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Nina [5.8K]
3 years ago
9

2. Fargo Corporation distributes property (basis of $260,000 and fair market value of $310,000) to a shareholder. Fargo Corporat

ion has sufficient E & P for its distributions. What are the tax consequences of this distribution to Fargo?
Business
1 answer:
earnstyle [38]3 years ago
8 0

Answer:

The distribution by Fargo corporations has the following tax consequences

  • The corporation has distributed an appreciated property( that on its own makes it liable for tax)
  • The corporation must recognize the gains or losses made on the distribution as if the corporation was selling the property to the shareholder.
  • Apply capital gains tax on the gains or losses
  • capital gain = $310000-$260000 =$50000
  • Apply any annual exclusion and multiply by the Capital Gains Tax to arrive at Taxable Capital Gain to be included in incomes

The shareholder will recognize dividend received in the market value and will be subject to exemptions if applicable.

Explanation:

You might be interested in
The lowest point on a purely competitive firm's short-run supply curve corresponds to __________. a. the minimum point on its AT
3241004551 [841]

Answer: Option 'b' is correct.

Explanation:

The lowest point on a purely competitive firm's short run supply curve corresponds to the minimum point on its MC curve.

As we know the relation between ATC, AVC, AFC, MC.

1) when AC > MC then, MC rises,

2) When AC = MC, then AC reaches its minimum point.

3) When AC < MC , then MC falls.

And MC falls at higher rate than AC,

So, MC reaches its minimum point first and it is the lowest point for perfect competition.

Hence, Option 'b' is correct.

4 0
3 years ago
Assume a division of Hewlett-Packard currently makes 12,000 circuit boards per year used in producing diagnostic electronic inst
madam [21]

Answer:

The net benefit is -$26,000

Explanation:

Given the above information,

The total cost of manufacturing 12,000 circuit boards

= 12,000 × $34

= $408,000

Total purchase price

= 12,000 × $34

= $408,000

Fixed overhead cost applied

= 12,000 × $6

= $72,000

The rental income = $46,000

Outsourcing cost

= Total purchase price + Fixed overhead cost applied - Rental income

= $408,000 + $72,000 - $46,000

= $434,000

Therefore, Net benefit

= Total cost of manufacturing - Outsourcing cost

=$408,000 - $434,000

= -$26,000

8 0
3 years ago
A sole priorietorship is a business that is owned by a number of people?<br><br> True or false?
miskamm [114]
The answer is "false"
3 0
3 years ago
2. (double-weight) A European put option is ""in the money."" The price of the underlying security now rises. a. What happens to
sertanlavr [38]

Answer:

(A) premium on put option falls (B) premium on call option rises (C) premium on call changes more in absolute terms

Explanation:

An European put expires on a specific maturity date and can only be exercised on that date. A put option grants the right to sell an underlying security at an exercise price (X) on the exercise date, irrespective of the price the underlying security is trading at (S). On the other hand, a call option grants the right the buy an underlying security at the exercise price. The call or put option buyer will pay a Premium to the option writer to obtain this right. The amount charged as premium depends on how valuable the option is.

The value of a put option (P) = X-S (thus, the lower the price of the underlying security, the more valuable the put option is, vice versa)

The value of a call option (C) = S-X (thus, the higher the price of the underlying security, the more valuation the call option is, vice versa)

If the price of the underlying security rises,

(A) the put option will become less valuable, and its premium will fall

(B) the call option will become more valuable, and its premium will rise.

(C) the absolute size of the change in the call option will be larger than that of the put option. This is because the more the price of the underlying security increases, the more valuable the call option will become (as an example, if I have an option to buy an item at $10 and the current price of the item is $20, I can pay a positive value for that option. If the market price of the item increases to $50, I can pay even more for the option to buy the item at $10).

Whereas, the value of a put option will remain static once the price of the underlying rises beyond the exercise price. For instance, if I have the option to sell an item at $10 when the market price is $20, I just will not exercise the option. I will not change my decision if the market price rises to $50.

3 0
3 years ago
When Corinne asked why she didn't get the job, the manager replied, "I needed someone who understood basic accounting practices
OLga [1]

Answer:

The aspect of career readiness the manager feel Corinne was lacking was Knowledge

Explanation:

Career readiness is the preparation and process of acquiring skills, knowledge, talents that are required to start a career, maintain one's position in such career and grow.

The aspect of career readiness the manager feel Corinne was lacking was Knowledge because see made a statement that implied that Corinne lack basic understanding of accounting practice.    

Knowledge  is an aspect of career readiness that has to do with the theoretical or practical  understanding of a subject matter. It is the information, skills and facts gained through experience and education.

Other skills that are acquired in the process of career readiness are communication skills, human relation skills, critical thinking skills etc.

5 0
3 years ago
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