[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

C is correct!

[Anonymous]

14–Sandy is the sole shareholder of Swallow, an S corporation. Sandy's adjusted basis in Swallow stock is $60,000 at the beginning of the year. During the year, Swallow reports the following income items:

Ordinary income $30,000

Tax-exempt income 5,000

Capital gains 10,000

In addition, Swallow makes a nontaxable distribution to Sandy of $20,000 during the year. What is Sandy's adjusted basis in the Swallow stock at the end of the year?

A. $60,000

B. $70,000

C. $80,000

D. $85,000

[REGTaker]

D

Thank you so much!! Let's work on you now so I can return the favor. Let me find my estate/trust flashcards. BRB

[Anonymous]

Do you feel better about C-Corps/S-Corps? You did great on those quizzes!

[REGTaker]

I definitely feel more confident about them. I think I am just psyching myself out.

[REGTaker]

What is the annual exclusion for gifts?

[Anonymous]

$14000 per person

[REGTaker]

Correct!!! What are the exceptions?

[Anonymous]

Marital deduction, gifts to colleges for tuition/fees, gifts to medical providers for medical stuff, and…

[REGTaker]

Awesome!!! Charitable contributions to qualified exempt organizations.

[terryharm]

Why isn't the answer $36, If there is a $10K liability wouldn't Lind's basis be reduced by $4k because the liability was assumed by Ace?

Lind and Post organized Ace Corp., which issued voting common stock with a fair market value of $120,000. They each transferred property in exchange for stock as follows:

Adjusted Fair Market Percentage of

Property Basis Value Ace Stock Acquired

---

---

---

---

Lind Building $40,000 $82,000 60%

Post Land 5,000 48,000 40%

The building was subject to a $10,000 mortgage that was assumed by Ace.

What was Lind’s basis in Ace stock?

A.

$82,000

Incorrect B.

$40,000

C.

$30,000

D.

$0

BEC: 81
FAR: 75
AUD: 81
REG: 85

PA license Pending..

[REGTaker]

I thought the same thing, but what we both missed was that it is a corp, not a partnership. When a corp assumes liabilities, none is left with the shareholder.

[terryharm]

ok but if it was an SCorp it would have been $36 because S Corps act like partnerships?

BEC: 81
FAR: 75
AUD: 81
REG: 85

PA license Pending..

[Anonymous]

Is the answer B? I thought it would be C – $40000-10000 liabilities.

[REGTaker]

3–When is the estate's tax return due?

[Author]

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