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kati45 [8]
2 years ago
5

Nancy and her daughter, Kathleen, have been working together in a cattery called "The Perfect Cat." Nancy formed the business se

veral years ago as sole proprietorship, and it has been very successful. Assets currently have a fair market value of $450,000 and a basis of $180,000. On the advice of their tax accountant, Nancy decides to incorporate" The Perfect Cat." Because of Kathleen’s participation, Nancy would like her to receive shares in the corporation. What are the relevant tax issues?
Business
1 answer:
elena-14-01-66 [18.8K]2 years ago
3 0

Solution :

In the context, the relevant tax issues are :

1. The transfer to be subjected to tax deferred treatment under 351. It is a tax issue for transaction.

2. Kathleen receives stock in the exchange of the property transferred.

3. Receipt of the stock that is a gift from her mother is a relevant tax issue.

4. If Kathleen is not the transferor of the property and Kathleen receives the stock from the corporation, the transaction will be qualify as non taxable under 351.

5. Stocks received by Kathleen and Nancy is a taxable and so it is relevant to the tax issue.

6. The property in the hands of a corporation is always a tax issue.

7. The deductions that is allowed when the transfer of the stock for the rendering services for Kathleen.

8. The transfer of the stock is considered as gift to Kathleen by Nancy is a taxable transaction, so it is a relevant tax issue.

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Waterway Industries buys a delivery van with a list price of $60000. The dealer grants a 13% reduction in list price and an addi
krek1111 [17]

Answer:

Cost of the VAN <em>$53.298‬</em>

Explanation:

We have to enter the van as the cost for a cash purchase and all other neccesary cost to get the van ready for use and in company's possesion.

The financing cost (interest) should be excluded as are not part of the cost the company can chose to take them or not.

list x reduction = invoice

invoice  less discount = cash price

60,000 x (1 - 0.13) x (1 - 0.01) = 51.678‬

to this, we add up the sales tax and the extra cost for the device

51,678 + 860 + 760 = <em>53.298‬</em>

5 0
3 years ago
Russell Preston delivers parts for several local auto parts stores. He charges clients $1.30 per mile driven. Russell has determ
Lapatulllka [165]

Answer:

A. Determine how many miles Russell needs to drive to break even?

break even formula = total fixed costs / contribution margin

  • total fixed costs = $1,220
  • contribution margin = $1.30 - $0.29 = $1.01

break even formula = $1,220 / $1.01 = 1,207.9 ≈ 1,208 miles

B. Assume Russell drove 2,500 miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month.

if he drove 2,500 he made a profit because it is more than the break even point.

C. Determine how many miles Russell must drive to earn $2,135.00 in profit.

($1,220 + $2,135) / $1.01 = 3,321.7 ≈ 3,322 miles

D. Prepare a contribution margin income statement assuming Russell drove 2,500 miles last month.

total revenue                         $3,250

<u>- variable costs                       ($725)</u>

contribution margin              $2,525

<u>- fixed costs                         ($1,220)</u>

net income                            $1,305

E. Use the above information to calculate Russell’s degree of operating leverage.

Degree of operating leverage = contribution margin / operating income = $2,525 / $3,250 = 0.7769 or 77.69%

8 0
3 years ago
The term __________ refers specifically to geologic mountain building.
White raven [17]
'Mountain formation' or 'orogeny'
4 0
3 years ago
Decision-Making Scenarios Scenario 1 Football season starts this weekend and Steve is excited about his school’s first game. He
pickupchik [31]

Explanation:

Being a son, Steve should obey his parents and stay at home to babysit his six year old brother, because it is always the duty of children to give respect to their parents' decisions. Though he was super excited about the football match in which his school team was going to play against the long term rivals, but because his parents' friends had a call for meeting them after so long, they asked him to stay at home as he could have many more chances of seeing such matches.

But being a parent, I should respect my son's program of watching the football match, and take the baby with me, so that the program of both son and parents would not be disturbed.

7 0
3 years ago
During the current year, Rulon’s toilet overflowed due to a pipe breaking during a nationally declared earthquake disaster. Rulo
sashaice [31]

Answer:

Since half of his loss would be covered by insurance and he is not filing an insurance claim, he cannot take half of the loss.

For the half he can take, 4500, he must reduce it by 100 and then by 10% of his AGI. 4,500 - 100 - 5,000 = less than zero.

So he cannot deduct any of the loss.

7 0
3 years ago
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