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AfilCa [17]
2 years ago
15

Steve owns Barb, Inc. and has grown the business over the last 15 years and is the sole owner. He decides to sell 40 percent of

the corporate stock (all outstanding stock) on July 1, Year 1 to an ESOP for $8 million. His adjusted basis for his entire interest in the stock was $3 million. On February 4th, Year 2, Steve uses all $8 million to buy shares of Apple Stock. Which of the following statements is correct? a. Steve will not have a capital gain in Year 1 for tax purposes. b. He will have a capital gain of $5.0 million in Year 1 for tax purposes. c. Steve's transaction does not qualify for non-recognition of gain treatment. d. He will have a capital gain of $6.8 million in Year 1 for tax purposes.
Business
1 answer:
Mamont248 [21]2 years ago
3 0

Answer:

a. Steve will not have a capital gain in Year 1 for tax purposes.

Explanation:

Since Steve (the owner of Barb) sold his stocks to an ESOP (employee stock ownership plan), then he will be able to avoid capital gains taxes at least for the first year. ESOPs are qualified retirement plans and when they invest in stocks of the same sponsoring company, the transaction is not taxed if the seller reinvests (buys other stocks). As long as ESOP holds at least 30% of the company's stocks, then Steve can defer his taxes.

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During 2020, Sarasota Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sarasota for
vfiekz [6]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

Gross profit = Sales - Cost of goods sold

= (440 x 90 + 220 x 80 + 264 x 50) - (440 x 56.7 + 220 x 50.4 + 264 x 31.5)

= (39,600 + 17,600 + 13,200) - (24,948 + 11,088 + 8,316)

= 70,400 - 44,352

= $26,048

Ending inventory schedule attached in the excel archive

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Download xlsx
8 0
3 years ago
On December 31 of the current​ year, Pilozzi Company has the following information​ available:
Aleksandr [31]

Answer:

On December 31 of the current​ year, can the Board of Directors declare and pay a cash dividend of $ 2 ​million

If the company don´'t have enough cash on hand to distribute the previously announced sum to shareholders, it may have to borrow funds to honor the dividend payment.

Explanation:

Companies can pay dividends in  cash or additional shares.

If the company don´'t have enough cash on hand to distribute the previously announced sum to shareholders, it may have to borrow funds to honor the dividend payment.

6 0
3 years ago
Current Attempt in Progress
Allisa [31]

Answer:

Net Increase in cash = $124,200

Explanation:

Note: The correct value for Year 2021 inventory is $510,300 not $10,300.

Also note: See the attached excel file for the statement of cash flows for 2022.

In the attached excel file, the following workings are used:

Workings:

w.1: Increase in accounts receivable = Account receivable in 2022 - Account receivable in 2021 = $237,600 - $205,200 = $32,400

w.2: Decrease in inventory = Inventory in 2022 - Inventory in 2021 = $450,900 - $510,300 = -$59,400  

w.3: Decrease in accounts payable = Accounts receivable 2022 - Accounts receivable 2021 = $105,300 - $116,100 = -$10,800

w.4: Disposal of land = Land in 2021 - Land in 2022 = $270,000 - $216,000 = $54,000

w.5: Purchase of equipment = Equipment in 2022 - Equipment in 2021 = $702,000 - $540,000 = $162,000

Download xlsx
3 0
2 years ago
_____ oversee the activities of first-line managers.
natta225 [31]
<span>Mid-level managers oversee the activities of first-line managers. Mid-level managers are responsible for their department and report to top management. Mid-level managers must make sure that resources are allocated correctly and must invest money in training and development, materials, supplies and technology. They communicate the goals and strategies to first-line managers.</span>
6 0
3 years ago
Say's law says that
Nutka1998 [239]

Answer:

The answer is : People consume the goods  they produce

Explanation:

Say's law could also be refereed to as  Say's law of markets in Classical economics states that supply itself creates its own demand which is equivalent to people consuming what they produce.

3 0
3 years ago
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