Fact Pattern On January 1 Of Year One Ant And Bee Formed X Corporation On That D

Fact Pattern.

On January 1 of Year one Ant and Bee formed X Corporation. On that date Ant contributed land with a FMV of $10,000 and an adjusted basis to A of $3,500. B contributed two capital assets: CA #1 (FMV $6,000, AB $8,000), and CA#2, FMV $6,000, AB $5,000), B also contributed a liability (which had a legitimate business purpose) of $1,000 which was assumed by X. A received 100 shares in exchange and B received 100 shares and $1,000 cash in the exchange.

Connect with a professional writer in 5 simple steps

Please provide as many details about your writing struggle as possible

Academic level of your paper

Type of Paper

When is it due?

How many pages is this assigment?

DURING YEAR 1

  • X received $5,000 revenue from operations
  • On July 1 X distributed $1,000 cash to A and $1,000 cash to B.
  • On October 15 X received $2,000 of dividends from Y corp. (X owns < 1% of Y stock)
  • On December 21 X sold CA #1 for $5,000

DURING YEAR 2

  • On January 1, In an unrelated transaction, X received a capital asset from W (“CAW”) with a FMV of $15,000 and an adjusted basis of $12,000 to and issues 100 shares of X stock which it gave to W.
  • Also on January 1 X purchased a Section 179 asset for $1,000
  • On April 1 X sold CAW for $16,000  capital gain:1,000
  • On July 1 X distributed $5,000 cash to each of A, B and C ($15,000 total).
  • X received $4,000 revenue from operations    
  • X paid $1,000 in federal tax.

DURING YEAR 3

  • X receives $1,000 revenue from operations
  • X distributed $333.33 to each of A, B and W
  1. What is X’ taxable income in Years 1, 2 and 3?
  1. What income, gain or loss does A recognize in Year 1?
  1. What income, gain or loss does B recognize in Year 2?
  1. What is X’ Accumulated E&P at the beginning of Year 3?
  1. What income, gain or loss does W recognize in Year 2?
  1. What income, gain or loss does W recognize in Year 3?