segment digits are all off : A temperature sensor is to be connected to a pin of choice on the MSP430. Connect a 2-digit 7-segment display.

User Account

All Pages